Problems relating to Trade and Investment on Vietnam

26. Others
Issue	Issue details	Requests	Reference

(1) Inadequate Transportation Infrastructure	- Development on the road from industrial zone to harbour/airport has made a fair progress. On the other hand, traffic congestions have grown to the extreme in the metropolitan areas. As alternative means of transport, development and overhaul of railways are keenly awaited. - Subsequent to the CEPT tariff repeal in 2018, there will be increased import of finished cars from Asia pacific countries, filling up the capacity of Cai Lan port (current unloading port). It is time to consider whether to stay with the current Cai Lan port or to move to another port. On the other hand, the construction project is underway for Lach Huyen international gateway port (LHIGP) in Hai Phuong District, being inclusive of development in the adjoining areas of the Hanoi<=> Hai Huong express way. Including the accessibility to TMV, LHIGP is a strong candidate site for move of MFS operation. However, LHIGP being exclusive for container vessels, MFS desirous of activating RORO (roll on/roll off) vessels has a unique problem in mapping out its future plan.	- One-step further development is imperative on railways leading to the Harbours. - Development on metropolitan railways required for relaxing traffic jam in metropolitan areas. - It is requested that GOV reviews the operation of LHIGP, including its acceptance of the RORO operation.	- Construction Project for Lach Huyen International Gateway Port (Since May 2013-)
	(Action) - On 24 September 2009, the Governments of the 4-countries, Vietnam, Thai, Cambodia and Laos signed "the Memorandum of Understanding (MOU) on Compulsory Cross-Border Motor Insurance Co-operation" based on which drivers crossing the national borders of these countries can be covered with Compulsory Cross-Border Motor Insurance. - On 18 March 2010, Ho Chi Minh City People's Committee (comprising of 13 directors of the City) promulgated Decision No. 15/2010/QD-UBND), prescribing incentive measures to promote investment into overland traffic for road transport (enforced from 28 March 2010). Investors satisfying the requirements under Decision No. 15 are entitled to receive various preferential measures under Investment Related Laws, Investment Certificate that guarantees financing during the investment project, and exemption of additional charges for change of land utility and compensation for compulsory land purchase. - On 19 June 2010, National Assembly voted against the Government Bill on "North-South Express Railway" based on the Shinkansen Technology with the majority voting. - In August 2012, the construction work began on Ho Chi Minh Railway Metro No.1, due for completion by 2018. - In July 2014, construction of expressway got under way between Ben Luc, Long An Province and Long Thanh, Dong Nai Province.
	(Improvement) - In June 2012, the New Express way was opened. It spans 56-kilometres between Cau Gie in Hanoi City (on National Route 1A) and Ninh Binh (on National Route 10), substantially cutting down the transport time. - In January 2014, expressway between Ho Chi Minh and Long Thanh was opened to traffic.

(2) Inadequate Power Infrastructure	- Delayed Notice of planned power outages for maintenance, construction, etc. from time to time disrupts production. While planned outages have dropped in frequency in northern part of Vietnam, momentary blackouts occur from time to time. - During 2014, due to the drop in the power demand from economic depression, no planned power outage occurred. However, the tight balance continues between the demand and supply.	- It is requested that operators in Vietnam will develop power distribution network for securing stable power supply under systematic construction schedule, and give ample lead-time in the advance notice of construction and/or planned power outages. - It is requested that power suppliers will expedite strengthening power generation capacity corresponding to the demand.
	(Action) - On 29 June 2011, Prime Minister Nguyen Tan Dung promulgated Decision No.37 On Development and Promotion of Wind Power Generation (entered into force on 20 August 2011). Investors into Wind Power Generation will receive Preferential Measures on Import Tariff, Corporate Income Tax, Land Cost, Land Utility Fees, and Financing. Operators are exempted of Import Tariffs for goods, materials and domestically unavailable semi-finished goods, which are imported for construction of the fixed property. Operators will also receive like preferential measures under Investment Act, Corporate Income Tax (CIT) Act and their respectively detailed implementing regulations for CIT, Land Cost, and Land Utility Fees for the Project in the Specially Encouraged Sector. - Power Master Plan VII came into force in 2011 envisages the target power charge of 8-9 cents per kWh to ensure a stable power supply over a long-term. - On 22 December 2012, Ministry of Industry and Trade (MOIT) raised the power charge by 5%. - On 1 August 2013, MOIT raised the power charge by 5%, to bring the power charge to 1,508.85/VND (about 6.9 yen) per kWh.

