Private businesses complain about discriminatory treatment

Private enterprises seem to be at a disadvantage compared with foreign invested enterprises (FIEs) on the home playfield.

For the last many years, FIEs in Vietnam have been raising their voice asking for a leveling competition environment, where they can join a fair competition with domestic enterprises.

However, experts have pointed out that in fact, domestic enterprises have been at a disadvantage compared with FIEs.

Last month, when receiving the notice about the land leasing fee adjustment, General Director of the Hai Phong-based Hong An Equipment Company started in surprise when realizing that the leasing fee has increased by 18 times.

The land rental increases have become a headache of thousands of Vietnamese enterprises. However, the noteworthy thing is that while Vietnamese enterprises, especially private run businesses, are facing big difficulties with the new policy, FIEs remain unruffled, because the land rental they have to pay were fixed before at the time of licensing already.

The director of the Hai Phong-based company cited the LS Electric Cable Joint Venture, located near his company in Hai Phong, to say about the discriminatory treatment. While LS only has to pay 1.6 dollars per square meter a year within 50 years, the land leasing fee Hong An has to pay in accordance with the new policy is higher by 215 percent.

In principle, the land leasing fee could be adjusted annually, which means the total fee Hong An has to pay would increase year after year. As such, the gap between the land leasing fee Hong An and LS have to pay would be widened.

“We support the government initiated policy on raising the land leasing fee. However, the increases need to be implemented in accordance with a well designed plan, and there must be the equality among enterprises,” the director said.

According to Thoi bao Kinh te Vietnam, even without the new policy on land leasing fee increases, domestic enterprises have been bearing many disadvantages in comparison with FIEs already.

For example, the current policies allow FIEs to pay land rental once for the whole lifetime of projects, or pay annually. In case they pay money at once, they will enjoy some preferences.

Meanwhile, domestic enterprises have only one choice of paying land rental annually, which means that they do not have the chance to enjoy preferences. Especially, they will be at a disadvantage if the land leasing fee increases.

The representative of the Kinh Bac Urban Area Development Corporation, the developer of the Que Vo Industrial Zone in Bac Ninh province, said that in fact, the problem has been realized by state management agencies. However, he still cannot understand why the problem has not been fixed yet.

The disadvantages of private enterprises in comparison with FIEs have been recognized by international institutions.

A recent survey conducted by UNDP (the United Nation’s Development Program) in Vietnam shows that Vietnamese enterprises, especially private businesses, should be considered as the backbone of the national economy, and that there should be the fairness and balance in the viewpoint regarding the domestic investment encouragement and foreign investment attraction.

The experts from UNDP believe that FIEs seem to have gained more preferences and they have been put on the higher priority levels in the investment policies in comparison with domestic businesses.

If domestic enterprises can operate in a good environment and can be driven to the right track of development, they will make the most important contribution to the building of the national competitiveness.

A survey conducted within the frame of the project on improving Vietnamese competitiveness (VNCI) shows that 50 percent of Vietnamese enterprises believe that FIEs get more incentives than domestic ones.

Tags: Vietnam companies, Vietnam enterprises, Vietnam SMEs