Business Beat
The fire that killed 61 people at HCMCity’s International Trade Centre last week left many unsettling lessons for business owners, fire-fighters and urban planners. Almost none of the small traders renting space in the centre had fire or theft insurance. It is not clear whether the fire has brought home the shattering reality to businesses that they can no longer afford not to buy insurance.The fire also served as a warning to other old buildings without adequate fire prevention facilities. Many buildings were constructed for purposes other than the apartments, offices or trading centres they now house. Because of the change in function, many are not properly equipped for fire prevention - escape routes are often blocked by motorcycle parking lots.
Many people have been thinking that if fire fighters had simple tools like long ladders or air mattresses, they would not have had to watch helplessly as people trapped on the top floor were forced to jump. It is a real consolation to watch the television footage and see the efforts of common people, including some foreigners, trying their best to save lives using anything they could lay their hands on.
***
To stop value-added tax frauds, the Government has decided that tax refunds will only be made to transactions where payment are settled through banks. That’s fair enough and the Ministry of Finance even asked the State Bank to provide a clear-cut definition of "payments through banks". But the definition has not been announced, forcing people to sit on their claims.
The definition is not necessary in many cases, but in border-trade, real life situations sometimes make it hard for tax officials to decide whether refunds are legally acceptable or not. Buyers from China, for example, pay in cash and deposit the money in sellers’ accounts. Buyers from Hong Kong pay sellers from their accounts in Viet Nam in local currency. Do these cases meet the requirement of settling payments through banks?
Nobody can say for certain and in a situation of ambiguity, tax officials will play it safe and refuse refunds. Without a clear-cut definition, tax frauds might surface again when buyers and sellers collude to create bogus settlement of payments through banks.
***
Viet Nam has expressed a clear intention to exclude motorcycles from the list of commodities which will have import tax cut under ASEAN Free Trade Area AFTA commitments. The AFTA commitment will apply to motorcycle components starting from 2006. At the same time, the Government has decided that from next year the importation of assembled motorcycles and engines will be subject to at least 100 per cent tax. Import tax on other components will remain the same. Foreign-invested motorcycle manufacturers have been given assurances they will be able to import as many components as stated in their investment licences.
Meanwhile, no final decision has been reached on measures to limit the number of motorcycles, although everybody agrees something has to be done to stop the lethal traffic accidents and bottlenecks. Some suggestions include limiting motorbike use to every second day, based on number plates ending with an odd or even number, or raising motorcycle registration fees to VND4 million a year. Another proposal suggests prospective car buyers register one year before they buy, and only after they provide proof they have their own garage. Perhaps, the good thing to come out of these discussions is a sense of awareness that motorcycle users have to start thinking of alternative means of transport.
***
HCM City authorities realise they are going to miss this year’s foreign investment target. They wanted to get US$1 billion in new investments but so far pledges have only reached $300 million. Unlike the heyday of the mid-90s when they waited for investors to come, HCM City sent one delegation after another to target markets to entice investors. It’s not clear if these trade missions reaped any tangible results, but at least it forced the authorities to clean up the business environment for those investors already here. Communication channels have been set up so investors can exchange their daily woes with city officials. But according to investors, what they need is simply consistency of policy. In the mid-90s, barriers were hastily set up and changes in regulations were introduced which discouraged long-term investment. Investors will return if they are assured of no sudden policy changes and new investors will come if they find what they are looking for. The mentality of authorities has been to look for investment that suits their overall planning and projects. Let investors identify business opportunities and leave city officials to create the best environment and additional incentives for priority sectors.
VNS
