Enterprises set conditions for expansion and greenfield investment

September 10 2019

In recent years, ministries, branches and localities have always focused on and created the most favorable conditions for investment attraction. However, there are still some issues that hinder enterprises from making a decision about expansion and greenfield investment.

The “accelerated” change of policy

Citing examples of changes affecting investment decisions of enterprises, the Korean Chamber of Business in Vietnam (KoCham) said that in June 2019, Estec PhuTho Company located in Phu Tho province decided to invest 8 million USD to build a new factory based on the promotional data to attract foreign investment that had been issued by Phu Tho province in 2015. However, Phu Tho province suddenly changed the Industrial Zone Development Plan, so that the area where this enterprise placed the factory is an industrial cluster, not an industrial zone.Therefore, this enterprise faced difficulties in its business activities because it was not designated as an EPE enterprise (Enterprise Processing Export in an industrial zone or an economic zone) – because only enterprises located in the national industrial zones could apply for a license under Decree No. 82/2018/ND-CP regulating the management of industrial zones and economic zones in Vietnam.

Commenting on the above case, KoCham said that this could damage enterprises’ belief in policies to attract foreign investment and promotion materials of the province.While the first procedure to designate an industrial zone according to the current legal regulations is that province makes a plan and takes powers and responsibilities to submit it to the Government, therefore, FDI enterprises have no choice but to rely on the promotional materials and information provided by the province as a basis for their investment consideration. Hence, KoCham suggested that local authorities needed to implement reasonable support measures for FDI enterprises suffering from misinformation provided.

Enterprises always want to have a favorable business environment to expand investment

Similar to the above problem, the American Chamber of Commerce Vietnam raised concerns about frequent changes in regulations and policies. It is because in some cases, investors are forced to stop their licensed business due to the emergence of new regulations.Therefore, the American Chamber of Commerce Vietnam (AmCham) proposed the amended Investment Law should issue provisions to protect licensed business activities in the existing licenses.Specifically, business activities, terms and conditions in investment licenses or business registration certificates need to be protected from regulatory changes.

Proposal to loosen regulations

In general, the business community evaluated that Vietnam has made great efforts to loosen regulations on investment.However, many obstacles, even overlapping regulations and the “rigidity” of the executing team have been causes affecting the expansion and investment of enterprises.

According to the World Bank database, the actual average time to start a business in Vietnam is 17 days. But the enterprises said that this average time was even longer, especially for FDI enterprises, it might take up to three months, especially for conditional business lines.Therefore, it is necessary for the Government to continuously reduce the legal barriers to entering the market; reduce the time needed to set up businesses through simplifying procedures. Enterprises highly appreciated that the Government intends to eliminate the requirement of notifying seal samples according to the current Enterprise Law. They think that this is a useful step, but they look forward to easing the 90-day time limit to invest capital.

Another problem is that many enterprises are concerned about the regulation on the percentage of foreign ownership for fintech companies.Currently, the State Bank proposed the ceiling of foreign ownership at 30% of “room” in companies providing intermediary payment services. Ms. Amanda Rasmussen. AmCham President, said the growth of financial services and fintech would depend on the implementation of favorable legal, regulatory and policy frameworks for investment.Therefore, the application of the limit on foreign ownership in the payment field and fintech will significantly limit start-up companies in raising capital from foreign investment organizations, thereby limiting their ability to attract talent and make them less competitive than other businesses in the region.

It can be seen that a favorable business environment will be a driving force for the investment and development process of enterprises.Vietnam’s efforts are very remarkable, but acquiring and modifying recommendations and suggestions of the business community is always necessary to get a more complete environment, attract investment projects towards increasing added value, focusing on sustainable development.


Write a Reply or Comment

Contact Me on Zalo