The Improving Business Climate in Vietnam

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The Government continues to assert its intention to improve the business environment with the reduction in requirements for inspections licenses and sub-licenses. The Ministry of Planning and Investment announced in early January that in 2018 they want to see Vietnam in the Top 50-60 countries in the global competitive indices, namely the World Bank’s Global Doing Business report where it ranked 68th out of 190 countries in 2017.

In line with this trend and intentions is the announcement of the a new Decree No 163/2017/ ND-CP which allows foreign logistics companies to enter new sectors of the market from February this year and is in line with Vietnam’s WTO commitments, however now several years behind the original schedule. Under the new Decree, foreign logistics companies will be allowed to own up to 49% of the shares in in companies providing international shipping services owning their own fleets flying the Vietnamese flag.

In addition, foreign ownership will be allowed in companies operating transportation services by rail and inland waterways (49%) and by road (51%).

Another change is the foreign companies or individuals will be allowed to own up to 50% in companies offering container loading and unloading in all transportation sectors.

While on the face of it, this represents a major step forward and ends the requirement for joint ventures being the only access to provide the above services, it is not clear what additional benefits this brings other than no longer having to establish a formal joint venture.

On a separate note the Prime Minister Nguyen Xuan Phuc has also stressed the need for institutional reform in order to help achieve sustainable growth, one of the items, which has a strong focus in the EU Vietnam Free Trade Agreement due to be ratified in 2018. The Prime Minister also stressed the need for increasing labour productivity and industrialisaton and continuing improvement of the business environment.

The messaging continues to be good but still needs to be filtered down to local provinces and getting them to act in accordance with Central Government directives, which can be easier said than done.

Kenneth M Atkinson, Executive Chairman
Grant Thornton Vietnam

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