Car tax in post office

Prof. Dr. Andreas Stoffers – Country director, Vietnam The Friedrich Naumann Foundation for Freedom

The United Kingdom is an important trading partner of Vietnam. In 2020, trade turnover between the two countries amounted to $6.6 billion. With $5.8 billion in exports, Vietnam’s trade balance was clearly positive, which also underlines the country’s strong interest in reaching an amicable agreement with the UK. In recent years, despite the uncertainties associated with Brexit, the growth of trade relations has been unbroken, averaging 12.1 per cent per annum in 2011-2019.

The trade relations between the EU and Vietnam are naturally greater given the fact that the EU is the world’s largest market. In 2019, the EU was the second-most important overseas market for Vietnamese products with a total trade volume of $56.45 billion, of which Vietnam’s exports accounted for two-thirds ($41.55 billion). This is 16 per cent of the country’s total export volume. In 2020, exports to the EU increased to $34.8 billion, and imports to $14.5 billion.

Vietnam benefits significantly more from bilateral economic relations than the EU. The continuous surplus Vietnam enjoys in its bilateral trade relations with the EU has been instrumental in offsetting Vietnam’s huge trade deficits with China and South Korea.

Vietnam exports mainly electronics, footwear, clothing and textiles, coffee, seafood, and furniture. The most important goods of EU exports to Vietnam are high-tech products including boilers, machinery and mechanical products, electrical machinery and equipment, pharmaceuticals, and a very limited number of motor vehicles. The EVFTA opens many opportunities for producers and traders on both sides, including small- and medium-sized enterprises.

The EVFTA is of course one of the most modern and far-reaching agreements of its kind. It plays an important role in promoting trade liberalisation between Vietnam and the EU.

Combined with the new Law on Investment which entered into force on January 1, and the other FTAs concluded by Vietnam, the Southeast Asian country has set an important course to improve its position as a trading partner and investment destination. From Vietnam’s perspective, the UKVFTA goes in the same direction.

The UK, looking to strike deals in the aftermath of Brexit, used the EVFTA as a template for a Vietnam deal, photo Le Toan

Differences and similarities

“Recognising their longstanding and strong partnership based on common principles and values, and their important economic, trade and investment relationship”. This formula replaces the preamble of the EVFTA in the UKVFTA. If one reads both agreements in parallel, one notices the large overlaps, not only at the beginning, where only some words are replaced by others.

In fact, there are so many similarities between the two FTAs that it is fair to call the UKVFTA a clone of the EVFTA. However, there are some small but subtle differences.

In 14 sectors of the agreement, the UK allows Vietnam to export at zero tax with a certain quota: egg yolks and poultry, garlic, sweetcorn, milled rice, milled rice, tapioca starch, tuna, surimi, sugar and products high in sugar, mushrooms, ethanol, mannitol, sorbitol, Dextrin, and other modified starches.

In the area of banking services, Vietnam agreed to favourably allow UK credit institutions to increase their foreign holdings to 49 per cent of their charter capital in a Vietnamese joint stock commercial bank. Similar to the EVFTA framework, this commitment is only valid for five years (after that, Vietnam will not be bound by this commitment) and not applicable to the four joint stock commercial banks with a dominant government share, BIDV, VietinBank, Vietcombank, and Agribank.

In addition, the implementation of this commitment will be required to fully comply with regulations on procedures for mergers and acquisitions as well as safety and competition conditions, including the applicable shareholding limit. Vietnam allows the EU to raise 49 per cent in two banks while allowing the UK for the equal or even higher treatment of a bank (mostly HSBC and Standard Chartered) to raise their holding to the ceiling.

Within the EVFTA, one of the signing parties may grant subsidies when they are necessary to achieve a public policy objective. The parties acknowledge that certain subsidies have the potential to distort the proper functioning of markets and undermine the benefits of trade liberalisation. In principle, a party should not grant subsidies to enterprises providing goods or services if they negatively affect, or are likely to affect, competition and trade.

As far as the UKVFTA is concerned, the policy is less tolerant. “In principle, a party should not grant subsidies to enterprises providing goods or services if they significantly negatively affect or are likely to significantly negatively affect trade between the two parties.”

