Report by World Bank Urges Reforms to Reach Upper Middle Income Status by 2035
The World Bank released its Vietnam 2035 report titled: ‘Towards prosperity, creativity, equity and democracy’. The report outlines the need for the country to foster private sector competitiveness, promote social inclusion, and boost the state’s effectiveness at climbing up the economic ladder. The report indicates that the economy needs to grow at seven percent per year for the Vietnam to reach upper middle income status by 2035. As of 2014, Vietnam’s average income level in purchasing-power parity (PPP) terms was US $2,052; a figure that will need to be raised to US $18,000 by 2035 in order to achieve middle income status.
World Bank President Jim Yong Kim also stated that the country will need to remove barriers that exclude marginalized groups and deliver quality public services to an aging and urbanizing middle class population. The report stated that such aspirations will depend on three pillars – economic prosperity, balanced with environmental sustainability; equity and social inclusion; and state capacity and accountability. The joint report was prepared by the Ministry of Planning and Investment, the World Bank and external experts from Vietnam.
Farming, Engineering, other Sectors to Face Labor Shortage
Labor experts have forecast that the agriculture, forestry and fishery sectors will face a shortage of 3.2 million workers by 2020. The development comes as a result of human resources policies adopted in 2010, which set a 2020 target for skilled laborer penetration of 50 percent up from 2010’s prevailing rate of 15.5 percent. An official at the Ministry of Agriculture and Rural Development stated that around one million workers are required in these sectors every year.
While entrance test scores at universities for these sectors remains low, the facilities are not able to recruit enough students. In addition, there is also a high demand for mechanical engineering, chemicals, bio-technology and industrial electricity graduates. Such sectors currently meet 50 to 60 percent of the labor market demand. However, not many people want to join the sector due to the heavy workload according to analysts. Nevertheless, such sectors offer better chances for employment with higher salaries than many other industries.
Transport Firms Ordered to Reduce Fares Due to Falling Gasoline Prices
Taxi companies including Mai Linh and Vinasun agreed to reduce fares on 26 February after the Ministry of Finance ordered transport companies to adjust fares following a reduction in local gasoline prices. Mai Linh, one of the biggest companies reduced its fares to a range of US $0.58 to $0.72 per 0.6 miles depending on the vehicle size. The authorities have urged transport businesses to calculate prices and publicize these new fares after complaints were received by the Finance Ministry that several taxi and bus companies did not revise fares.
Gasoline prices account for 25 to 35 percent of passenger fares but several companies are reluctant to cut prices when demand is high. Analysts blame ineffective pricing regulations. In addition to transport fares, Vietnamese airlines have also decided to cut airfares due to falling costs. National carrier Vietnam Airlines is offering discounts ranging from 9 to 80 percent on domestic and international routes, while low-carriers Vietjet Air and Jetstar Pacific are giving up to 100 percent discounts.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Annual Audit and Compliance in Vietnam 2016
In this issue of Vietnam Briefing, we address pressing changes to audit procedures in 2016, and provide guidance on how to ensure that compliance tasks are completed in an efficient and effective manner. We highlight the continued convergence of VAS with IFRS, discuss the emergence of e-filing, and provide step-by-step instructions on audit and compliance procedures for Foreign Owned Enterprises (FOEs) as well as Representative Offices (ROs).
Navigating the Vietnam Supply Chain
In this edition of Vietnam Briefing, we discuss the advantages of the Vietnamese market over its regional competition and highlight where and how to implement successful investment projects. We examine tariff reduction schedules within the ACFTA and TPP, highlight considerations with regard to rules of origin, and outline the benefits of investing in Vietnam’s growing economic zones. Finally, we provide expert insight into the issues surrounding the creation of 100 percent Foreign Owned Enterprise in Vietnam.
Tax, Accounting and Audit in Vietnam 2016 (2nd Edition)
This edition of Tax, Accounting, and Audit in Vietnam, updated for 2016, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate Vietnam’s complex tax and accounting landscape in order to effectively manage and strategically plan their Vietnam operations.