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Vietnam cuts taxes, facilitates int’l trade
In line with other economies, Vietnam has cut business taxes in 2008-09 to strengthen business regulations and increase opportunities for its companies in the face of global financial turmoil, say the World Bank and the International Finance Corporation.
In their annual Doing Business 2010 report released in Hanoi on September 9, the WB noted that Vietnam has slashed the corporate income tax rate from 28 percent to 25 percent and eliminated the surtax on income from the transfer of land. The country has also adopted a new corporate income tax law and value added tax law to create a healthier businesses environment for its companies.
The WB report also pointed out that increasing competition in the logistics industry and the application of new customs administration procedures as part of the World Trade Organisation membership reform programme have reduced international trade delays.
This year Vietnam is ranked 93 globally on the global Ease of Doing Business rankings, virtually unchanged from 91 last year.
Sylvia Solf, WB manager of the Doing Business project, explained that Vietnam has made progress in regulatory reform, but not enough in comparison with other regional countries.
Indonesia, for instance, the most active reformer in Southeast Asia this year, moved up to 122 from 129 in the global rankings. It cut the time required to start up a business by 16 days and the time to transfer property by 17 days. The country also strengthened disclosure requirements for related-party transactions to protect investors.
Singapore, a consistent reformer, is the top-ranked economy on the Ease of Doing Business for the fourth year in a row. It introduced online and computer-based services to ease business start-up, construction permits and property transfers.
However, Victoria Kwakwa, WB Country director for Vietnam, said that besides rankings, investors are also interested in other factors, including market regulations, infrastructure development and market scale. That is why Vietnam has attracted investors despite its low ranking.
She also said that Vietnam is among the few countries that are expected to achieve positive growth this year. It has set a target of growing 5 percent this year – an undreamt figure for many countries given the global economic fallout.
She suggested that the government continue to maintain its macroeconomic stability, finalise market institutions and accelerate administrative reform so as to secure steady growth in the coming years.
According to the report, 2008 was a tough year for doing business. Companies around the world had to cope with the effects of a financial crisis that started in rich economies but led to a global economic downturn. Access to finance became more difficult. Demand for products fell in domestic and international markets, and trade slowed globally.
Policymakers and governments also faced big challenges, from stabilising the financial sector and restoring confidence and trust to countering rising unemployment and providing necessary safety nets as an estimated 50 million people risked losing their jobs as a result of the crisis.
Despite the many challenges, more governments implemented regulatory reforms aimed at making it easier to do business than in any year since 2004 when Doing Business started to track reforms through its indicators. Doing Business recorded 287 such reforms in 131 economies between June 2008 and May 2009, 20 percent more than in the year before.
Reformers focused on making its easier to start and operate a business, strengthening property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures.
vov, vietnamplus
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