In several areas, the EVFTA is more specific than the UKVFTA. There are for instance some notes on fruit and vegetables in accordance with the Common Customs Tariff provided for in Commission Implementing Regulations and successor acts, laying down detailed rules.

Binding Vietnam into more specific rules is a wise strategy to make sure products are high quality and stops sub-standard products entering difficult UK markets.

Global Britain

Following the UK’s decision to leave the EU, the UK faces many challenges. A key one was how to manage trade relations with countries that had previously benefited from the EU’s trade agreements. As a huge trading bloc encompassing 27 European nations the EU is, in terms of trade policy, a power factor that can forcefully assert its interests.

Of course, a medium-sized single country like the UK does not have this power. Therefore, concessions have to be made that a giant like the EU does not have to make. However, the sheer size of the EU means that the individual and sometimes conflicting interests of the individual member states have to be taken into account. As a result, decision-making processes sometimes remain protracted, as can be seen in the decade-long negotiations on the EVFTA.

Accordingly, Great Britain has the advantage of being very agile. This means that FTAs can be launched much more quickly. This is especially true if no major concessions are expected on the part of the contracting partner. In addition, existing agreements – such as the very comprehensive and modern EVFTA – can be used as a model.

“Global Britain” is the British government’s leitmotif for its post-Brexit foreign policy. It was used by Theresa May in her first major speech as prime minister at her party’s conference. It signals that the country would not be inward-looking after Brexit, but on the contrary would have a global perspective that goes beyond Europe.

As stated in the joint agreement between the UK and Vietnam in last December, the UKVFTA is “also a key step towards the UK joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership”. Therefore, the UKVFTA is only one, but an essential building block of the post-Brexit UK’s liberal trade policy. Many more agreements will follow.

In order to reposition Vietnam after the COVID-19 crisis, both the EVFTA and the UKVFTA are an important element on the road to economic recovery. After the pandemic has started to shake the world’s economy, Vietnam has used the time well.

In addition to these two FTAs, there are many other steps to take, above all the new investment law, which helps Vietnam to emerge stronger from the crisis. Vietnam’s goal in repositioning its economy is not reaching a “V-shaped” curve of improvement, as so many other nations hope; rather, it lies in a “square-root recovery” where the pre-crisis level is not only to be reached, but clearly surpassed in order to continue growing at a higher level.

The efforts of the Southeast Asian nation will be crowned with success, and most analysts are bullish about Vietnam’s prospects. The EVFTA and the UKVFTA stand for the open and liberal politics of Vietnam, and they will make Vietnam – especially in conjunction with the new investment law and EU-Vietnam Investment Protection Agreement – more attractive for foreign investors.

On behalf of the real estate enterprises, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HOREA), said that compared to the previous year, there was an additional petition of Gamuda Land Joint Stock Company. The petition states that while waiting for the Prime Minister to decide on a VND514-billion deduction following the recommendations of the Government Inspectorate, over the past time, construction investment and business activities of the company have been stagnant, affecting the reputation and brand of this company in 10 years of operation in Vietnam.

As for the matter of social housing, Mr. Le Huu Nghia, CEO of real estate developer Le Thanh, said that they were considering whether to develop social housing again. Because of too many difficult procedures, many people advised him to play safe by switching to develop commercial real estate. At the Le Thanh Tan Kien social housing project in Binh Chanh District, although the HCMC People’s Committee had directly instructed to remove obstacles, after three years of implementing the project, now it backs to square one.

Although the regulation for the processing time of the application by authorities is 215 days, in fact, the processing of the application can take a lot longer than that because the application must be transferred between departments and districts. Even a document from the urban management office to the district People’s Committee takes several months. Moreover, although the social housing projects are invested by enterprises from start to finish, they are audited as projects using capital from the State budget. Meanwhile, the auditors are too strict. They slap them with high fines on petty mistakes, discouraging investors, Mr. Le Huu Nghia explained.

Le Thanh Company is one of 20 enterprises that have petitioned the city through the summary of HOREA. This list shows that many petitions had been raised by investors at meetings with the city leaders in the past years, but they kept repeating because they were not resolved, or resolved sluggishly.

