In fact, the Vietnamese Government has also paid great attention to directing this activity and has proposed many measures to make bidding activities in general and bidding activities for complete machinery and equipment in particular highly effective in selecting the most suitable suppliers of goods, services and technologies for projects. However, the legal system of Vietnam is not yet complete, so it is inevitable that there will be problems in the implementation process, which greatly affects the efficiency of importing complete equipment of the company in particular and economic development in general.
Specifically, in the bidding regulations, the fact that importers are forced to import works for projects by bidding is unreasonable because bidding is a very complicated and time-consuming method, so even for small or not very large projects, it still has to be applied, leading to increased costs, affecting the efficiency of the project and losing business opportunities. The purchase of machinery and equipment through bidding often causes complicated problems when implementing the project, and importers often have to accept losses with the supplier if they do not want to re-bid and choose another contractor, which is time-consuming and costly, causing delays in construction progress.
This bidding regulation has some unreasonable provisions on the minimum number of bidders, for example, in the competitive method, each bid package must have at least three offers from three different bidders, or in the restricted bidding method, the inviting party must invite at least five qualified bidders to participate. In reality, there are cases where only two or even one bidder participates, and sometimes the inviting party has to postpone the bid opening time to give other bidders a chance to participate but still does not have enough bidding documents. As a result, some projects have to be canceled or switched to the designated bidding method, which is a very unobjective method. In particular, for some projects in some specialized technology fields such as the production of medical instruments, teaching aids, precision mechanical equipment, etc., there are very few companies in the world that are qualified to bid, so the situation of not having enough minimum bidders often occurs.
Bidding also faces many difficulties when the State restricts the subjects allowed to apply price-adjusted contracts. According to the provisions of Article 6 of the Bidding Regulations, price-adjusted contracts are contracts applied to bid packages that at the time of signing the contract do not meet the exact conditions on quantity and volume or have large price fluctuations due to changes in State policies and the contract has a performance period of more than 12 months. Thus, price-adjusted contracts are only allowed to be applied when the contract has a performance period of more than one year, bidding increases the risk for contracts with a shorter performance period because the price is not adjusted if there is a price fluctuation. In the procurement of complete equipment, price fluctuations are mainly caused by changes in the exchange rate of the Vietnamese Dong and foreign currencies, mainly the USD. Due to the impact of the Asian economic crisis, the domestic currency has depreciated compared to the USD. But the total amount
Maybe you are interested!
-
Procedures for Trial of Cases Involving Minor Defendants -
Improving the law on gender equality in the civil, marriage and family fields - Theoretical and practical issues - 1 -
Gender issues and feminist resonances in contemporary Vietnamese prose through the works of some typical female writers - 21 -
Evaluation of Research Situation and Issues Raised for the Thesis -
Perfecting Policy Institutions and Reforming Administrative Procedures
Investments approved in Vietnamese Dong are difficult to change. This is the reason why many foreign equipment procurement contracts, mostly using USD, have increased sharply in value compared to Vietnamese Dong, causing Vietnam to suffer great losses, and some projects have even had to stop implementation.
A very important condition in the bidding process is the requirement for information confidentiality. Up to now, there has only been a regulation that the inviting party is not allowed to disclose information, but there has been no regulation or prohibition on exchanges between bidders, which often leads to bidders colluding to lower prices, causing disadvantages for importers.
In addition, there are still many legal regulations on the purchase of machinery and equipment in Vietnam that are inconsistent with the regulations of international organizations, sometimes causing difficulties for foreign contractors when participating in bidding in Vietnam, and not attracting foreign contractors to Vietnam. The main international documents in this field are the "Agreement on Government Procurement" of the WTO, "Guidelines for Procurement under Asia Development Bank Loans", "Procurement of goods" and "Procurement of Work" of the WB... In the international documents, there is no distinction between domestic and foreign contractors in international competitive bidding, while Article 10 of the Bidding Regulations stipulates that the international bidding conditions are preferential to domestic contractors. In particular, Clause 2 of Article 10 requires foreign contractors to commit to using Vietnamese subcontractors or to form joint ventures with Vietnamese contractors. This regulation has been strongly opposed by foreign countries because in reality it is sometimes impossible to find Vietnamese subcontractors to provide machinery, equipment and services suitable to their technology.
International documents stipulate that the invitation to bid must notify all bidders of any amendments to the bidding documents at least 30 days before the bid opening. If the time from sending the notice to the announced bid opening time is less than 30 days, the invitation to bid must extend the bid opening time so that bidders have enough conditions to amend their bid documents to comply with the bidding documents. This period is much longer than the provisions in Article 12 of Vietnam's bidding regulations, which stipulates a period of only 10 days for bidders to request amendments to their bid documents.
