14:41 | 05/03/2015 Economy
Foreign business groups hailed Vietnam and HCM City's success in attracting FDI and boosting trade at a meeting with the city People's Committee on March 4.
Just eight years after its WTO accession, Vietnam is the top ASEAN exporter to the US with a 20 per cent market share, Herb Cochran, executive director of AmCham, said.
"If present trends continue, Viet Nam will have a 30 per cent market share by 2020. This is an outstanding success."
Vietnam-US trade exceeded US$36 billion in 2014, a 24 per cent increase over 2013. Viet Nam exported about $10 billion worth of textiles and apparel to the US, and that key sector continued to account for about one-third of Viet Nam's total exports to the US.
"With the TPP and the AEC 2015 both to be finalised this year, and maybe the EU-Viet Nam FTA, prospects are bright for continued improvement in Viet Nam's business environment, additional FDI and growth in Viet Nam's international trade," Cochran said.
Yasuzumi Hirotaka, vice chairman of the Japanese Business Association in HCM City (JBAH), said 2014 was the year in which the Vietnamese Government had announced various reforms.
From amendments to the Law on Investment and Corporate Law, transparency and simplification of administrative procedures can be expected, while measures like reductions in time taken for taxation procedures and customs clearance have also been taken, he said.
However, a survey by JETRO found "underdeveloped legislation" and "opaque operation of the legal system" to be the biggest "investment risks" in Viet Nam followed by "complexity of administrative procedures", "complexity of tax system, tax procedures" and so on, he pointed out.
"Therefore, continuous efforts to improve transparency in the operational aspects of the legal system are required," Hirotaka said.
In addition, the rate of use of local materials is increasing gradually, reaching 33.2 per cent now though procurement from Vietnamese companies remains at just 14.4 per cent compared with 21-23 per cent in Thailand and Indonesia, he said.
Strong support for local private companies is more important than attracting foreign companies, he added.
The EuroCham quarterly business climate index showed a strong upward trend in 2014, demonstrating optimism among the European business community in Viet Nam, especially in HCM City, according to Vo Quang Hue, a member of EuroCham's executive committee.
He said the challenges that HCM City has to overcome include in areas of infrastructure, sustainability, education, and legal framework.
Referring to "sustainability", he said traffic congestion, power and internet supply and sustainable buildings are some of the many issues that the city faces.
As for education, he said, with the city continuing to grow, the business sector constantly searches for workers with adequate educational and technical qualifications.
"There are cases where European businesses have chosen to locate educational facilities and institutions in this market to specifically address this need."
Thai Van Re, director of the city Department of Planning and Investment, said the city economy grew by 9.6 per cent in 2014 to VND853.5 trillion (about US$39.7 billion), accounting for 21.6 per cent of the nation's GDP.
Its foreign trade amounted to $57.4 billion, accounting for 19.3 per cent of the country's total.
The city last year licensed 457 FDI projects with total registered capital of $2.88 billion, while 138 existing projects brought in a further $383.4 million.
The manufacturing sector accounted for $1.65 billion and property for $635 million.
However, foreign investors faced difficulties caused by lengthy and tortuous procedures and immigration, taxation and customs issues, Re admitted.
That would be addressed starting in July when the revised Investment Law and Corporate Law takes effect, reducing the time to get a business licence to three days and an investment licence to 15 days, he promised.
Le Thanh Hai, Secretary of the city Party Committee, said HCM City has over 5,300 FDI projects with an investment of over $36 billion that employ 22 per cent of the city's workforce.
FDI has helped develop many hotels, buildings, offices, malls, apartment buildings, and urban areas, giving HCM City a new look, he said.
Foreign investors have brought in advanced new technologies and new business models, all very important factors that help the city's efforts to restructure its economy and economic development model, he said.
"We will try our best to improve the investment environment.
"Enterprises' difficulties are ours too. We will make efforts to resolve the difficulties to better satisfy demand for socio-economic infrastructure and human resources and to create a fair and transparent business environment for investors and enterprises."
The city would speed up administrative reforms, he added.
Some 200 delegates from foreign groups and companies based in industrial parks, export-processing zones, hi-tech agricultural parks and the Sai Gon Hi-tech Park in HCM City attended the meeting.
Source VOV News