For Novaland Group Corporation, out of a total of 14 problematic projects, only 4 projects were solved. Seven projects that have handed over houses to customers in Phu Nhuan District and have been facing obstacles in the past years, merely stay at the stage of “being actively considered and settled by the Department of Natural Resources and Environment and relevant departments”.

Entanglements at the Dragon City project in Nha Be District of Phu Long Real Estate Company have lasted for 16 years. In 2004, the company won the auction of 14 land plots with a total area of 44.49 hectares, which are clean land. The investor has fulfilled all financial obligations as prescribed, at the same time embarked on implementing the housing project as planned. However, one subdivision of the project still has a house that refuses to move, causing the company to be unable to deploy the rest of the project. Although the company has sent many petitions to the People’s Committee of HCMC, the People’s Committee of Nha Be District, and relevant authorities over the past years, so far, there has been no progress in compensation settlement.

The HOREA raised a hot issue that although the project does not include public land, the Department of Planning and Investment still requests the investor to supplement the documents many times. Up to now, the department has not submitted to the municipal People’s Committee for issuance of the decision on investment policy for the project, causing enterprises to face many difficulties. The representative of the Department of Planning and Investment explained in writing as follows: In the process of handling documents, the department does not require investors to amend and/or supplement their documents many times. However, in the case that after consulting the departments, if there is a request, the department will ask the investor for additional documents following the opinion of these agencies. The Department of Planning and Investment also suggests that in the future, if there is an unreasonable request for additional documents many times by the Department, the HOREA should inform the department so that it can respond promptly.

So for public land, which are roads, trails, canals scattered and interlaced in the projects, how will it be handled? The representative of the Department of Planning and Investment answered that the department can only review and process dossiers for investment policy approval after the Department of Natural Resources and Environment submits to the City People’s Committee to handle the issues related to the receiving of transfer, capital contribution, renting agricultural land use rights to implement projects and small land parcel managed by the State.

HCMC People’s Committee Chairman Nguyen Thanh Phong asked relevant agencies to focus on solving difficulties and speeding up the progress of real estate projects because the implementation was extremely slow. This delay is due to the inspection and auditing work. The city had had to work a lot, with the Government Inspector alone inspecting 164 projects. When being inspected, the projects must halt, affecting greatly the operation of enterprises. Besides, there are some projects related to public land, the city also had to stop.

“I understand that currently, real estate businesses are facing many difficulties. It costs a lot if the project is behind schedule, so departments must understand and share this,” Mr. Nguyen Thanh Phong noted.

HCMC now has 13 million people. After five years, it will increase by 1 million people, so the pressure on technical and social infrastructure is tremendous. This is also a great potential for real estate enterprises. The real estate industry plays an important role and position and has a close relationship with many industries and many other markets, such as capital, labor, and construction materials. Since 2000, real estate is considered one of nine important service industry groups of HCMC. Up to now, out of 10,200 businesses with a capital of VND100 billion upwards, real estate enterprises account for 32 percent and 35 percent of the capital. Statistics also show that in the nine important service industries contributing 56.5 percent of the gross regional domestic product of HCMC, real estate accounts for 4.2 percent, contributing 8.2 percent to domestic revenue.

Mr. Nguyen Thanh Phong affirmed that removing difficulties for real estate is to remove difficulties for the economic development of the city. The city leader felt concerned after hearing that most real estate businesses have been encountering difficulties. He requested that based on the petitions of enterprises, Vice Chairman of the People’s Committee Le Hoa Binh should schedule to work with departments to resolve each issue and give specific conclusions. As for the 61 projects facing difficulties in investment procedures, the Director of the Department of Planning and Investment was assigned to study and report to the investment working group of the city. These works must be completed by April 15.

The Hanoitimes – The country has approximately nine million of people or around 9% population living in poverty.

Poor people are listed among priority groups in Vietnam’s vaccination against Covid-19, which is planned to take place in March.

People aged 65 and older are listed in priority groups for Covid vaccination in Vietnam. Photo: VGP

According to the United Nations, around 9% of Vietnam’s population or roughly nine million people living in poverty in 2019, a drastic reduction from 57% in 1990.

