Why EVFTA’s Success Will Depend on Vietnam’s Administration Reforms
Overview of the EuroCham & ACAPR Special Dialogue: “Administrative Reform: A Key Role in EVFTA Implementation”
On June 30, the European Chamber of Commerce in Vietnam (EuroCham) and the Prime Minister’s Advisory Council for Administrative Procedure Reform (ACAPR) co-organized a special dialogue in Hanoi, titled “Administrative Reform: A Key Role in EVFTA Implementation”, discussing this key issue to unlock the full potential of the European Union Vietnam Free Trade Agreement (EVFTA), set to take effect from August 1.
The event included special guest speaker H.E. Minister Mai Tien Dung, Chairman of the Office of the Government as well as several government officials, business leaders, investors, journalists, and members of the diplomatic corps.
At the event, EuroCham also launched the 12th edition of the EuroCham Whitebook, their flagship annual publication gathering the insights and concerns of European business, represented by 17 sector committees. The Whitebook also includes their recommendations to help improve the trade and investment environment in Vietnam.
The event’s discussion highlighted existing obstacles in business as well as administrative procedures faced by European enterprises in three major fields: business environment, healthcare and sustainable development, and consumers’ choice.
There are some highlights regarding cross-sectoral business environment and sector-specific recommendations by the EU business community that may influence certain industries in the medium term.
Vietnam’s business environment
Visas and entry of foreigners
At the event, H.E. Minister Mai Tien Dung discussed the issue of foreigners’ entry to Vietnam, which is the top concern of many investors during this sensitive period. At the moment, Vietnam is only allowing foreign experts working on projects to enter the country, provided that they strictly follow quarantine measures. He expressed the government’s willingness when committing that any document requesting allowance for foreign investors’ and specialists’ entry sent to the Office shall be addressed within one working day.
Market Access
Speaking on behalf of EU businesses, the Legal Committee emphasized certain limitations of market access for foreign investors in Vietnam. Some barriers that were mentioned include the existence of over 200 conditional business sectors, wide-ranging foreign ownership caps, cumbersome and time-consuming merger control notification process, and so on.
It is known that recommendations by the EU business community have been taken into consideration by the Vietnamese government when the Law on Investment 2020 abolished 22 conditional business sectors and added more incentives for certain projects.
Work permits
The Legal Committee also expressed their concern on regulations regarding work permits for foreign workers in Vietnam. The draft Decree dated Aril 2020 stipulates a threshold of US$215,000 (VND 5 billion) of capital contribution for the owner or capital-contributing member of a limited liability company to be exempted from a work permit. EU businesses believe this high threshold may discourage foreign investors and recommended setting a lower value.
Responding to this suggestion, the Ministry of Labor, War Invalids and Social Affairs (MOLISA) urged EuroCham to offer a specific threshold so that they could evaluate the rationality of this level and lower the current one.
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This article is produced by Vietnam Briefing, a premium source of information for investors looking to set up and conduct business in Vietnam. The site is a publishing arm of Dezan Shira & Associates, a leading foreign investment consultancy in Asia with over 27 years of experience assisting businesses with market entry, site selection, legal, tax, accounting, HR and payroll services throughout the region.