Vietnam’s failed efforts to cut red tape have stifled its business climate and economic growth, experts said during a recent conference.
The conference was held Wednesday in Hanoi by the Ministry of Planning and Investment and the Central Institute for Economic Management (CIEM).
Nguyen Dinh Cung, acting director of CIEM, pointed out that Vietnam ranked 99th out of 185 countries and territories on the World Bank’s 2013 business environment index.
Vietnam has remained at the same level for many years, while many other countries have successfully reformed their business environment, he said.
The economist also cited a US study as saying that if Vietnam were able to reduce its custom clearance time on exports from 22 days to 15 days, its gross domestic product (GDP) would increase by US$11 billion, and if time of import clearance were decreased by seven days, GDP would go up by some $15 billion.
Phan Vinh Quang, an expert with the US Agency for International Development, said Vietnam has made progress on reforming its tax procedures in recent years, but it still has a long way to go in order to match some Southeast Asian countries like Malaysia and Thailand.
While Vietnam demands that businesses submit value-added tax payments every month, Thailand allows businesses to make one annual payment.
In Malaysia, businesses must fill out four forms to complete import procedures; Vietnam requires them to fill out eight.
Quang also quoted the World Bank’s 2014 report on business environment as saying that businesses in Vietnam have to declare and submit taxes 32 times a year. The procedures require an average of 872 hours to complete--or 100 working days.
Meanwhile, in other Asia-Pacific countries, tax paperwork take businesses an average of 208 hours a year to complete.
Quang claimed Vietnam's excessively detailed tax forms are responsible for the gap.
But Hoang Thi Lan Anh, deputy chief of the General Department of Taxation’s reformation division, said that they've come a long way in a few years.
Just a few years ago, businesses spent an average of 1,050 hours, annually, on paying their taxes.
Even still, she said, the current demands remain unsatisfying--even for the leaders of local tax agencies.
However, she also pointed out that the World Bank figure includes time spent paying all government fees (like social and health insurance)-- so in order to cut the time more, relevant agencies need to work together.
The tax department can't fix the problem alone, she said.
In the meantime, Cung of CIEM said what matters most is the ministries’ “determination” – the extent to which they truly want to reform – given that early this year the government already issued a resolution on improving Vietnam’s business climate.
The resolution laid out objectives to be achieved by the end of 2015, like reducing the average customs clearance time on exports to 14 days and imports 13 days, and the time spent on tax submissions down to 171 hours per year.
Any ministry that fails to meet these objectives must explain their failure and be held responsible for it, Cung said.
Quang suggested establishing panels to review all Vietnamese administrative procedures.
Nguyen Thi Cuc, chairwoman of the Vietnam Tax Consultants’ Association, said legal documents related to taxes lack consistency and transparency, leading to different interpretations even among tax agencies.
So, Vietnam should open more tax agents who can help businesses complete their payments without wasting time and money or exposing themselves to financial risks, Cuc said.
The government could do this by offering tax breaks to businesses that submit their taxes through agents.
She said only 700 businesses in Vietnam employ tax agents now, while in many other countries as many as 90 percent of businesses use them.
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