The overview of the conference

Persistent difficulties

 Mr. Phong pointed out that the Vietnamese economy and business activities have been affected by the complex geopolitical developments in the world and in Vietnam’s major markets. The economic performance of Vietnam in the first six months of 2023 showed a gloomy picture from the end of 2022. The country’s gross domestic product (GDP) only increased by 3.72% in the first half of 2023, the lowest growth rate in this period in a decade (except for 1.74% in the first half of 2020 due to the COVID-19 pandemic outbreak). Vietnam recorded a trade surplus of US$12.25 billion from January to June. However, both export and import values declined in the same period, down 12.1% and 18.2% respectively, due to the reduced demand from Vietnam’s main markets such as the United States, ASEAN, the European Union (EU) and some East Asian countries. Exports to the U.S. market decreased the most, by 22.6%, while imports from South Korea dropped the most, by 25.6%. This also resulted in a significant decrease in the output of some key industrial products of Vietnam compared to the same period in 2022.

He added that companies are expected to continue facing many challenges due to the ongoing COVID-19 pandemic impacts, climate change issues, unexpected droughts and floods, strategic competition of great powers, unresolved Russian-Ukrainian conflict, high inflation in many countries, high prices of energy and materials, and slow recovery of major trading partners. Moreover, they have to cope with the shift of value chains, the demands of trade partners and markets for sustainable production and consumption, the green economic trends, the digital economy and the rapid Industry 4.0. Mr. Phan Duc Hieu, member of the Economic Committee of the National Assembly, stated that businesses are currently encountering numerous obstacles in terms of market, finance, capital and competition. When markets are tight, competition intensifies not only among domestic enterprises but also among enterprises in the region. Among their obstacles, finance to cover and maintain production and business activities is the most difficult.

Completing legal framework, reducing costs for businesses

To enable Vietnamese companies to proactively adapt, recover quickly and develop sustainably to become an important force for economic autonomy, central and local authorities have implemented many key business support and development solutions in a drastic and effective manner. However, the business community and authorities need to work together to solve many problems. To eliminate existing challenges for companies, the first important thing is to carry out institutional reforms because this not only simplifies administrative procedures and institutions but also reduces financial burden and compliance cost, he said. The Prime Minister issued Official Letter 644 on rectifying and strengthening responsibilities and improving the effect of administrative procedure reform to promptly remove obstacles and difficulties for people and businesses. Three points are emphasized: Not only reforming procedures but also cutting compliance costs; reviewing and eliminating impeding administrative procedures, reducing compliance cost by 20%; promptly handling complaints of people and businesses.

To implement the Prime Minister’s Official Letter 644 on effective and sustainable institutional reform, it is necessary to focus on controlling new regulations that result in an increase in costs, Hieu said. If it is not urgent, no new regulations are needed. If new regulations are issued, a suitable application roadmap is required to help enterprises with enough time to stabilize their “health” and prepare a compliance plan while providing direct financial support for enterprises in regulatory compliance such as fire prevention and CO2 inventory in the right location, for right demand and with regulatory compliance. In difficult times, companies in some industries and fields such as real estate and finance need to restructure their business operations. However, current regulations sometimes impede such activities. Therefore, it is necessary to study and consider relaxing mechanisms with a limited time and scope to help enterprises carry out restructuring and overcome challenges, he added. This is an effective institutional reform measure applied during the COVID-19 period. In the long term, it is important to study sustainable mechanisms that promote regular institutional reform. According to international experience, institutional reform will not be effective if it comes from a single, spontaneous initiative from institution builders. For effective implementation, many countries around the world established an independent competent agency under the Government or the Prime Minister to monitor and promote institutional reform. In Vietnam, at present and in the future, it is necessary to study and propose the establishment of such a corresponding agency for sustainable, effective and regular institutional reform.

To further facilitate business recovery and development in the last months of 2023 and the following years, VCCI suggested major solutions such as improving the legal framework on business investment, reducing costs for businesses and enhancing their access to resources from State support packages, Mr. Phong noted. In particular, there is a need for timely solutions to support strongly recovered industries such as tourism and services, which are currently facing personnel shortages; build and improve the legal framework to facilitate the formation and development of innovation-based business models; and accelerate the programs to improve the business environment and enhance national competitiveness. However, only businesses know what they need most, Mr. Phong said. And, it is the business community that needs to identify challenges and opportunities to discuss solutions for sustainable business development.

