[Vnbiz] EIU Vietnam Business Environment at a Glance

[Craig Stevenson]

Vietnam: Business environment at a glance
   November 15th 2006
 Printer version<http://www.viewswire.com.ezproxy.umuc.edu/index.asp?layout=VWPrintVW3&article_id=761450261&printer=printer>

   COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

Policy towards private enterprise and competition

2007-08: The operating environment for private enterprises improves in line
with the implementation of new legislation, but the government's progress in
reforming state-owned enterprises (SOEs) remains slow.

2009-11: Private firms will still lack full access to land and finance, but
large SOEs will be reformed.

Policy towards foreign investment

2007-08: The government further eases restrictions on foreign investment,
and seeks to promote foreign investment in listed firms. A unified legal
system for foreign and domestic firms is in place, but there remain some
implementation problems.

2009-11: Foreign investors will enjoy greater access to local markets, but
red tape will remain a hindrance.

Foreign trade and exchange controls

2007-08: Trade barriers and tariff levels fall after Vietnam becomes a
member of the World Trade Organisation (WTO).

2009-11: Trade barriers will be lowered further, and foreign-exchange
controls on the capital account will be eased.

Taxes

2007-08: Some progress is made on improving the efficiency of tax collection
and streamlining the tax regime, but there are distortions, and some aspects
of the tax regime remain complicated.

2009-11: Many distortions will be removed, and a unified personal income tax
regime could come into effect.

Financing

2007-08: State-owned commercial banks (SOCBs) continue to dominate the
banking system. The stockmarket becomes a more important source of finance,
and foreign investors are permitted to participate more fully.

2009-11: Limits on the activities of foreign banks will be eased further, in
line with WTO commitments, thereby improving the availability of financing,
and SOCBs will undertake some reforms, including moves to equitise
(part-privatise).

The labour market

2007-08: Wage costs for unskilled labour remain low, but there are shortages
of skilled labour.

2009-11: Wages will rise, but will remain low. Although the skills level
improves, the market for skilled labour will remain tight.

Infrastructure

2007-08: Transport infrastructure is weak, and there are capacity
constraints in energy supply and telecommunications.

2009-11: Foreign finance for infrastructure projects will be more readily
available. Bottlenecks will persist.
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