The Minister of Finance proposes 4 issues to reduce costs for businesses

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Reduction of administrative procedures and costs is the expectation of enterprises. Photo: H. Diu.

Speaking at the Government's regular meeting for June 2017 on 3rd July 2017, the Minister of Finance, Mr. Dinh Tien Dung said that in the first 6 months of 2017, the budget revenues were quite good, with an average of 13.69% compared to the same period. In particular, 16 key localities have achieved and exceeded progressive budget revenues. However, the problem of restructuring State-owned enterprises has been still slow and the target of 60,000 billion at the request of the National Assembly is still difficult.

Regarding the improvement of the investment environment, the Minister of Finance, Mr. Dinh Tien Dung said that the Ministry of Finance had issued a number of documents to speed up the reform of administrative procedures and accelerate the implementation of Resolution 19 on the improvement of the business environment with 47 task groups and 87 solutions.

Accordingly, in the first 6 months of 2017, the Ministry of Finance reviewed 270 administrative procedures. Accordingly, the Customs had 178 procedures, the Taxation had 28 procedures, the public had 56 procedures, removing some of the unnecessary procedures to achieve clearance time of 70 hours for imports and 90 hours for export. The National Single Window mechanism, trade facilitation, and information technology application have been promoted.

In particular, at the meeting, the leader of the Ministry of Finance submitted 4 recommendations to the Government to reduce costs for businesses.

Firstly, the tax policy has been continuously adjusted to decrease, faster than the strategy, which partly helps enterprises overcome difficulties, and ensures State budget revenues. Compared to other ASEAN countries, Vietnam is at a low level of income tax. However, the Minister of Finance, Mr. Dinh Tien Dung proposed for tax exemption and reduction, with careful solutions and consideration.

Secondly, as for the redundant contributions, enterprises must pay 23.5% of salary fund, with 21.5% paid for social insurance (17.5% for social insurance, 3% for health insurance, and 1% for unemployment insurance); and 2% for public fees. Accordingly, enterprises also have to pay 10.5% of salary fund for employees, including 8% for health insurance, 1.5% for health insurance and 1% for unemployment insurance.

The Minister of Finance said that this contribution was very high, relatively high compared to other countries in the region. Therefore, the reduction of the level of contribution should be calculated carefully to ensure the safety of funds, especially the social insurance fund.

The Government has recently agreed to reduce unemployment insurance from 1% to 0.5% by 31st December 2019. However, this level is still 2,550 billion vnd per year, equivalent to 13.7 million vnd per year per enterprise. Moreover, this policy is only for short-term, so in the long run, it will affect the financial plan of enterprises. Therefore, it is necessary to expand the coverage to reduce spending.

"As for trade union costs, there is a lot of work to be done to reduce this because a 2% premium is quite high", the Minister of Finance said.

According to Minister Dinh Tien Dung, the third issue is that the cost of businesses is now suffering from bank interest rates, mostly due to loans. Loan outstanding is about 1.6 million billion vnd, and the difference between deposit rates and lending interest rates are quite high from 3% to 5%.

"The banking system is earning about 200 trillion vnd a year from the economy, which is higher than the total corporate income tax paid to the State budget. Thus, the reduction of interest rates of 0.5-1% will have a big impact on businesses. Therefore, the banking sector must focus on accelerating the process of bad debts and healthy banking restructuring", the Minister of Finance said.

In addition, according to the Minister of Finance, enterprises also suffer from the costs related to administrative procedures such as taxes, Customs, and land. Therefore, the Minister affirmed that in the coming time, the Ministry of Finance would continue to accelerate the reform of tax and Customs procedures toward simplification and reduction of costs.

Finally, the Minister of Finance, Mr. Dinh Tien Dung recommended promoting public expenditure and public investment. There have been 4 of 24 programs to be approved by the Government, so there should be an acceleration of progress on the basis of the Prime Minister’s approval, and then the Ministry of Finance will allocate funds according to in line with estimates.

Moreover, according to the Minister of Finance, the total amount of investment capital under the balance of State budget, government bonds, other sources of capital and investment capital from 2016 reached 300,000 billion vnd. Thus, the Ministry of Finance will focus on solving all the issues, mobilize another 600,000 billion vnd or more, and there will be about 1 million billion vnd from investment capital to the promte economy.

Along with that, the Minister of Finance, Mr. Dinh Tien Dung recommended accelerating the divestment and equitization of State-owned enterprises, which was quite slow.

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"In the recent times, localities and ministries have been succeeded in the management of revenues, expenditures, and inspection. Therefore, in the coming time, they should actively reduce costs, create favorable conditions for businesses", the Minister of Finance recommended.