Businesses need plans to deal with uncertainties  Dr. Bui Quang Tuan - Director of the Vietnam Institute of Economics   Before current challenges, it is most important that businesses must have proactive plans for various external uncertainties. At the same time, they must actively develop plans to deal with unexpected situations. Given the fact that they have high demand but their access to capital is low, companies must better manage their resources, have plans to replace credit resources and have plans to reduce costs. In the long term, they need to reform their business models towards modern, digitized models. The green trend is also an opportunity for them to enter the European market and catch up with energy transformation support trends with appropriate strategies. Considering plans to relax and postpone "burdens" for businesses  Mr. Hoang Van Cuong - Member of the 15th National Assembly, Vice Rector of the National Economics University Fiscal policy is currently supported by businesses. However, they are paying up to 30% for social insurance and union fees and this is a cost burden, causing them to lay off workers in difficult circumstances. Therefore, it is necessary to carefully analyze and consider an extension, postponement and even reduction of these costs. In addition, administration needs to be simplified. When we face external challenges, we have to relax internal conditions. Recently, while the outside world is challenging, we still tighten our internal conditions. A lot of controls make businesses confused about what to do. It is true that standards must be controlled but they should be defined to a certain extent. In addition, it is necessary to discuss interest rates. The State Bank of Vietnam announced four interest rate cuts but companies are unlikely to access low-rate loans. Interest rate policy needs to be taken into account but there is still room in the bank to lower interest rates for prioritized business sectors. Fiscal policy should be directed towards better support for reducing lending rates and adding support strength for businesses.    Reviewing and resolutely removing unnecessary administrative procedures  Mr. Nguyen Quoc Hiep -  Chairman of Vietnam Construction Contractors Association There is a need for a specialized agency under the National Assembly to review legal documents before submitting them to the National Assembly in order to eliminate overlaps and conflicts in laws, especially between the Land Law and other laws being prepared for amendment at the upcoming assembly. In addition, law drafting agencies need to capture suggestions, recommendations and questions from trade associations and businesses for bills to complete the legal framework, promote and encourage social resources into development investment, job creation and economic growth. The Government has made drastic moves to lower lending interest rates to the threshold of 8% per annum and adopted solutions to relax public resources such as reducing 2% VAT, reducing motor vehicle registration fees and increasing salaries. But, it is necessary to have more specific solutions on exemption, reduction and postponement of some taxes and fees, loosen fiscal policy, and boost consumer demand to build up the market sentiment. Businesses are hindered and troubled by conditional business procedures. Many procedures arise spontaneously. Some agencies and localities also apply their own regulations which must be fulfilled by enterprises. These matters make many foreign investors reluctant. In order to remove barriers in the business environment, it is necessary to soon review applicable regulations in all economic sectors and resolutely eliminate inappropriate administrative procedures. It is essential to define agencies empowered to issue regulations that oblige companies to comply with them. It is necessary to make an overall strategy for industrial development Mr. Nguyen Chi Sang - Vice Chairman of the Vietnam Association of Mechanical Industry (VAMI) To develop the mechanical industry to meet 50-60% of the market demand of US$800 billion from now to 2045, increase the market share for common products and participate more deeply in global supply chains, it is necessary to develop an overall strategy for development of industries, especially capital-intensive industries in the national development strategy. It is important to continue the “supporting industries” program with necessary additional and updated policies and mechanisms and concretize the Mechanical Development Strategy 319/QD-TTg to make a decree on mechanical development in the coming time. Moreover, the Ministry of Industry and Trade needs to advise the Government to issue specific mechanisms and policies to direct corporate investment in the mechanical industry in order to meet economic development requirements and ensure national security and defense.    Businesses are very confident about digital transformation  Mr. Le Hung Cuong - Deputy General Director of FPT Digital Digital transformation is taking place strongly in Vietnam in many fields. In fact, most Vietnamese businesses have gradually adopted digital transformation at different levels and degrees. Therefore, when carrying out digital transformation, companies need to firmly believe in this journey. Digital transformation is aimed to improve capacity and competitiveness against other businesses. Therefore, when they encounter digital transformation problems, they need to identify urgent issues that need to be addressed first and then develop a long-term strategy for digital transformation. In addition, the Government needs to issue a digital transformation framework and guidelines on digital transformation for businesses to understand and participate directly in digital transformation programs effectively. At the same time, funding resources are needed to help SMEs access digital transformation in the most effective manner. Businesses seek to borrow at 5-7% per annum Mr. Mac Quoc Anh - Vice President and General Secretary of Hanoi Association of Small and Medium Enterprises (HanoiSME) To eliminate existing challenges for companies, it is necessary to extend payment terms for mature loans and provide interest support; reduce interest rates for old loans in the third quarter and fourth quarter of 2022, and to have consulting programs on solutions to survive the economic recession and win competitors; create business support mechanisms, especially for SMEs participating in tenders launched by State projects or State-funded projects. Companies need zero tax on essential imports (Spunlace non-woven fabric) and import tax cuts on non-woven fabrics according to the tax reduction schedule as committed every four years. They want to borrow loans carrying an interest rate of as low as 5-7% per annum as applied to manufacturers and receive property support from the State (such as factories and warehouses) to develop well in the coming time. On the other hand, the VAT refund is very difficult to get. So, it is necessary to have a mechanism for import and export services companies to reduce import and export costs.