Workers process cloth at a garment company in Việt Nam. The Government is promoting the role of private enterprises for national growth. — Photo vietstock.vn

HA NOI (Biz Hub) — The Government is promoting the role of private enterprises for national growth, yet significant obstacles lie ahead as agencies work to accelerate their development.

Officials from several business associations revealed these sentiments to Hai quan, a newspaper of Viet Nam Customs, after Prime Minister Nguyen Xuan Phuc told a meeting in late April that private enterprises would be a driving force for economic growth.

Phuc said special support policies were needed to foster the development of start-ups and small- and medium-sized enterprises, and to intensify investor confidence.

The PM signed Resolution No 19-2016/NQ-CP in late April, which entrusts ministries with specific action plans to improve the country's business environment and competitiveness for the third year in a row.

"I highly appreciate the PM esteeming private enterprises," said Viet Nam Timber and Forest Product Association General Secretary Nguyen Ton Quyen. "Recent moves of the Government and the spirit of the resolution have blown a new breath of air into the business community."

"However, enterprises are most interested in whether the policies will rapidly come to life," he said.

Quyen said private firms needed significant capital to renew technology and improve productivity, but currently they found it hard to compete with State utility and foreign direct investment (FDI) companies in accessing credit.

Domestic timber enterprises need loans worth US$1.5-17 billion per year, but it would not be easy for them to borrow with annual interest rates of 7 per cent to 8 per cent. Firms in many other countries could manage dollar loans with rates of 1 per cent to 2 per cent, he said.

Quyen also suggested that the Government should enact more appropriate policies for human resources. Up until 2010, there were about seven vocational schools for forestry workers nationwide. Now, they have become junior colleges that educate teachers, no longer labourers.

"This makes skilled and productive workers become less and less so, causing difficulties for enterprises," he said.

Viet Nam Textile and Apparel Association Vice President Truong Van Cam said a Government policy requiring annual minimum wage increases at enterprises was causing challenges for sectors using numerous workers, especially in the footwear, garment and textile sectors.

He said regular wage increases would push up manpower costs and restrict the ability of firms to boost investment for more productivity and competitiveness, as well as regulation of the labour market.

Cam also said it was still time-consuming for businesses to deal with customs clearances, as this process largely depends on licences of other agencies in inspecting import and export goods. There was a need for closer connection among these authorities to speed up the process, he said.

Nguyen Hoai Nam, the deputy general secretary of the Viet Nam Association of Seafood Exporters and Processors, said the country's policies related to temporary imports for re-export were making domestic seafood and farm produce less competitive in some cases. 

For example, Viet Nam enabled fish, shrimp, poultry and vegetable imports to pass through the northern port of Hai Phong before these goods were exported to China with border trade policies between the two countries.

The policy virtually helped Chinese importers dodge tariffs, and they even received value-added tax refunds in their country when exporting the goods again to other nations. This explained why China's fish and shrimp exports were cheaper in Japan, the US and the European Union.

Nam said the Ministry of Industry and Trade should soon ask the Government to remove the temporary import for re-export policy. They should stimulate that only domestic enterprises could import materials and process them for export, he said.

A representative of production, trading and service firm Thien Bao told Hai quan under the condition of anonymity that some local authorities still ignored the national determination to improve the business environment.

Resolution No 19 recognised this situation.

"Heads of some ministries, agencies and localities do not pay adequate attention to the implementation of Resolution No 19, treating it as a movement or campaign rather than a specific task or a must-do item," it stated.

"Oftentimes, businesses have to pay (the authorities) significant amounts of ‘lubricant fees,'" the anonymous official said. "The Government asks us to raise our voices about that, but we hesitate about ‘hitting'. We hope for more drastic actions from top to bottom so that business conditions can be eased with less costs and risks."

To Hoai Nam, General Secretary of the Việt Nam Association of Small and Medium-Sized Enterprises, said the Government should focus on building a law to support these firms. This would ensure the most effective enforcement of national policies for them.

Nam said the policies should include a reduction in corporate income taxes, the designation of key enterprises to serve as a guarantee for other businesses in a business area, and preferential loans of commercial banks and credit funds extended to companies producing high added value products or contributing to a production chain.

The Government must continue to speed up administrative reforms, especially in providing public services, he said. — VNS