In addition, international documents stipulate that general conditions of contract with price adjustment must be applied to all contracts with a performance period of more than 12 months, and for contracts for the purchase of important machinery and equipment with the possibility of price changes in a short period of time, general conditions of contract with price adjustment can also be applied. Such regulations are much more flexible than the regulations of Vietnam as mentioned above, which can lead to either the inviting party or the bidding party encountering unexpected risks when commodity prices and exchange rates on the world market constantly change.
4/. Problems in the process of negotiating and signing contracts.
Before negotiating, it is necessary to come up with some negotiation options, specifically here it is necessary to analyze the issues that both sides have only partially agreed on and the issues that are still controversial, in order to gradually determine a strategy to resolve them during the negotiation process. Usually, the company's weakness is that when entering into negotiations with foreign contracting companies, it does not have an advantage over its negotiating opponents. The company's negotiation experience and negotiation capacity are not equal to foreign companies that have been operating in the international market for many years. If the company does not continue to collect information about the other party, learn and grasp the other party's intentions as well as outline a suitable negotiation option to gradually shift the advantage to its side, it can achieve the negotiation goals.
In negotiating contracts for the import of complete equipment, specifically for construction and technology transfer, the negotiation content usually includes 3 areas: technical, commercial and legal. However, the negotiation team sent by the company is not always full of members who have full knowledge of all 3 areas.
For foreign countries, according to their business practices, they can hire experts to support them in areas where they lack experience, which helps negotiations to be quicker and more convenient. That is also the reason why foreign companies undertaking contracts in Vietnam are very hesitant to work and negotiate with Vietnamese partners in our country's current mechanism. That is because the agreements on the negotiating table in Vietnam will still be subject to inspection and approval by the experts behind the negotiating team. Regulations like this in Vietnam waste time while waiting for approval, slow down the progress of project implementation, and make foreign parties less confident in the agreements reached at the negotiating table, because those agreements still have to wait for approval from the authorities behind.
In reality, the company's negotiating team is often passive when negotiating to complete a contract for the purchase of complete equipment, and one of the large contracts with extremely detailed and complex regulations. Negotiators often do not have the right to decide on what is achieved or not achieved at the negotiating table, but always have to wait for instructions from competent authorities, and often these competent subordinates do not have enough capacity and lack practical experience to solve a specific problem.
5/. Conditions set forth when performing the contract 5.1/. Regarding types of import licenses.
Currently, regulations on procedures for importing machinery and equipment for projects are issued by many agencies at many levels, leading to conflicts between documents, causing import congestion and loss of time and money for importers.
For example, for machinery and equipment that cannot be produced domestically, the Ministry of Industry decides, but to be exempted from import tax, permission must be obtained from the Minister of Trade, although according to the law, if the goods cannot be produced domestically, they only need to be confirmed by the industry management ministry to be exempted from import tax. Such cumbersome regulations cause a lot of difficulties for importers.
5.2/. Tax problems.
The import of complete equipment for projects is also aimed at industrialization and modernization of the country, so they enjoy many tax incentives when imported. However, due to the continuous and excessive issuance of legal documents in this field, it has led to overlapping, causing difficulties for importers, investors and related parties. Especially since January 1, 1999, when the 1999 import-export tariff was applied and two new taxes, VAT and corporate income tax, along with changes in legal documents related to these two taxes, have led to many changes in business operations. Although the policy of applying these two taxes is complete and adequate, the quality of the issued documents is low, so they must be constantly revised and supplemented, and the guiding documents are issued slowly, leading to a series of bottlenecks in production and circulation, causing significant losses for businesses.
For example, the preferential import and export tax schedule in 1999 has been valid since January 4, 1999, but it was not until April 7, 1999 that the Ministry of Finance issued Circular No. 37/1999/TT-BTC guiding the classification of goods, so many problems arose regarding the method of applying import codes. The customs side, unable to decide on the method of applying tax codes, chose a method with a high tax rate, causing heavy damage to importers and investors. In addition, the issuance of import and export tax types has been carried out for decades, so it cannot be said that there is no experience, but the special and regular preferential import and export tax schedules issued in 1999 still have errors, leading to the need to continuously issue revised or supplemented documents to explain unclear concepts such as "synchronous machine", "easy-to-turn steel" ... This has created conditions for some Customs officers to apply tax codes arbitrarily, causing damage to businesses (sometimes up to billions of VND).
