Red tape causes $37bn loss in annual trade revenue to Vietnam: expert
Tuesday, July 22, 2014, 17:06 GMT+7
Vietnam suffers losses of $37 billion in annual trade revenues when it comes to both export and import activities due to red tape, a seasoned expert stated Monday.
Olin McGill, an independent consultant with 25 years of experience in business environment development, was in Hanoi to share his insights at the invitation of the Central Institute for Economic Management after Vietnam was ranked in 99th place in the latest World Bank’s Doing Business report.
Each year enterprises take as long as 872 hours to pay taxes in Vietnam, compared to 264 hours in Thailand and 133 hours in Malaysia, according to World Bank statistics.
The number is deemed “unacceptable” by Vietnamese Prime Minister Nguyen Tan Dung as he met with tax officials last week.
McGill attributed the low ranking of Vietnam and the huge amount of time dedicated to paying taxes to the fact that the country requires enterprises and members of the public to declare and pay taxes 32 times a year.
The Southeast Asian country also asks businesses to present five mandatory invoices and receipts to be able to ship their products across the border, while countries with high ranks in the World Bank report only demand two papers.
It takes as long as 21 days to complete export procedures in Vietnam, while the respective duration in Malaysia and Thailand are 11 and 14, according to McGill.
These complicated and lengthy procedures cause trade revenue losses for the country, the UK-based expert concluded.
In comparison with developed countries, the time needed to complete import procedures in Vietnam is 16 days longer, resulting in a loss of more than $19 billion in annual import revenues, McGill elaborated.
The time to pass export procedures is also 14 days longer, meaning a more than $17 billion revenue loss per annum.
In total, the trade revenue loss is as much as $37 billion each year, he said.
The consultant added Vietnam is totally capable of reducing the time needed to pay taxes by transferring some of the tax procedures online.
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