Three steps to stop Vietnam's slide HANOI - Three quick legislative steps would do much to stem Vietnam's slide into uncompetitiveness on the Asian regional stage, a top government adviser said. John Bentley, an adviser on legislative reform to the Hanoi government, said freeing up private business, scrapping punitive taxes and floating the over-valued dong currency would provide quick solutions to many of Vietnam's pressing economic problems. ``The most urgent thing right now is to pass the new enterprise law...to provide a way for people to exercise the right to do business,'' Bentley told Reuters. Vietnam's draft Business Enterprise Law, which has been broadly welcomed, is due to be debated and approved by the next session of the country's legislature when it meets from May 4. Bentley said it would remove constraints that require case-by-case discretionary approval for many basic business decisions and create a system for company registration. Bentley, an international business lawyer with experience as a government adviser in a number of developing countries, has worked for Vietnam's justice ministry since 1994, implementing United Nations Development Programme projects to develop a comprehensive legal framework in the communist-ruled state. He said Hanoi must scrap punitive income tax for high earners that has different rates for Vietnamese nationals and foreigners. ``This makes what should be reasonably priced Vietnamese labour very costly once people start to acquire skills,'' Bentley said. ``In some cases it is cheaper to bring in foreigners than to hire Vietnamese.'' Company taxes need to be cut to regional norms of 25 percent from 25-32 percent Bentley said, and tax should only be paid on net incomes with the allowance of a broader range of deductables. Fresh foreign investment pledges and approvals have slowed to a trickle this year after declining through 1997 and 1998 as investor confidence soured and Vietnam was hit by fallout from the Asian financial crisis. ``Vietnam is now competing with other countries for foreign investment...many deductables, such as advertising costs, are denied so the effective tax rate is higher,'' Bentley said. But the simplest move would be to float the non-tradeable dong currency, widely viewed as at least 20 percent overvalued, and relax restrictive foreign exchange regulations, Bentley said. ``I believe these controls reflect a policy to maintain an over-valued exchange rate, and this is disastrous for the development of the country,'' he said. ``If foreign investors don't have free and easy access to foreign exchange they will be reluctant to come.'' Controls designed to protect foreign exchange reserves had the opposite effect to that intended and hard currency tended to exit the market once it was impeded, Bentley said. Vietnam's foreign exchange reserves and other banking statistics are treated as a state secret. Reuters - April 29, 1999.