Value added tax (VAT) is a tax calculated on the value of goods and services (Article 1, VAT Law) to avoid the situation of tax on tax, however, the method of calculating VAT along with the regulations on the application of VAT Law are inaccurate and not comprehensive, causing obstacles for importers.
Looking at the formula for calculating VAT overlaid on import tax:
VAT = (Import price + import tax) - VAT rate.
When imported goods first arrive at the border gate, VAT cannot appear yet, this amount can only appear when the goods are in transit, and import tax on goods cannot be considered as the added value of the goods. However, when importing goods, the company must immediately pay an input VAT without knowing whether the goods can be consumed or not, although if the goods are not sold, this tax can be refunded during this period, the expected interest will not be small for large-value complete equipment projects.
A very important issue that needs to be mentioned is the unclear regulations on taxable subjects. Complete equipment projects often include imported materials for domestic mechanical manufacturing enterprises to manufacture equipment on site to use as fixed assets, but right from the time of import, the importer must pay VAT, which contradicts the policy of supporting the development of the domestic mechanical manufacturing industry. In addition, according to Circular 89/1998/TT-BTC dated June 27, 1998, one of the subjects not subject to VAT is the case where an establishment imports a synchronous equipment and machinery line that is not subject to VAT, but in that synchronous line there are both types of equipment and machinery that have been produced domestically (even though that machinery is the main machine - according to the content of Document No. 4950.TC/TCT dated September 13, 1999 of the Ministry of Finance), VAT is not calculated for the entire synchronous equipment and machinery line. However, this Circular does not mention which agency is the competent authority to certify the synchronous equipment and machinery line. On the other hand, when applying import tax, in another document of the Ministry of Finance - Circular 37/1999/TT/BTC dated April 7, 1999, it is stipulated that one of the conditions for a shipment of complete or synchronized equipment to be classified and the import tax rate of the main machine is to have "Confirmation from the agency approving the technical and economic thesis or investment project stating that the imported goods are complete or synchronized equipment and the main machine of the complete or synchronized equipment". According to the current Customs procedure, tax calculation and tax codes are carried out at the same time for import and export taxes, surcharges, and VAT. Therefore, the importer must present to the border Customs the documents confirming that the imported goods are complete or synchronized equipment and the main machine of this complete or synchronized equipment, along with the Customs declaration with a basis for inspection. However, for group A projects, the competent authority to confirm the complete or synchronized equipment and machinery line and the main machine is the authority approving the technical and economic thesis, which is the Prime Minister. In this case, the investor cannot have a document confirming the complete or synchronized equipment and machinery line and the main machine issued by the Prime Minister. Such bottlenecks in the customs clearance process have led to taxes when importing shipments of goods amounting to billions of VND. If the investor has not yet arranged a temporary loan source to pay the tax, it will cause trouble for the business activities of the importer, because the importer is responsible for importing and carrying out customs clearance procedures for the goods, so if it is not completed,
tax payment obligations, that shipment will be forced, and all goods of the importer at all border gates nationwide will not be allowed to continue customs clearance procedures but must wait for settlement, causing tens of billions of dong in additional costs due to warehouse storage, compensation due to ships not being released... and a series of other losses.
5.3/. Issues arising from Customs procedures for complete equipmentimport
According to the new customs collection process, the regulation that enterprises must take responsibility for declaring and applying tax codes to goods when making customs declarations has shifted all responsibility to enterprises, while enterprises must continue to take responsibility for five years. It is clear that the responsibility of Customs is to check the declaration, if the declaration is correct, there is no reason to require enterprises to take responsibility for that declaration for five years. That is too heavy and even contradicts Article 9 of the administrative penalty ordinance, which stipulates that the statute of limitations for violations of import and export activities is only two years, as well as the regulations on the time to implement financial regimes such as making sales invoices, annual settlement, etc.
In the process of calculating preferential import tax, it is necessary to set out regulations:
"The importer has a written commitment and is responsible for the validity of the Certificate of Origin (C/O). If fraud is later discovered regarding the C/O, tax will be collected and handled according to current regulations" is completely unreasonable. For imported goods from abroad, C/O is issued by foreign competent organizations, which can be the competent authority of a state. They even allow the manufacturer to also apply for C/O, so currently the form of C/O is very diverse and it is difficult to determine what is a valid C/O. Therefore, the validity of the C/O must be reviewed and confirmed by the Customs when the enterprise presents it to calculate preferential import tax. The above regulation means that once again, the Customs is pushing the responsibility onto the importing enterprise.
