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Burden of unofficial expenses on businesses in Vietnam

The burden of unofficial costs is weighing on enterprises in Vietnam, and it is rising year by year. The bigger the businesses are, the more they are inspected by relevant bodies, found the PCI (provincial competitive index) survey in 2015 by the Vietnam Chamber of Commerce and Industry (VCCI).

VietNamNet Bridge - The burden of unofficial costs is weighing on enterprises in Vietnam, and it is rising year by year. The bigger the businesses are, the more they are inspected by relevant bodies, found the PCI (provincial competitive index) survey in 2015 by the Vietnam Chamber of Commerce and Industry (VCCI).

 

 

In the last few years, the rate of interviewed enterprises saying that unofficial costs had increased rose from 50% in 2013 to 64.5% in 2014 and 66% in 2015.

More than 11% of the enterprises in the 2015 survey said that unofficial expenses accounted for over 10% of their total revenue, a slight increase compared to 2014 (10%).
About 65% of the enterprises said that ''harassment when addressing administrative procedures for businesses is common''.

In the eyes of private enterprises, the business environment in many provinces and cities was unfair. In some provinces in the PCI survey in 2015, 39% of enterprises said the local government was in favor of state-owned corporations and made it difficult for private businesses', an increase of 4% compared to 2014.
This rate was the lowest in the southern province of Bac Lieu (25%) and highest in Hanoi (51%) and Can Tho (50%). The localities that faced difficulty in attracting investment and economic development also had high rates, such as Dak Nong (46%) and Yen Bai (48%).

Nearly 49% of the enterprises said that the local governments gave priority to attract foreign investment rather than to develop the private sector, up 6% from the previous year. The highest rates were in Thai Nguyen (67%), Thanh Hoa, Ha Tinh (66%), Ha Nam, Hung Yen (63%) and Bac Ninh, Binh Duong (60%).

In addition, the rate of the enterprises which agreed that ''giving priority to large companies (public and private) is an obstacle for business operation,'' also increased from 52% (2014) to 56.5% (2015).

The province with the highest rate of enterprises worrying about discrimination was Yen Bai (67%) and the one with the lowest rate Dong Thap (41%). These figures show that localitie should have more viable solutions to build a fair business environment for companies.

According to PCI 2015, up to 74% of enterprises had to receive inspection teams in all fields over the past year. There is a worrying phenomenon: The bigger the enterprises are, the more they were inspected. Another problem is the overlap of inspections. The time for inspection was also longer for bigger enterprises.

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