Foreign investors say to need easier customs and investment procedures
Speaking at a conference between some 100 FIEs from the southern region and state agencies in HCMC on Wednesday (8 April 2009), business leaders complained that customs procedures were hard to understand.
Jung Eui Kwan, Production Planning Manager of South Korea’s Shinsung Vina Co. specializing in clothing for the U.S. market, said that according to previous regulations, his company, located in Long An Province, was allowed to work with the HCMC Customs Department. “This helped us much in delivering and receiving containers as well as sending documents quickly following requirements from foreign partners as most of the headquarters of sea cargo companies are in HCMC,” he said. “However, according to the new Circular 116/2008/TT-BTC issued by the Finance Ministry, we must do it in Long An Province.”
Speaking in Vietnamese, Kwan calculated that it is 60km from his company to the similar agency in Long An Province and 90km more from that agency to the sea cargo company’s headquarters while earlier, when Shinshung Vina’s products were at Cat Lai Port, the distance was just 60km. This has caused difficulties for the company at a time when cost cutting is necessary, he said.
Regarding foreign currency, Ho Thi Yen Truc from Perstima (Vietnam) Co., located at Vietnam-Singapore Industrial Park (VSIP) in Binh Duong Province, said that the company specializing in steel products for export to Malaysia would possibly lose most of its Malaysian customers who are now required to use Malaysian ringgit in trading instead of U.S. dollars because of worries about foreign exchange risks. The ringgit is not used in trading between Vietnamese and Malaysian firms because Vietnam’s banks do not accept it.
Importing advanced components, accessories and machines for manufacturing in Vietnam is also a problem partly because some customs regulations are not caught up with technology development. Le Thi Be Tuyet, chief of the Import-Export Department of Yazaki Eds Vietnam, said that the Japanese-based company specialized in manufacturing components and accessories for automobiles, so it had to import advanced machines for production. However, it costs the company time and effort to declare the parts of machines as technologies at the agencies are not good enough to check the products. “One such machine has thousands of parts and some of them cannot be checked at Vietnam’s agencies,” she added.
Investment incentives also make companies wonder. In the current economic turmoil, foreign orders for plastic products are down, said Nguyen Huu Nguyen, deputy director of Sunway Mario Plastics Joint Venture Co. Sunway Mario wants to expand its business and further penetrate the local market. Nguyen explained that due to the lack of information regarding regulations for FDI enterprises to re-register, the company had not re-registered and the deadline, July 1, 2008, had passed.
“As a result, in the difficulties, we would like to ask the Government’s consideration so that unregistered companies like us are allowed to supplement registration and perform our rights in line with the Enterprise Law,” Nguyen said.
Phan Thi Ngoc Linh from Fuluh Shoes Co. in Long An Province said that her company has not transferred eight of its 46 hectares of land from local authorities after three years of operation, creating difficulties in manufacturing and labor recruitment. According to the company plan, Fuluh should have 7,000 workers, 14 manufacturing lines and an annual output of 8.4 million pairs of shoes but now has only 2,300 workers. It has been forced to decline some foreign orders due to lack of capacity, said Linh.
Personal income tax for foreigners working in Vietnam, import taxes and tax refunds were also hot topics at the conference.
Ha Le, finance director at P&G Vietnam, said that income taxes for foreigners working in Vietnam were higher than in other countries in the region. She added that this was not an advantage to Vietnam’s development. “Foreign experts play an important role in training Vietnamese employees,” Le explained.
Yen Truc from Perstima (Vietnam) Co. mentioned import taxes suggesting that the Government repeal the 3% import tariff on tin mill black plate. Most factories like hers must import the product to serve their production possibly because no manufacturers in Vietnam can make it. With the current tariffs, it is difficult for companies in Vietnam to compete with rivals abroad.
Minister of Industry and Trade Vu Huy Hoang assured FDI businesses of the Vietnamese Government’s consistent policy of treating all businesses equally while reporting that his ministry is inquiring into difficulties facing FDI businesses to promptly remove them.
Bui Quoc Trung, deputy head of the Foreign Investment Agency under the Ministry of Planning and Investment, said the ministry was working on readjustment of the current Law on Foreign Investment, including problems the enterprises mentioned. “The readjustments will be reported to the National Assembly in May,” he said. According to the Ministry of Industry and Trade, which organized the conference, FDI businesses have accounted for about 40% of the national export value in recent years and 55% of it last year.
In the first two months of this year, they recorded an export value of nearly US$3 billion, down 9% year-on-year. The ministry held a similar conference in Hanoi last week for FIEs in the northern region.
