On 23 January the City of London, in cooperation with the UK ASEAN Business Council (UKABC), hosted a delegation of Ministers and senior officials who were accompanying General Secretary HE Mr Nguyen Phu Trong on his first official visit to the UK. The delegation took part in a ‘High Level Economic Dialogue’ with a number of UK businesses who are already active in Vietnam, which Alderman Fiona Woolf hosted.
This was an excellent opportunity for UK businesses to raise broad, as well as some specific, issues around doing business in Vietnam. I thought it worthwhile to highlight some of the broad issues raised, which included:
Speeding up the licensing process
The licensing process in Vietnam can be very slow and this is a very real barrier to companies looking to do business in Vietnam.
The Vietnamese delegation explained that much of the responsibility for licensing was delegated to a regional government level, and that the delays in processing licence applications as well as inconsistencies in the application of business incentives is a real challenge for Vietnam to deal with. Vietnam is making 2013 a ‘breakthrough year’ for enhancing the business environment to ensure that Vietnam isn’t left behind in the region; in February the government will be reviewing and amending a number of laws and incentives around foreign investment to improve the ease of doing business.
What more can be done to connect British and Vietnamese SMEs?
Vietnam is very keen to do more in this area and this is a subject which they have been discussing with the Embassy in Hanoi. The delegation felt that communication and promotion of information about Vietnam to UK SMEs was crucial here. The delegation was very keen to work closely with UKTI to make progress in this area.
This is also an area where the UKABC makes a significant contribution with its outreach activities to SMEs, promoting the business opportunities across the ASEAN region – we will continue to work closely with UKTI in this area.
Importance of a strong education system and skills training
Given the very ambitious infrastructure development plans in Vietnam the importance of a strong education and skills system was highlighted, as well as the benefits of PPP as a model to deliver these infrastructure plans.
The government in Vietnam is doing a lot of work to promote and implement an increase in the quality of education across the country, and is currently developing its education master plan. The delegation highlighted that they strongly believe in the quality of the UK education system and that is why so many of their students come here to study. The government will also be reviewing the ceiling on public sector investment in PPP projects, and is looking to raise it from its current level (30%) up to around 80-90%.
Shareholdings in domestic banks
There is currently a 20% limit on the amount a foreign company is allowed to own in a domestic Vietnamese bank, which can slow down investment and reduce the incentive for technology and knowledge transfer.
The Vietnamese delegation fully understood these concerns and explained that much work had been done, and would continue to be done, to address weaknesses in the banking sector – foreign investment plays a key role here. They acknowledged the barrier which the shareholding limit placed on investment, and confirmed that this is a regulation which will be reviewed in the near future.
The discussions which took place during this dialogue were fascinating but also extremely encouraging. It is clear that the government in Vietnam clearly understands many of the challenges foreign companies face and is taking concrete steps to improve the business environment. It was also clear from the discussions that there is certainly no a lack of enthusiasm for, or belief in, the commercial opportunities in Vietnam from British businesses
Tom Burden
UK ASEAN Business Council