Difficulties of domestic and foreign enterprises when investing in Vietnam
According to the latest statistics of the General Statistics Office of Vietnam, the number of enterprises established in our country in the first 6 months of 2017 has reached 10,985 enterprises, depicting an increase of 9% over the same period last year. Although the number of enterprises investing in Vietnam is on the upward trend, it is still not really a great transformation in business investment situation in our country. So, what is the matter that makes domestic and foreign enterprises be hesitant when deciding to set up their business in Vietnam?
The reasons why the enterprises have not yet promoted investment in Vietnam
1. Legal burdens
When deciding to invest in Vietnam, many enterprises have identified that our country has many strengths and economic potentials. However, they also have recognized that no country has such a complicated legal and business invoice system like Vietnam, even the domestic enterprises could see that. Such complex, time and money-consuming legal procedures is considered as one of the main reasons that make many domestic and foreign enterprises feel nervous when investing in our country.
Therefore, the legal bodies, especially the domestic and foreign business law management department, have been trying to eliminate the cumbersome procedures, amend and supplement the regulations on accounting and tax payment to create the simple, reasonable business environment, which is suitable with the size and nature of business.
2. Non-properly trained Human resources
One of the important social factors to attract investment is the quality and price of human resources. When an investor wants to open a factory, their first concern is to look for an area that can meet the quality and quantity of labor force. Although the labor force in Vietnam is abundant and the diligent and meticulous virtues of Vietnamese people make investors quite satisfied, there are still drawbacks on the level of culture and professional skills. It is the regional division and unequal universal education has resulted in the situation that the number of illiterate workers still exist which affect adversely on the working classes in our country. This situation makes investors worried when choosing Vietnam as the place for business investment.
However, in recent years, our Government has also started to have thorough investment policies in Education and Training to improve the level of culture for human resources in Vietnam. Schools are built everywhere along with the promotion of universal education to contribute bringing knowledge to the labor force. Moreover, Vietnam also strengthens international cooperation to actively exchange experiences in order to improve the skills and qualifications in high technology fields.
3. Geographic difficulties
In general, foreign enterprises are still hesitant in relocating their facilities to Vietnam for doing business. The reason is that it requires the enterprises to spend a lot of time researching as well as understanding the information about politics, policies, living environment, natural resources, people and especially the economic geography location of each area and region in Vietnam. Moreover, the enterprises, especially foreign ones, will certainly have to spend a considerable amount of money on this investment.
Even local entrepreneurs have found it quite difficult to find a perfect place to build their business infrastructure in order to meet the business needs , it requires to build the production facilities near places having convenient communication and transportation networks, having the systems of energy supply, water supply & drainage and public works serving for manufacture and business such as sea port, airport, etc. However, with such a geographic division in our country like current condition, it is very difficult for the enterprises to find good locations for business.
Therefore, in order to eradicate the geographic anxiety for the enterprises, Vietnam has encouraged the development of pre-built factories to reduce the time and costs of foreign investors in developing their production facilities in our country. As most industrial zones are located in the key economic zones which are very close to the harbors, international airports and the center of the city, it is convenient for the transportation of goods and the materials, helping investors to save a lot of money. Moreover, these models of the factory are equipped with professional staff, along with high-end infrastructure with modern equipment, strict security system, etc. This solution even helps the enterprises to solve matters on legal procedures that enable the enterprises and the investors to completely put their trust here.
Hopefully, with these endeavors and continuous improvements, in a near future, Vietnam will become one of the most ideal places for enterprises to invest capital and this will contribute to make our economy grow more sustainably.
By Marketing Department – Kizuna JV Corporation