Last updated: Wednesday, March 29, 2017
Business Activities Being Impeded by Laws and ConditionsPosted: Thursday, August 11, 2016
“Each year the National Assembly should amend laws on business and investment environment, and even each session could amend laws or clauses if necessary,” suggested Dr Vu Tien Loc, President of Vietnam Chamber of Commerce and Industry (VCCI) at the seminar “Legal system on investment and business activities: Problems and Recommendations” organised recently in Hanoi by VCCI.
Reviewing over 50 laws
According to the VCCI report, some 37 laws on business and investment should be amended and readjusted in accordance with business reality and to avoid contradictions among various laws such as Trade Law, Investment Law, Enterprise Law, Land Law, Construction Law, Environment Protection Law, Science-Technology Law, Taxation Laws, Business Income Tax Law, Special Value-added Law, Tax Management Law, Law on Management of State Capital in investment and business activities, Advertisement Law, Housing Law, and others.
“Presently, there are some 37 laws with over 100 regulations and conditions that should be readjusted. At this seminar, over 20 more laws are being requested for amendments, increasing the list to over 50 laws and over 150 conditions impeding business activities to be amended,” Mr Loc said.
Mr Dau Anh Tuan, Director of VCCI Legal Department said that the review is to remove constraints, especially unnecessary conditions and contradictions in business activities. Thereby, administrative reform can be accelerated with better coordination and transparency, facilitating businesses with equal opportunities to join the market.
VCCI recommended the abolition of conditions on such services as training insurance agents, constancy on shares of joint stock companies, selling and buying debts, jobs, car maintenance, examination of car drivers, training of housing managers, training managers of investment projects, operation of infrastructure, import of IT equipment, training on bidding and evaluation on projects, chemicals for environment protection and aqua-culture, etc.
Also included are businesses on fishing equipment, import-export of items in accordance with CITES, gold import-export, and imports under management of State Bank.
Reform in next 5 years equivalent to past 30 years
According to Mr Loc, Vietnam is facing a challenge to be one of the three leading economies in ASEAN. Therefore, it puts pressure on structural development in Vietnam to reform in the next 5 years equivalent to that of the past 30 years. “Evidently, the structural reform must be accelerated with more improvements and the people and businesses warmly welcome such improvements,” said Mr Loc.
In spite of the current sound legal system, without being reviewed and improved, Vietnam will miss the opportunities of international integration. Accordingly, Mr Loc proposed that the National Assembly review and amend all laws on investment and business activities including those approved recently.
“Any unreasonable law must be amended to ensure free entrepreneurship of the people and safety for businesses. Law reform must go side by side with administrative reform,” asserted Mr Loc.
VCCI calls on the business community to join hands with the government in the process from the beginning, not just asking for amendments when laws are already approved. Businesses are truly thousands eyes and hands in the drafting process ensuring correctness.
Mr Loc also proposed that the government, Ministry of Planning and Investment (MPI) together with VCCI review the inter-agency regulations, establish working groups of businesses and associations to make recommendations on certain documents and areas. In so doing, it will be most efficient. It is hopeful that the government and MPI continue the coordination with VCCI and business community.
“The next 5 years are most decisive for the Vietnamese economy. Going forward or retreating depends on structural reform in the present stage,” concluded Mr Loc.
Mr Dang Duy Dong, MPI Deputy Minister
It is important to reconcile the interests of the State and businesses. In many cases, the interests of the business community are also of the State. However in specific businesses and business groups, it is not always reconcile with the interest of the State. Therefore, it is an important problem.
Regarding car import, it is important to facilitate businesses in free entrepreneurship and joining markets and consumers to access markets.
Regarding minimum wage, the State should consider the interests of employers to ensure interests of the State and businesses.
Ms Do Ngan Binh, Hanoi Law University
Point 8.4 in VCCI recommendations is no longer appropriate and should be deleted. At present, Article 36.8 and 48, employers can no longer pay subsidiary for unemployed workers. Therefore, 4 new recommendations should be added. Accordingly businesses will no longer contribute 2 per cent to trade unions. On minimum salary, employees must ensure minimum working time and productivity. However we fail to touch on this issue.
Article 6.3 of Labour Code refers to executive right of employers. However, other provisions limit such right such as employers are not allowed to entrust signing labour contracts twice or must directly sign labour discharge. Therefore it is a problem forbig companies like Honda that Executive Directors have to signlabour discharge. Employers should be allowed to mandate it to ensure management efficiency.
On extra working hours, it could be increased to 450 or 700 hours as other countries in the region. The ceiling should be lifted to days or months.
Ms Vu Thi Minh Nguyet, Braun Vietnam
Many issues raised by businesses have not been fully responded to. They are truly problems for businesses such an application of tax rates, or documents submitted by businesses have been sent back.
Regarding report system of FDI companies in Vietnam, according to Directive 04/2011/TT-BKHDT, there must be 6 reports each month, a report each quarter, a report for 6 months and a report a year, in total, 72 reports a year. Both the State and businesses have to comply with law. State employees must receive and deal with reports instead of putting them aside. Therefore, unnecessary reports must be abolished. There must be a mechanism on processing reports.
FDI businesses confront more problems with Investment Law, many businesses do not know where to apply for permission. It is necessary to abolish conditional businesses to facilitate business activities.
Mr Tran Anh Duc, Allen & Overy Law Firm
In the past, a Co, Ltd has 3-year period for capital mobilisation. However, from July 2015, new Enterprise Law requires enterprises to complete registered capital in 90 days. The period is too short for high investment projects and big infrastructure projects. We request the government amend such regulation so that businesses can have enough time to mobilise capital. Articles 48, 74 and 112 should be amended so that shareholders can participate in PPP projects or major projects in accordance with the agreement between the State, related authorities and investors.
In the past, FDI needed only an Investment Certificate. While the new law divided into 3 permits: investment acceptance, investment registration and business registration. Whenever businesses change business activities, they have to change 2 or 3 permits. In fact, administrative formalities for FDI have increased much more in comparison with the past.
Ministry of Industry and Trade (MoIT) is drafting a Decree on acquisition of FDI economic organisations in Vietnam adding permits on business activities, distribution, retail sale with two-tier permission from Ministry and Departments of Industry and Trade. Consequently, there will be more business permits from MoIT.
We request the Prime Minister instruct the cutting down of formalities and applying one-stop shop to reduce administrative formalities on investment, business establishment and activities.