The European Chamber of Commerce (EuroCham) in Vietnam last week
launched its eagerly awaited White Book 2013, a high-profile report
highlighting issues of great concern for European companies in Vietnam. VIR’s
Tuong Thuy spotlights some of the hottest issues.
EuroCham’s “2013 Whitebook of
Trade/Investment Issues & Recommendations” was released late last week to
draw the attention of national policy-makers to the year’s top trade and
investment issues facing European firms in Vietnam.
Three reoccurring themes in this
year’s Whitebook are pricing, the role of the state sector and intellectual
property rights (IPR) issues.
According to EuroCham, the
government continues to display an ambivalent attitude towards free market
pricing, and in sectors like energy, price changes now require approval.
EuroCham finds this type of price
control worrying as investors expect to be able to set prices themselves within
the normal boundaries of cost and competition.
EuroCham said it was estimated
that 40 percent of the Vietnamese economy was in the hands of the state sector,
which in itself was not a problem. “However, in those areas, state companies
generally receive favourable treatments through loans, access to land, limited
profit targets and others which hampers the growth of the economy.”
The Vietnamese government has
expressed the desire and need to move away from a labour intensive economy into
technology and value-added areas. However, according to EuroCham, unless there
is real, implemented protection of intellectual property rights, investors are
unlikely to bring their technology to Vietnam, and Vietnam will remain in the
low labour cost trap.
EuroCham chairman Preben
Hjortlund said that in practice, real protection for IPR remained very limited.
In order to give a clearer
outline of the issues, the Whitebook 2013 has a new, improved layout which
pinpoints the main issues in each industry sector and provides suggestions for
how to address them.
The book includes chapters on the
Vietnam-EU Free Trade Agreement (FTA), for which negotiations have just started;
as well as human resources and training, IPR, logistics and transport, taxation
and transfer pricing. Other chapters cover information technology, nutritional
food for infants and toddlers, pharmaceuticals, tourism and hospitality,
energy, mergers and acquisitions, and World Trade Organization commitments.
“This year we have tried to make
the White Book more readable, and thus more useful, than the past by providing
a top 10 list of recommendations for each industry” Hjortlund said. If
implemented, these top 10 recommendations are the ones which would have the
biggest benefit for European investors and, thus for foreign direct investment
flows and the economy of Vietnam.
“We hope that like the prior
editions, this year’s White Book will be well received and more importantly a
helpful tool for the Vietnamese government. As always, EuroCham is prepared to
further advise on the implementation of any of the proposed changes and remains
confident that together, we can overcome the challenges ahead and boost quality
long term investments in Vietnam,” he noted.
Vietnamese Government, Hjortlund
stressed, had achieved much in the last year in terms of controlling inflation,
but many issues remained, which needed to be addressed, and which were acting
as a brake on European direct investment.
At the launching of the Whitebook,
Hjortlund said that according to EuroCham’s Business Climate Index (BCI)
European businesses’ perception of Vietnam as a business destination has
further declined this year – for the first time going below the mid-point of
50. Many of EuroCham’s concerns are shared by non-European companies doing
business in Vietnam.
EuroCham’s members remained
positive for the medium term development of Vietnam, but were concerned at a
lack of progress on many issues in the short term. Many members were reporting
an increase in business hurdles, through increased scrutiny and bureaucracy. In
the medium term, the members were optimistic and ready to invest once the
business environment in Vietnam improves, he stressed.
EuroCham’s executive director
Paul Jewell said that recent developments such as the beginning of negotiations
for the Vietnam-EU FTA represented an important signal for Vietnam. “The coming
years will determine the longer term future of Vietnam, and if the government
is successful in addressing the issues identified by the business community and
a comprehensive FTA is agreed, then Vietnam would be a strong regional player.”
Jewell added that this could lead
to a further increase in the quantity and quality of foreign direct investment
and that EU enterprises increasingly would perceive Vietnam as their ASEAN hub
or even headquarters, from where they could service efficiently both ASEAN
markets and neighbouring countries.
“EuroCham therefore believes that
the White Book 2013 represents an important opportunity for the Vietnamese
government to demonstrate its future economic aspirations and send a clear
signal to the business community that Vietnam is ready to do business.”
The White Book covers the major
industries that EuroCham’s almost 800 member companies operate in, such as
pharmaceuticals, fast-moving consumer goods, energy, telecom, automotive,
tourism and banking.
Hjortlund said over the last five
years, the government had discussed and considered issues raised in previous
editions of the publication. “But we would like to see more action from the
government,” he added.
Jean-Jacques Bouflet, head of
trade and economic affairs at the EU Delegation to Vietnam, said that many of
the issues highlighted in this year’s White Book “will be included and
addressed in the Vietnam-EU FTA negotiations.”
According to Bouflet, the EU has
recently become the most important trade partner for Vietnam in terms of trade
and investment, but also politically. Today, the EU is the largest overseas
market for Vietnam and a largely favourable relationship for Vietnam. The EU
trade deficit with Vietnam surged to 7.72 billion Euros in 2011 from 4.9
billion Euros in 2010 and 3.77 billion Euros in 2009.
Hjortlund said EuroCham made its
various suggestions within this White Book on behalf and in the interests of
its members. However, he also underlined that “it is clear that in the vast
majority of cases the recommendations are clearly in the long term interest of
the Vietnamese government and people. The economy can only grow sustainably if
the business climate is favourable, if there is a level playing field, if
corruption and the resulting inefficiencies are banished, if government
bureaucracy and oversight are reasonable.
“We sincerely hope our
suggestions will assist the government to reach such a situation and we in
EuroCham will continue to assist where possible in striving towards this goal,”
added Hjortlund.
For more information please consult the
Whitebook press releases in English or Vietnamese.
To access last year's edition, the Whitebook 2012, please click here.
vir.com.vn
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