Factors that characterized the poor include large size of household, low education and skills, dependency on agriculture, remoteness in rural mountainous areas, lack of supporting infrastructure. The poor nowadays is also specifically associated with ethnic minorities in mountainous area rather than urban migrants.

Under the government’s resolution dated February 26, the poor and social beneficiaries belong to nine groups of people prioritized for the inoculation in the country of nearly 100 million population.

Other groups in the priority list include:

– Health workers and frontline forces (members of the steering committee for Covid prevention at all levels, people working in quarantine centers, contact tracers, volunteers, reporters, among others); army officers; policemen.

– Vietnamese diplomats abroad; customs and state officials working in immigration service.

– Essential providers in aviation, transportation, tourism, clean water, electricity, among others.

– Teachers and employees in education sector; people working in administration agencies having frequent contact with others.

– People with underlying diseases and those above 65 years of age.

– People in the pandemic-hit areas.

– The poor and social beneficiaries.

– People in overseas mission.

– And other people decided by the Ministry of Health basing on the requirements of the pandemic control.

People, who are subject to the first shots (the first phase) of the 117,000 doses, are health workers and frontline forces.

The first batch of vaccine arrived in Vietnam on February 24 from British–Swedish multinational pharmaceutical and biopharmaceutical company AstraZeneca.

Vietnam is under the fresh Covid-19 outbreak that resurged in late January, recording more than 800 locally-transmitted infections so far.

The Hanoitimes – The One Commune One Product (OCOP) program, which has been implemented since 2019, has created a breakthrough in rural economic development in Hanoi.

Permanent Deputy Chief of the Hanoi Office of New Rural Development Program Coordination Nguyen Van Chi talked to Hanoitimes about how to effectively implement the One Commune One Product (OCOP) program.

OCOP products on display at a promotion fair. Photo: Hoai Nam

Could you name some outstanding results from the implementation of the OCOP program in Hanoi?

Implementing the prime minister’s decision, the Hanoi People’s Committee immediately issued a concrete plan to roll out the OCOP program for the 2019 – 2020 period. In 2019, Hanoi had 301 OCOP products, including six products submitted for being labeled with five stars.

In 2020, despite the impact of the Covid-19 pandemic, localities have made great efforts to promote the program. So far this year, 147 products from five districts and towns have been evaluated and classified as OCOP ones.

For five-star products, Hanoi will support and submit them for evaluation and inclusion in the national OCOP list. In addition, the city maps out a policy of upgrading the rating of all OCOP products, those of three stars to four stars, and those of four stars to five stars.

In the process of implementing the OCOP program, what difficulties are entities in Hanoi facing?

In fact, the production scale of the facilities is still small. As products are mainly semi processed, we are building an investment project for deep processing to improve the quality of products. The local handicraft industry is causing strong environmental pollution, thus, Hanoi has requested departments, branches and localities to focus on environmental impact assessment to draw up solutions. Design and the quality of products also need to be improved in the coming time.

Design and the quality of products also need to be improved in the coming time.

What solution does Hanoi have to address the consumption of OCOP products?

In addition to consulting and assisting the businesses to improve the quality of products for evaluation at all levels, in the OCOP product development cycle, Hanoi has also focused on promoting sales. In 2020, Hanoi has issued a plan to organize four events to promote, introduce and sell OCOP products with provinces in the Northern mountainous, Red River Delta, Central – Central Highlands and Southern regions.

Due to the impact of Covid-19, the implementation progress has been slower than expected. However, we have managed to organize three events recently. The remaining event will be held in December 2020. Through the evaluation of the Vietnam Retailers Association, after three trade networking events, about 65% of the memoranda of understanding to sell OCOP products in distribution channels have been effectively implemented.

What are your suggestions to effectively implement the program?

We are aware of the importance of the quality management of OCOP products. The city has conducted four inspections and evaluations of those who have been granted OCOP product certificates. Any business that fail to comply with quality standards will see its certificate revoked. In fact, the implementation process in the past period shows that localities are very active in upgrading the quality of OCOP products. Entities are also aware of the importance of OCOP-labeled products. This will be the premise for Hanoi to complete the objective of the OCOP program to ensure the criteria of quantity and quality.

Thank you for the interview with Hanoitimes!