US embassy cable - 05HOCHIMINHCITY1105

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. 
 
WINNICK