In addition, importers face many difficulties when Customs requests appraisal of imported goods whenever they feel that "the appraisal results are not consistent with the actual goods". This is an unreasonable condition because Customs itself is not an appraisal organization, appraisal results are usually not simply what is seen but require a standard inspection system... Therefore, Customs cannot give such reasons to refuse appraisal results and request widespread appraisal.
The Customs sector is a state agency tasked with combating smuggling and protecting national sovereignty, and is paid from the budget. Therefore, the inspection of imported goods is the responsibility of the Customs, and any additional fees are unreasonable. However, according to Official Dispatch 1368/TCHQ-KTTT (June 17, 1995) of the General Department of Customs,
Customs, Customs officers who inspect goods outside of working hours "are compensated according to regulations" but this document does not clearly state where this compensation money is taken from. Therefore, in order to inspect goods quickly and conveniently, many importers have spent their own money to "Compensate Customs", creating a bad precedent and a principle that leads to participation in developments in the Customs force, affecting the economic development and reputation of our country.
5.4/. Dispute settlement issues arising during contract performance .
Disputes arising during the performance of a contract are very likely to occur. However, the resolution of this type of contract dispute still faces some difficulties due to the lack of strictness of the law in this field. For example, according to Article 5 of Decree 166/CP (September 5, 1994), "The decision to resolve a dispute by the economic arbitration center is effective and cannot be appealed", but Article 31 of this Decree stipulates that "In case the arbitration decision is not enforced by the disputing party, the other party has the right to request the competent people's court to adjudicate according to the procedure for resolving economic cases". Such contradictory provisions implicitly deny the value of the arbitration award (which should always be "final"), making businesses lack confidence and disregard for the arbitration clause, often leading to a lack of seriousness when performing the contract.
6/. Problems with staff in the company.
Although the company's human resources have university and graduate degrees, but given the specific requirements of the field of importing complete equipment, it still needs to be seriously re-evaluated. There are two problems still existing in the company's staff.
Firstly, not all sales staff in the company meet the requirements of foreign languages, modern import-export business operations, law and especially scientific and technological knowledge.
Second, a number of staff still do not have a business mindset in the market mechanism, are not really proactive in finding customers, proactively creating jobs, especially attracting customers and promoting the company's reputation.
It can be seen that the above-mentioned obstacles, whether from the company or the State, cause many difficulties for the company's entire equipment import work. To resolve these obstacles requires a combination of the company's efforts and changes in State policies.
Chapter III
COMPLETE SOLUTION FOR IMPORTING FULL EQUIPMENT AT IMPORT-EXPORT COMPANY FOR FULL EQUIPMENT AND TECHNICAL TECHNOLOGY.
I. THE COMPANY'S BUSINESS GOALS AND ORIENTATION IN THE COMING TIME:
1. Objective .
The immediate goals that the enterprise has set and must achieve in 2001 are:
- Total import-export turnover: 12,500,000 USD
- Total import turnover: 11,875,000 USD
- Entrusted Import: 77187500 USD (accounting for 65% of total import turnover).
- Self-employed imports: 41,562,500 USD (accounting for 35% of total import turnover).
- Total revenue: 420 billion VND.
- Total budget payment: 2850 million VND.
- Total profit: 65 billion VND.
- Average income of each employee: 1.7 million VND.
In addition to the specific goals to be achieved as mentioned above, the enterprise has set itself a long-term goal: to continuously improve the company's reputation and power, expand the target market, increase market share, minimize risks and ventures in business and strive to continue to be the leading unit in importing machinery and equipment, especially complete equipment nationwide.
2. Direction.
Through a development process full of difficulties and challenges in the market mechanism, Technoimport has affirmed itself in the role of a unit specializing in importing technology and complete equipment for the national economy. Thanks to the company, more than 500 complete equipment projects in many industries have been built and put into operation, bringing practical benefits to the country: improving the country's technological capacity, exploiting and effectively using the country's natural resources, improving people's lives, enhancing the competitiveness of Vietnamese exports in the international market... contributing worthily to the industrialization and modernization of the country.
However, doing business in a market economy also brings the company many valuable lessons. These are lessons about diversifying business, actively seeking customers, proactively doing business in the direction of self-employment, exploiting traditional strengths, maintaining prestige with customers...
The current state of Vietnam's engineering and technology industry also suggests attractive business opportunities for the company, because Vietnam is a country with a low starting point, under the pressure of economic development, the growth rate will be very high,