Vietnam chamber outlines headaches for business
HANOI - Vietnamese companies
said two key constraints to running a business in the
communist-ruled country were poor legal guidelines and
dealing with bureaucrats, a survey showed.
The survey of 400 firms by the Vietnam Chamber of
Commerce and Industry (VCCI) showed business
executives believed the top barrier to making money was
an unpredictable legal framework.
The report, which covered mainly small and
medium-sized enterprises under state and private
control, added that company bosses spent almost one
third of their time grappling with Vietnam's feared
bureaucracy.
This took the form of dealing with administrative
formalities along with official inspections and audits, said
the survey, which was obtained by Reuters on
Wednesday.
``Reform of institutional structures and administrative
systems is important to help businesses reduce the time,
energy and money they have to spend on bureaucratic
matters,'' it said.
A VCCI official said the survey was the chamber's most
comprehensive report on local companies. It was
commissioned last June by reform-minded Prime
Minister Phan Van Khai.
It was unclear if Khai already has the report.
The survey said many enterprises were concerned about
the Vietnamese proverb ``the king's rule stops at the
village gate.''
This refers to stubborn, local-level bureaucrats, whom
executives said did not understand business-related laws
or applied them at their own discretion, regardless of
directives from the central government.
Executives said besides vague laws and troublesome
bureaucrats, they had problems with limited export
markets, low domestic demand, smuggling and
counterfeiting along with complicated and high tax rates.
``This implies, in the view of the business enterprises,
that the biggest disadvantages to their operation and
development should be solved by legislation macroeconomic policies,'' the report said.
``Many enterprises said they did not see any major
progress brought by new legal documents introduced
recently in creating a more favourable environment for
business,'' it added.
The report made no specific mention on any legislation.
Regarding exports, firms in Vietnam are disadvantaged
because the country does not have Most Favored
Nation (MFN) status with the United States. Officials
have been negotiating a bilateral trade agreement that
needs to be in place before Washington will grant MFN
to Hanoi.
The report said from 1995 to last year more than 70
percent of the surveyed companies recorded growth in
production, revenues, exports and employment. More
than 60 percent had an increase in actual net profits, it
said.
In addition, the survey said over the last two years 89
percent of the 400 companies had invested in new fixed
assets.
The report made no mention of the impact on surveyed
firms from Vietnam's economic downturn or the Asian
economic crisis.
But enterprises felt solutions to business problems
proposed by government agencies were inadequate, it
added.
One example was the establishment of telephone hotlines
at various ministries earlier this year to deal with business
complaints.
This had not helped solve major problems, the survey
said.
By Dean Yates - REUTERS - August 12, 1998.
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