(3) Shortage of Supporting Industry	- Member firm's subsidiary (MFS), being anxious to improve cost competitiveness, has sought local procurement of parts, moulds, jigs and processing, finds fostering and developing of the downstream industries (Dis) lag behind. While a number of ministries and agencies/organisations grapple with the growth and development of Dis, it seems they do so without initiatives.	- It is requested that GOV extends its support to entrepreneurial investment for starting the company, and for inviting experts from overseas.
	(Action) - Numerous construction works are underway for rental or apartment-type factories addressed to the needs of Small and Medium Enterprises (SMEs). - In March 2014, the joint Communique released during the visit to Japan of the President Truong Tan Sang of Vietnam confirms Japan's continued cooperation for development of the downstream industries in Vietnam. - In July 2014, Hochi Minh City Export Processing and Industrial Zones Authority (HEPZA) established "Japan-Vietnam Support Industry Forum" to develop the downstream industry in South Vietnam. - On 3 November 2015, GOV promulgated Decree No. 111/2015/ND-CP of November 3, 2015, on Development of Supporting Industries, enforced from 1 January 2016. "Priority Development Industry Product List" divided into 6-Sectors, lists Specific Product Names: "Textile/Clothing", "Leather/Shoes", "Electronics", "Car Manufacture/Assembly Industry", "Machine Manufacture Sector", and "Industrial Products Supporting High-Tech Industry". It incorporates GOV's Support Policy on Research & Development, Application/Technology Transfer, Human Resources Development, Market Development, and SMEs' Support Policy.
	(Improvement) - On 4 July 2011, MOF promulgated Circular No. 96/2011/TT-BTC to implement Decision No. 12/2011/QD-TTg of February 24, 2011, on policies on development of a number of supporting industries of manufacturing mechanical engineering, electronics-informatics, manufacture and assembly of automobiles, textile and garment, leather-footwear and hi-tech industry development (entered into force on 18 August 2011). This Circular exempts import tariff on (1) Specified equipment and machinery, (2) Domestically unavailable raw materials and supplies which are imported for software production, and (3) Goods imported for scientific research and technological development (machinery, equipment, spare parts, supplies and means of transport, scientific documents, etc. Furthermore, Projects to manufacture supporting industry products for hi-tech industry development are eligible for Corporate Income Tax Rates and Tax Exemption or Reduction under Corporate Income Tax Act. This Circular also stipulates financial assistance policies, VAT refund, exemption of tax land, etc., according to regulations on development support for small-and medium-sized enterprises.

(4) Improvement of Living Conditions in the Industrial Park to Attract the Needed Workforce

- A comfortable living environment hardly exists to attract workforce into industrial parks, located in the outskirts of the metropolitan area: roads, public transportation, educational facilities, hospitals, shopping centers, amusement facilities, etc.

- It is requested that GOV systematically develops these facilities as an attractive foothold for the workforce.

(5) Non/Delayed Payments

- MFS, having experienced nonpayment/delayed payment of accounts receivables, due in part to differences in traditions in commerce, business ethics, balance of power, etc., has switched to advance payment in its terms of sale. However, on products with short life expectancy cycles (such as manufacturing equipment for smartphone parts), the delivery terms and the prices claim the top priority, so that even if collection is completed successfully, the delay in payment severely affects the profitability of the MFS operation.

- It is requested that GOI:
-- extends its helping hands to the less powerful SMEs by provision of information, and
-- facilitates collection of accounts receivables.

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