[vnforum] State urged to support private enterprise

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State urged to support private enterprise
(VNS)- Viet Nam's private sector requires more State support in defining
its role Hoang Minh Ha, of the Ho Chi Minh Social Scientific Institute,
assessed the situation and proposed solutions in an article for Tien
Phong Chu Nhat (Sunday Pioneer).

The private sector is very sensitive, both to changes in the market and
the needs of society. Privately-owned businesses will be of great
assistance in mobilising capital and labour for the cause of national
construction. The sector has already contributed to reducing the
unemployment rate without State investment.

But the sector hasn't developed to its full potential, because of
difficulties which are largely beyond its control.

Viet Nam's business environment has been vastly improved. Private firms
are now licensed to export some of the goods which only the State sector
could previously export. Administrative procedures have been made far
easier, particularly as 84 different kinds of licenses have been
abolished.

But a small number of authorities have yet to move beyond the
discrimination against private firms which was widespread during the
period of State subsidization. This is the main impediment to the
private sector.

As Prime Minister Phan Van Khai has said, "The State hasn't created
favourable conditions for people to invest capital in running
businesses. A country whose people aren't assured that the money they
spend on developing their businesses is safe, will never become rich."

To encourage the private sector, all remaining discrimination among
economic sectors must be removed. It is also imperative to establish a
transparent, strong and equitable legal system.

The current legal environment is so subject to change that private
enterprises are never sure whether their operations are in accordance
with the law. This, unfortunately, creates opportunities for some State
cadres to make trouble.

The State should implement regulations which will support private
enterprises in finance, trade and market information.

A shortage of investment capital is a constant problem for both
State-owned enterprises and privately-owned firms.

Paradoxically, banks are now facing a fall-off in the volume of deposits
on hand while private enterprises are thirsty for capital.

Though the State allows private enterprises to borrow from the Fund for
Investment and Development, qualifying for funds is complicated and
time-
consuming.

Recently the State has allowed enterprises to borrow money from banks
without mortgages, under certain conditions. But red tape is still a
huge problem.

A lack of experience and business tradition is a great obstacle to the
sector. Private enterprises may be overly cautious in investing money in
their businesses and some enterprises may try to find loophole in the
law to get at additional illegal profit.

To solve this problem, the State must create real favourable conditions
for both private and State-owned enterprises. Particular attention must
be paid to enterprise law and its implementation.

But many owners of private enterprises have continued to improve their
credit, the quality and morals of their businesses, and learn more about
the law.

The last major problem faced by private enterprises is the paucity of
business information.

Experts who have studied the Vietnamese economy say that information is
often poor and inaccurate. There are always marked differences in
statistical figures provided by various offices from year to year. This
fact leaves many investors confused.

About 30 per cent of enterprises have Internet access but use the
service
mainly for e-mail. They are unaccustomed to the advantages of online
trading, which has taken off in much of the world and holds much
promise.

There are limits on the high-speed transfer of information because
computing standards in Viet Nam are poor and telecommunications fees are
far higher than in other countries

The State needs to create a competitive environment in
telecommunications,
aiming for a reasonable price and supporting policies to provide
economic
information on the Internet.

These are pressing issues which must be addressed to create conditions
for the private sector's healthy and stable development. It is critical
that the private and State owned sectors prepare the nation to integrate
into the regional and global economy in the 21st Century.

Thursday, October 12, 2000

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