- by Christopher Runckel, President of Runckel & Associates (www.Business-in-Asia.com)
1. The last year has been a difficult one for most countries in the world, how has Vietnam fared, what is you sense of how foreign invested businesses in Vietnam have done and how has the world financial crisis affected you and your company? By virtue of the history of the country, Vietnam has been more isolated from the world events than other countries. Although Vietnam has been open since the early 90’s, there are many fiscal, tax and monetary controls that the government has available to deal with difficult situations. The government in this country has the ability to react very quickly as it has demonstrated in this situation. In early 2009 the Vietnamese authorities stepped in quite quickly to remove Personal income taxes for the first 6 months of 2009, restore a number of benefits for expatriates working in Vietnam, delay and reduce corporate income taxes, offer 4 % interest subsidies to Vietnamese firms, and speedier Value Added Tax returns for export oriented companies. At the same time, there have been further reductions in trade barriers under the WTO agreements, and a number of new trade agreements (such as the ASEAN-Australia-New Zealand trade agreement). This is not to say that foreign invested companies have not failed or endured difficulties during this period, nor have things been easy. Tourism, property and funds have experienced significant problems inherent with the slowdown in Vietnam. The world financial crisis hasn’t really affected our company. We’re in a growth phase at the moment and have experienced a year-on-year growth of 40% and we expect this to continue into 2010. 2. I believe your company is roughly about 60 people now. How have you grown and what services do you provide and what part of that business has grown most quickly and are there any new areas you plan to focus on in 2010? That is correct, we have around 60 accounting staff. Our services to Vietnam include: company incorporation services, accounting & tax work, payroll outsourcing, business valuation and due diligence work. Our Australian accounting services include accounting and tax compliance work for all types of Australian entities. Over the last year we’ve seen our company be more widely recognized as a leader in the mid-tier market and as a firm with several years of experience we’re continuing to receive a significant number of referrals. With the expansion in staff numbers we’ve been able to secure more types of one-off type work such as embassy aid programs, due diligences and valuations. With the WTO agreement opening up a number of new segments to foreign owned corporations, we’ve also seen a growth in our work in new areas such as education and trading. 3. Can you tell us a little about yourself and your experience and also about some of the key people in your company and their qualifications? Also, what brought you to Vietnam and what keeps you here? I have a Big 8 accounting background prior to moving to Asia and hold both my American and Australian CPA qualifications. I’ve been living in Asia for the last 16 years with the exception of 2 years in the US where I was fortunate to meet my Vietnamese wife. Prior to focusing my attention on Odyssey I held various CFO positions in the region so I have both professional and real world background which I find ideal in advising clients. We’ve found that overseas educated and experienced accountants play an integral role in the quality of service we are able to offer our clients. Odyssey has many overseas educated and qualified accountants including Australian CA and CPA’s. In supporting our clients operating in Vietnam, we employ a number of Vietnamese qualified accountants. We also employ and develop Vietnamese accounting graduates for a variety of positions in our firm. 4. You have lived and worked in Australia, the U.S., Thailand, Indonesia and now in Vietnam. How do you compare and contrast these locations and how stressful and/or rewarding do you find your work in Vietnam? Vietnam is very much one of the last developing countries in the world, and while they still suffer from many well published issues facing developing countries (such as infrastructure development), the country has an energy and ‘get the job done’ approach that is refreshing. Vietnam is still developing and opening up, and is attracting a significant amount of foreign investment in many new areas. Although I have worked in many countries, Vietnam offers some amazing opportunities as a developing country that continues to open up. Whilst the working hours are long, I enjoy advising clients and being involved in ensuring their business is successful. Also, as a professional services firm, it’s refreshing to offer our staff the opportunity and challenge to work on a wide variety of clients and jobs. With the advances in technology, it’s difficult to leave the work at the office, and I find it a challenge to put the work down at the end of the day and ensure that I spend quality time with my family. 5. Vietnam tax and accounting regulations have been changing quickly as the government moves to alter laws and to improve procedures? What new changes has the government enacted over the last year that have helped to attract new companies to come to Vietnam and in what areas do you think the government still has much to do? In point one above I mentioned a lot of the recent general initiatives and changes that have occurred this year. There are many laws specific to various industries and locations that it would take too long to note them here. One example is the recent circular from the Ministry of Finance indicating that enterprises that have carried out environmentally friendly projects will have to pay 10 percent corporate tax, as opposed to the usual tax rate of 25%. The government continues to express a desire to attract foreign investment and more recently has allowed various remote provinces to adjust both the corporate and personal income tax rates for companies setting up in these locations. Vietnam should see an ongoing improvement in developing the systems to cope with the laws that it has recently enacted. It seems it will take some time for the government to implement systems and training to cope with the new laws. There is still a significant amount of paperwork, red tape and delays in most processes, but this has been communicated to the government and they have indicated it is a priority to reduce this reporting burden to attract new and retain new foreign investment. 