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Difficulties encountered by FDI enterprises in Vietnam

Views: 465711/10/2018Share
With the rapid economic growth, cheap reasonable abor force, Vietnam is becoming an investment destination of FDI enterprises doing business in Asia. However, besides the advantages, there are some disadvantages that FDI enterprises face when doing business in Vietnam.

Legal barriers
To implement production activities, enterprises need to implement from 10 to 15 procedures. When doing business in Vietnam, they are unfamiliar with complex processes, leading to difficult and rigorous legal enforcement. In addition, items requiring permits such as electrical connection, fire protection, labor source are also some of the challenges and need more time for investors to complete.
In order to solve the difficulty, Long Hau Joint Stock Company (LHC - Long Hau Industrial Park project developer) proactively assist clients in completing necessary procedures, before and after investment. At the same time, the LHC regularly organizes seminars and programs to popularize legal knowledge for enterprises.

"Through the events, LHC has shortened the gap between business and the law of Vietnam," said Takayuki Kitade, director of SKK One Member Limited Liability Company. Moreover, we can regularly update the changes in Vietnamese law on the website of the Industrial Park so that changes and reforms can be made to suit the business environment in Vietnam."

Design and construction
Another difficulty is the design and construction. For some projects in specific fields, especially cold storage, biotech  or high technology, the plant should be customized to fit specific operational requirements that needs Investors more focus on time and cost to complete. However, for SME businesses, time and cost are a limited resources when doing business in Vietnam.
Based on these facts, the LHC has actively diversified products such as ready- built, build- to- suit, high-rise and high-tech factory. The diversified workshop model not only helps businesses to operate quickly, but also saves money, meets production and business needs.

Supply chain is limited
The number of enterprises is growing fast. However, the supporting technology sector in Vietnam is still young, leading to many difficulties for FDI enterprises in the process of supply chain development. This also explains why many foreign businesses are forced to outsource suppliers or transport raw materials from other countries.
Understanding this, the LHC always try to create conditions for businesses to easily update the supply needs, mutual support such as Supplier Day - Long Hau Supplier Day or Business Connectivity Portal This is one of the leading activities of the LHC to support domestic enterprises and FDI enterprises to increase cooperation and increase mutual benefit values towards a sustainable investment environment.
Some other difficulties:

In Vietnam, the enterprise must dedicate 32 taxes that equivalent to 872 working hours to fulfill their tax obligations. However, in East Asia and the Pacific, businesses only take 209 hours. This is one of the major barriers for FDI enterprises to doing business in Vietnam.

Cultural differences
Vietnam is a country with strong foundation of community and collectivism. This leads to the working culture that is concerned with social relationships. In addition, holidays are also different leading to the situation asynchronous work, causing impact on the progress and morale of employees.

With over 12 years in the field of industrial  infrastructure development, LHC is proud to be one of the leading dynamic units in the South along with FDI enterprises on the development. By 2018, Long Hau Industrial Park is home of over  170 enterprises, including 50% of FDI enterprises from Japan, Korea, USA and Europe. Continuing to improve the business environment for businesses, in the future, the LHC continues to complete the projects, transfer digital technology and improve the quality of services, to become the most dynamic Industrial park  in Vietnam.
Long Hau Industrial Park - Partner in success
Address: Hamlet 3, Long Hau commune, Can Giuoc district, Long An province
Hotline: (+84 28) 3937 5599 - (+84) 906 938 599
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