Employees of LG Electronics Vietnam, a RoK-invested firm, operate a production line at the firm's factory in Hanoi (Source: VNA) Hanoi (VNA) - The need to bring about some degreeof parity between foreign-invested and domestic firms while fostering increasedlinkages was highlighted at the Vietnam Business Forum held on June 16 inHanoi.
There was a general consensus among the participants thatincreased links between FDI firms and the nation’s SME sector, in particular,would facilitate the process of international integration on a fairer footing.
Attending the mid-term forum were Deputy Prime MinisterVuong Dinh Hue, representatives from international organisations, tradeassociations and foreign chambers of commerce in Vietnam, senior ministryofficials, economists and trade experts.
They agreed that effective solutions had to be found forsmall and medium sized enterprises (SMEs) to connect with FDI enterprises.
Deputy PM Hue confirmed that the Government would do itsbest to adjust the difference between the two sectors without reducing FDIinflows.
He said the Government would be more selective with FDIcompanies, choosing those whose business plans suited the Vietnam’s economicrestructuring.
As such, priority would be given to foreign firms withstate-of-the-art, environmentally friendly technology ready to connect withVietnamese SMEs.
Meanwhile, the Vietnamese government had been strivingceaselessly to develop a transparent and uncluttered business environment forall economic sectors, the forum heard.
With Resolutions 19 and 35 on business legality, the governmenthoped to create a concrete playground with fair rules for all, the Deputy PMsaid.
Hue also said that the Government was working on renewing 73customs regulations in order to facilitate the needs of both domestic andforeign businesses.
Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce andIndustry (VCCI) and co-chair of the VBF, agreed with the Deputy PM, saying that"the government is right to spearhead linkages between the FDI sector anddomestic businesses so that development is more even".
“This is one of the topics for discussion at the NationalAssembly and a sustainable growth strategy for FDI firms," Loc said.
However, he also warned that according to the latest reportby the International Finance Corporation, only 21 percent of Vietnamese firmswere taking part in the global supply chain, which was much lower than inneighbouring countries.
Vietnamese producers are also placed at a low position onthe value chain as manufacturers and low cost workers provider.
Furthermore, according to the Organisation for EconomicCooperation and Development, added value generated by the FDI sector nowaccounts for 48.8 percent of total export turnover in Vietnam, as against just12.7 percent by domestic firms.
Most importantly, only 14 percent of Vietnamese firms arecurrently functioning as parts suppliers to FDI companies, since the latterfavour suppliers from their home countries.
"This means there is still a long way to go untilcomplete collaboration and understanding is reached between the two sectors andVietnamese SMEs finally benefit from technology transfer and productionopportunities that they sorely need," said Loc.
Representatives of foreign chambers of commerce in Vietnamblamed the current situation on the lack of a unified tax and customs policy.
Tomaso Andreatta, Vice Chairman of the European Chamber ofCommerce in Vietnam, said that while Vietnamese provinces compete against eachother to attract foreign investment, there was yet to be a fair andstandardised set of regulations for foreign companies operating in the country,which made them nervous and hesitant.
Jonathan Moreno, Chairman of the Board of Governors of theAmerican Chamber of Commerce in Vietnam, suggested that the Vietnamesegovernment removes or simplifies non-tariff technical barriers at border gatesthat are costly and complicated.
There was also positive feedback from internationalcompanies investing in Vietnam.
Ryu Hang Ha, co-chair of the Korean Chamber of Commerce in Vietnam, said that thanks to the Vietnam-Korea Free Trade Agreement (VKFTA) signed in 2015, bilateral trade had been increasingsignificantly. The nations are set to meet the two-way trade goal of 70billion USD by 2020, and 71 percent of Korean companies are satisfied with Vietnam’smanagement of foreign business entities.
‘As the Republic of Korea is now the number one investor inVietnam, Korean multinational companies as well as Korean SMEs consider thecountry a fresh and attractive destination,’ said Ryu.
Nonetheless, he suggested improvements in the easing andremoval of language barriers and the provision of more information oninvestment policies.
Hiroshi Karashima, Chairman of the Japan BusinessAssociation in Vietnam, said he had high regard for the Vietnamese government’sefforts to improve the connection between FDI firms and domestic SMEs.
Many Japanese companies are planning to build manufacturingplants in Vietnam and generate a high demand for local supporting industry,according to the chairman.
VBF organisers said they received nearly 1,000 suggestionsfor the Government and administrative agencies from businesses andassociations.
They expressed their hopes of joining regional andinternational production networks and eliminating national boundaries inproduction.
The Deputy PM showed his appreciation for the opinions andsaid that the government would take all of them into serious consideration asit tries to perfect the current legal framework and minimise litigation risksand fees. He said this was part of its efforts to become a truly constructivegovernment on behalf of the Vietnamese people.
The VBF is an ongoing policy dialogue between the Vietnamesegovernment and the business community organised by the Vietnam Business ForumConsortium in cooperation with the Ministry of Planning and Investment and theWorld Bank.
This year, the midterm forum includes four sessions onemployment, supporting industries development, infrastructure investment, thefourth industrial revolution, free trade agreements, elimination of non tariffbarriers, private sector investment and improving law enforcement.-VNA
VNA
