Foreign businesses slow to start in Vietnam: World Bank

TN News

Email Print

It takes 12 procedures and 94 days to start a foreign business in Vietnam, slower than the average in the East Asia and Pacific region and the world, said a new report by the World Bank Group.

A foreign business needed an average of 68 and 42 days to establish in regional and global countries respectively, said the Investing Across Borders 2010 report, which offers objective data on laws and regulations affecting foreign direct investment that can be compared across 87 countries.

In addition, the bank said foreign businesses in Vietnam must apply for approval in the form of an investment certificate from the Ministry of Planning and Investment, which takes an average of 57 days to obtain in lieu of the business registration certificate required of domestic businesses.

The bank said procedures were more complex because a foreign business must translate the documents of its parent company into Vietnamese and then get a licensing authority or a notary public to certify them as a "true copy" in the country of origin.

They must legalize said documents with the embassy or consulate of the country of origin in Vietnam and with the Vietnamese Department of Foreign Affairs, said the report.

It also provides indicators examining sector-specific restrictions on foreign equity ownership, access to industrial land, and commercial arbitration regimes in the countries.

It said foreign businesses were offered with limits in strategic services sectors like fixed-line and wireless or mobile telecommunications, electricity transmission and distribution, and select transportation sectors.

In accordance with Vietnam's commitment to the World Trade Organization, foreign businesses were limited to provide capital amounting to 49 and 51 percent of the total investment in telecommunications infrastructure and services, according to the report.

It said the electricity transmission and distribution and media sectors operate under direct government control and are closed to foreign businesses while they can only provide a maximum share of 49 percent of capital in domestic and international air transportation industries.

The bank said foreign businesses were able to access industrial land and lease it for 50 to 70 years from developers of industrial zones or the state with land clearance processes taking from a few months to several years.

Time taken to lease private land was about 120 days in Vietnam compared to 66 or 61 days average in the region and around the globe, said the bank, adding that it did not take as long to lease public land in Vietnam (133 days) compared with the region (151 days) and the world (140 days).

It said courts do not enforce arbitration awards as guidelines issued by the government for Ordinance on Commercial Arbitration have contradictory provisions, making the arbitration regime less effective in Vietnam.

Foreign awards were enforced in court and the process would take between 13 to 17 weeks, said the bank in the report.

It said the report does not measure all aspects of the business environment that matter to investors. For example, it does not measure security, macroeconomic stability, market size and potential, corruption, skill level, or the quality of infrastructure.

However, the indicators provide a starting point for governments wanting to improve their global investment competitiveness, said the bank.

More Business News