6. As I understand it, new companies in Vietnam often have a more difficult time finding well qualified company accountants. How can your company help in this area and does working with your company cost more or less than working with the major accounting firms and does it offer a better range of safeguards and checks and balances than trying to go it alone? New companies are faced with many issues operating in Vietnam that will take their focus away from core business activities. The Vietnamese have their own Vietnamese Accounting Standards, which are unlike anything most foreigners would understand. There is a large amount of paperwork and systems involved in setting up a company, and we recommend that professional help be sought in the early stages. The risk is that if the systems are not properly set up and documented, then the expenses or loans are disallowed by the authorities. As a mid-tier accounting firm with many levels of experience amongst our accounting staff, we have worked with many foreign companies outsourcing their accounting work to Odyssey. We find that our new clients appreciate the packaged compliance service in their early entry into Vietnam. We work with our clients to provide a solution that not only meets their needs, but allows them room to grow until such times as they can take on the accounting requirements on their own if they prefer. However, there is usually a high turnover of Vietnamese Chief Accountants around the year end time and we offer the security of knowing that your work will be completed correctly on time, and the reports lodged with the authorities as required. 7. In many countries, new companies need to hire a lawyer to review their business start-up forms and government licenses. Does your firm do this kind of work and what services do you offer to foreign companies starting up in Vietnam? We have the professional accounting and legal resources to take on this work and we prefer to be advising clients as soon as they enter the market. We have found issues with lawyers executing their client’s instructions perfectly, but creating problems later that are expensive to correct. Our preference is to offer a one-stop shop for their legal, accounting and HR issues. Odyssey wants to create long term relationships with our clients, and so you will find our advice and assistance is for your long term success in the market. In addition, we also offer due diligence, business valuation services, and joint venture discussions/negotiations. 8. For the new investor into Vietnam, what is the area within accounting and taxation that you believe new investors don't adequately focus their attention or misunderstand the workload, risk or rewards? It is critical that the systems and procedures are set up correctly in the first instance, and reported to the government authorities. Without proper advice, we have seen loans not being recognized, or expenses disallowed by the tax authorities. There is a significant amount of paperwork involved in the daily operations of a business, even a startup business, and failing to lodge the appropriate forms on time can result in penalties. Having a good accountant at your side allows you to seek and receive advice on the ever changing myriad of accounting and tax laws, and ensure you are continually compliant with the various regulations. 9. What pending changes in tax and accounting rules do you see for 2010 and how do you see these playing out? Will Vietnam be a cheaper less costly place to work in terms of tax and accounting going forward or do you see it otherwise? The government will continue its push to implement the tax initiatives they announced pre 2009 once the Global Financial Situation has settled down and Vietnam sees a return of foreign investment to previous levels. This means the implementation of a tax system applicable to all residents of Vietnam regardless of whether they are an expat or not, and we expect many of the expat benefits to be gradually phased out. The government has given an undertaking to ensure all individuals have an individual tax file number and in the next few years their will be an increase in the large numbers of individual tax returns lodged with the government. You should see at the same time more systems in place to allow the government to track transactions and the taxes applicable on these. This would include taxes on share sales and land/property transfers. The reporting to Vietnamese authorities still continues to be largely paper based, and there is a large volume of documentation that is required to be lodged. I can’t see this reporting burden being reduced in the near term. The Vietnamese authorities will implement tax initiatives to continue to attract foreign investment, so I would expect that while the Global Financial Situation is delicate there will be a continuation of the current tax and accounting laws. The one exception is that the government has announced the gradual increase of the costs associated with employees for their social, health, unemployment and union insurances. We believe these will steadily increase in line with the government announcements. 10. Could you tell us more about your company, staff and services?  Odyssey Resources Limited Odyssey Resources offer professional Accounting & Business Services. Odyssey’s unique position as leader amongst the mid-tier accounting firms in Vietnam has come through providing an international quality service at genuine mid-tier rates. We have assisted many International Companies to establish and maintain a successful presence in Vietnam. Odyssey is proudly an Australian Owned Company led by our CEO David Carter. David is an Australian ex-Big 8 CA/CPA and has been involved in Tax and International Business for around two decades, his first involvement in Vietnam began in 1994 with one of the first foreign Due Diligences. |
