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Japanese enterprises complain about high production costs and cumbersome procedures

apanese Ambassador to Vietnam Yamada Takio at the dialogue. Photo: Hoang Giang.

Japanese enterprises have suggested the authorities should simplify administrative procedures and the licensing process to help them shorten time and save costs for production, trading and investment activities in Vietnam.

On the afternoon of December 21, in Hanoi, the Government Office held a dialogue with Japanese enterprises in Vietnam.

High production costs

According to Minister-Chairman of the Government Office and chairman of Minister’s Advisory Council for Administrative Procedure Reform, this is the 5th dialogue in 2020 of the council with the domestic and foreign business community and the first open dialogue with Japanese enterprises in Vietnam.

According to Mai Tien Dung, the dialogue helps enterprises remove barriers, difficulties and obstacles in investment, production and business, cut costs and improve operational efficiency; and provide information about the Government’s new policies on supporting enterprises recovering from the Covid-19 pandemic.

At the dialogue, Japanese enterprises made many very specific recommendations about issues related to simplification of the investment process, administrative procedures, tax refund, corporate income tax, enterprise equitization and provisions in the Law on Public Investment.

Specifically, General Director of Uniqlo Vietnam Co., Ltd, Yasuda Makoto reflected on the difficulty of finding a suitable domestic supplier. Therefore, the company must import up to 60% of production raw materials from Japan and South Korea and must pay a high transportation fee.

Therefore, he suggested strengthening the capacity of Vietnamese enterprises, focus on developing supporting industries, add tax incentives and connect cooperation to promote domestic enterprises for mutual development.

Regarding infrastructure, a representative of Meiko Vietnam Company said that in 2020, the company’s production establishment of the company in Thach That (Hanoi) suffered 16 power outages, another one in Thang Long industrial park suffered 20 power outages and factories also suffered about eight water cuts. Therefore, to overcome these temporary energy cuts, the company has to use other raw materials and energy, making production costs in Vietnam 1.3-1.5 times higher than those for in factories in China.

Mr. Nakagawa Tetsuyuki, General Director of Aeon Mall Vietnam Co., Ltd. said that the licensing of land and construction still took a long time, many projects must take more than a year from applying to receiving the certificate of investment registration or land use rights. Thus, he proposed that the process should be shortened to attract foreign investment.

Problems on specialized inspection to be removed

Facing difficulties and problems of enterprises, the representatives of ministries and agencies gave answers at the dialogue.

Deputy Director of Foreign Investment Department, Ministry of Planning and Investment, Do Van Su said that legal provisions were related to many normative documents and regulatory agencies, so that enterprises faced difficulties and made recommendations was normal. Therefore, in general, they all recommended to shorten processes and administrative procedures.

According to Mr. Su, since 2016, the Government has asked ministries and agencies to speed up the implementation of online public services and build an e-Government. The National Assembly has also adopted a regulation that State agencies must have a roadmap for launching online public services.

Regarding the proposal to disclose information of state-owned enterprises upon equitization, Mr. Su said that the Enterprise Law and Investment Law 2020 were about to take effect, so ministries and agencies issued a draft decree on information disclosure. Currently, the information disclosure has been done, but mainly in Vietnamese, by 2021, it will be done in English, and if there is support from Japanese agencies, it will be done in Japanese.

Regarding the issue of high transportation costs, Mr. Do Van Su admitted that Vietnam’s logistics network had not yet met the needs of enterprises, so Vietnam was actively developing many solutions. In particular, the promulgation of the Law on Public Investment will partly contribute to removing congestion and attracting investment in infrastructure development.

He also added that, regarding the customs clearance of goods, the General Department of Customs had developed an electronic goods interconnection system, which will help the clearance time faster.

In the field of customs, at the dialogue, Mr. Mai Xuan Thanh, Deputy Director of the General Department of Customs answered some questions from Japanese enterprises on tax refund and specialized inspection.

According to the Deputy Director General, following the direction of the Prime Minister and the Government, the General Department of Customs is developing a scheme on reforming specialized inspection, thereby solving problems of specialized inspection for enterprises.

From recommendations at the dialogue, the Chairman of the Minister’s Advisory Council for Administrative Procedure Reform said that the report would be finalized and submitted to the Prime Minister to consider and guide ministries and agencies to implement measures to remove difficulties for enterprises.