Chapter 1: Doing Business In Vietnam - Market Challegens

•  The evolving nature of regulatory regimes and commercial law in Vietnam, combined with overlapping jurisdiction among Government ministries, often result in a lack of transparency, uniformity and consistency in Government policies and decisions on commercial projects.

•  While Vietnam’s anti-corruption law is considered amongst the best legal frameworks in Asia for anti-corruption, implementation remains problematic. Corruption and administrative red tape within the Government has been a vast challenge for Governmental consistency and productivity and for foreign company doing business in Vietnam. Vietnam ranks 116 (out of 177) on Transparency International’s
Corruption Perceptions Index (China 80, Malaysia 53, Indonesia 114, and Philippines 94).

•  Many firms operating in Vietnam, both foreign and domestic, found ineffective protection of intellectual property to be a significant challenge. Piracy rates for software are estimated to be 81 percent.

•  “Tied” official development assistance, in addition to corruption, continues to be a significant challenge for U.S. firms bidding on infrastructure projects. Some companies have successfully partnered with Japanese companies in order to be eligible to bid on Japanese ODA funded projects.

•  While Vietnam has reduced tariffs on many products in line with its WTO commitments, high tariffs on selected products remain. The U.S. industry has identified a range of products, which includes agricultural products, processed foods and nutritional supplements, which has significant export growth potential if Vietnam’s tariffs could be reduced further.

•  Investors often run into poorly developed infrastructure, high start-up costs, arcane land acquisition and transfer regulations and procedures, and a shortage of skilled personnel.

  •  Vietnam’s labor laws and implementation of those laws are not well developed international companies sometimes face difficulties with labor management issues.

•  Lack of financial transparency and poor corporate disclosure standards add to the challenges U.S. companies face in performing due diligence on potential partners and clients.