Business Condition Cutback: Disparate Reports and Realities

10:13:52 AM | 9/3/2020

“Under the current conditions, there are still unnecessary, unreasonable and impractical business conditions,” said Dr. Tran Thi Hong Minh, Chairwoman of the Central Institute for Economic Management (CIEM).

Recently, reforming regulations on business conditions to create a favorable and friendly business investment environment is the Government's priority target. In the 2017-2019 period, ministries and agencies made efforts to review and propose the abolishment and simplification of about 50% of business conditions to reduce procedural burdens.

However, in fact, some places still do not understand changes and reforms in business conditions, she said. Therefore, improving the quality of business conditions is still the central content in reforming the business environment in Vietnam.

Ms. Nguyen Minh Thao, Director of the Business Environment and Competitiveness Research Department - CIEM, said that the draft Law on Investment (amended) in October 2019 proposed abolishing 12 conditional business investment sectors, for example, service activity of arbitrators, debt trading, LPG container production and repair, franchising, logistics services, knowledge training services for real estate brokers, real estate exchange, urban planning consultancy services of foreign organizations and individuals and food business subject to special management of the Ministry of Health.

By the end of 2019, more than 30 documents on business conditions had been issued to reduce over 50% of business conditions (as reported by ministries). In fact, unspecific, unclear business conditions, deep interventions in production and business operations or lax regulations were removed. Besides, duplicated business conditions were abolished and changed to be managed according to National Technical Regulations (QCVN) and National Standards (TCVN). Some business conditions were also amended to reduce requirements and create more favorable conditions for businesses.

“According to independent review results, over 30% of conditions were eliminated,” Ms. Thao said.

Business conditions were mainly simplified, rather than being abolished, to reduce personnel requirements or reduce facility scale requirements, she said. Duplicated provisions were removed. Some of removed regulations were in fact regulations on process, not business conditions.

In addition, some unnecessary, unreasonable, impractical and unclear business conditions may lead to the discretion of governmental agencies. Although ministries reported to have completed their targets, no report on effect and impact of business condition reforms was made. Although business condition reforms have produced certain results, obstacles and barriers remain popular. Reform results are mainly based on reporting rather than on actual impact appraisal.

Mr. Dau Anh Tuan, Director of Legal Department under the Vietnam Chamber of Commerce and Industry (VCCI), said that administration mindset and methodology did not guarantee business freedom because business conditions define constitutional business freedom. Authorities still use administrative solutions to intervene in the market. In addition, the amendment of the list of conditional business lines is still not agreed by ministries.

Before this reality, authorities need to create new breakthroughs in reforming business conditions by changing the way of administrative management of business conditions and strongly shifting to post-inspection in the coming time. Enterprises may take initiative in carrying out business activities when they fully meet requirements on business conditions. At the same time, they must be responsible for meeting requirements on business conditions. Post-inspection is performed throughout enterprises’ operations. Authority is decentralized to local authorities to administer business conditions.

“Authorities, in addition to studying and applying the above principles in business management, should study and propose amendments to relevant laws to abolish and simplify business conditions in special laws; assess the effectiveness of reforms in each area; and establish dialogue and feedback mechanisms for businesses,” Ms. Thao emphasized.

By Quynh Chi, Vietnam Business Forum