NATIONAL ASSEMBLY CONSULTS FOREIGNERS ON DOING

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001105

SIPDIS

SENSITIVE

STATE FOR EAP/BCLTV AND EB/TPP/BTA/ANA
STATE PASS USTR FOR EBRYAN and GHICKS
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO
TREASURY FOR OASIA

E.O. 12958: N/A
TAGS: ETRD ECON PREL PGOV VM WTRO WTO DPOL
SUBJECT: NATIONAL ASSEMBLY CONSULTS FOREIGNERS ON DOING
BUSINESS IN VIETNAM


1. (U) SUMMARY: The Foreign Affairs Committee of the
National Assembly
(FACNA) organized a consultative meeting on September 1,
2005, in Ho Chi Minh City (HCMC) to solicit direct feedback
from foreign businesspeople on how the implementation of
Vietnam's regulations and policies affect them. The
discussion was frank and constructive, concentrating on
business, taxation, and residence issues. The foreigners'
responses highlighted three themes: namely, inconsistent
implementation of central government policies/regulations
across provincial sub-agencies, cumbersome administrative
procedures, and limited access to implementation guidelines
and regulations. FACNA appeared to take seriously the
recommendations made by foreign representatives. After FACNA
finishes gathering and analyzing data from survey
questionnaires and eight consultative group meetings, it
will submit a final report to the National Assembly in late
October. END SUMMARY.

Immigration and Residence Formalities
--------------


2. (U) The foreign reps characterized Vietnam's
immigration
and residence procedures as somewhat difficult, its handling
of immigration formalities as average, and its residence
permit process as problematic. Foreign reps recommended
that the Government of Vietnam (GVN) adopt best practices
from Hong Kong, Thailand and Singapore: namely, a multi-
year visa, permanent residence status for investors and a
central website for all immigration issues.



Business Issues
--------------


3. (U) The majority of participants characterized
Vietnam's business
environment as average overall; its business procedures as
cumbersome, its legal framework as below average, its tax
incentives as good, and its judicial practices as
unreliable.


4. (U) Investment Procedures: Many foreign reps said there
were excessive administrative procedures, which often caused
complications when unified actions by different ministries,
industries and provinces were required. Some businesses
experienced prolonged appraisals for their investments and
had to liaise with central and local authorities directly to
fulfill their investment obligations.


5. (U) Customs Procedures: Some complained about
inconsistent implementation of Customs procedures at the
local level. Shipments upon entry into Vietnam, they said,
experienced a high degree of inspections and requests for
additional information. Importers eager to comply with
documentary requirements or wanting to appeal officials'
decisions found it difficult to obtain clear written
procedures from local Customs on the process.


6. (U) Bankruptcy, Litigation, and Company Searches: Other
participants cited problems with the lack of procedure for
accessing information on corporations and state-owned
enterprises. When performing due diligence checks, some law
firm reps said there was no formal process to do bankruptcy,
litigation, and company searches at the People's Court or
the Department of Planning and Investment. Working level
civil servants there are still unable to provide clear
written instructions on such procedures, they said.


7. (U) Recommendations: Foreign reps suggested the GVN
issue policy implementation guidelines at Customs, the
courts, and DPI at the local level. Participants also
recommended that the GVN rationalize and streamline
administrative procedures for investment licenses and
appraisals. The foreign reps suggested that the GVN
consider technical assistance training to improve its
customs system and procedures.

Taxation
--------------


8. (U) In contrast to satisfaction with tax incentives
offered investors, most participants described the GVN's tax
procedures as
complicated and implementation as slow and often
inconsistent. Many noted that Vietnam's tax regime was more
burdensome across the board than those of other ASEAN
countries. Corporate tax, VAT and special consumption tax
rates in Vietnam were comparably higher. Foreign reps
recommended that the GVN look to Hong Kong, Singapore and
Thailand as possible models.

Comment
--------------


9. (U): The comments and suggestions made by
the foreign representatives were well-received by FACNA. It
was evident that GVN policymakers are keen on monitoring
progress and making adjustments to suit foreigners operating
in Vietnam, as they pursue greater economic integration and
more FDI. The consultative group meeting yielded three
themes for the GVN's policymakers to address: (i) streamline
administrative barriers, (ii) ensure consistent
implementation of policies across provincial sub-agencies,
and (iii) improve access to policy implementation guidelines
at the local level. END COMMENT.

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