Foreign firms in Vietnam complain about deteriorating business climate, consider quitting

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The head of the Foreign Investment Agency, Do Nhat Hoang (first R) speaks with some foreign investors at the conference

Many foreign firms plan to pull out or scale down business in Vietnam and go to other countries with better business environments, the Foreign Business Association said. 

News website Thoi Bao Kinh Te Saigon (Saigon Economic Times) reported the association and investors as telling Ho Chi Minh City leaders at an investment conference on August 30 that too many changes in regulations cause difficulties for them.

Paik In Ki, CEO of Korean company Woojin Vina and head of business support department at the Korean Chamber of Commerce in Vietnam, said businesses were hit this year when the minimum wage was suddenly raised and labor laws were amended.

New environmental regulations have forced many to call off new projects or scale back operations, he said.

Deputy chairwoman of the European Chamber of Commerce in Vietnam (EuroCham), Nicola Connolly, said 20 percent of European firms have considered shifting to other Southeast Asian countries while 45 said other Southeast Asian markets are better business destinations than Vietnam.

They are disappointed with the business environment and are aware of the growing competitiveness of other markets in the region, she said.

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Two regulations limiting overtime working hours and increasing the minimum wage in the amendments to the Labor Code are causing the biggest worry for foreign companies.

Employees can no longer work more than 200 hours overtime per year, and, in exceptional circumstances, no more than 300 hours.

Connolly said this rule is inappropriate for firms in sectors like textile and footwear that carry out work on customers' orders.

They need workers to work extra to execute orders.

Other countries in the region like Thailand, Singapore, and Malaysia allow 900 hours a year or even more, and Vietnam should reconsider the rule, she said.

Mark Gillin, chairman of the American Chamber of Commerce in Vietnam (AmCham(, said investors hope they are allowed to discuss or at least prepare for the new laws before they take effect.

Kimio Yamaguchi, chairman of the Japanese Business Association in HCMC and CEO of Sojitz Vietnam Ltd., Co., said Vietnam's investment climate does not meet the expectation of Japanese firms.

Many of them still complain about the difficulties they have to face when doing business in Vietnam such as the poor logistics and transport facilities, lack of traffic safety, and tortuous customs and tax procedures, he said.

Herb Cochran, AmCham's executive director, said Vietnam should improve its investment environment and authorities should not cause trouble for foreign investors but instead help them pay taxes and complete licensing formalities more easily.

Le Net, a local lawyer, agreed that the country's investment procedures cause many difficulties for companies.

An official from the city Department of Planning and Investment said to get a license a project has to go through different levels of authorities, which results in contrasting opinions and causes difficulties for investors.

Deputy chairman of the HCMC People's Committee, Le Manh Ha, and head of the Foreign Investment Agency, Do Nhat Hoang, promised to apprise the government about all the difficulties mentioned at the meeting.

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