Business Forum

Last updated: Wednesday, May 15, 2019


Waiting for Investment, Enterprise Laws to Be Amended

Posted: Friday, August 26, 2016

To put forth further proposals and recommendations for completing the regulatory framework for business, improving the investment environment, and enhancing competitiveness, the Central Institute for Economic Management (CIEM) and the Ministry of Planning and Investment (MPI) recently hosted a workshop on amendments and supplements to investment and business laws in Hanoi.
Overlapping, inconsistent
Dr Nguyen Dinh Cung, Chairman of CIEM, said the Law on Investment and the Law on Enterprise have come into force for over one year. The two laws have initially created a more favourable, open and safer environment for the Vietnamese business community. However, in reality, a lot of articles and clauses in these laws exposed many problems. Overlapping, inconsistent, incompatible and even contradictory regulations are found between these laws and other regulatory documents.
With regard to those shortcomings, Mr Phan Duc Hieu, Vice Chairman of CIEM, pointed out that project licensing policy is a substantial matter that needs to be viewed holistically to rule out inadequacies, particularly contents related to the Law on Investment, the Law on Public Investment, the Law on Land and other legislations. For the time being, to be licensed, an investment project must be filed to three main authorities, namely the Department of Natural Resources and Environment, the Department of Construction, and the Department of Planning and Investment. And, when there is a need for professional advice, the Provincial People’s Committee will seek consultancies from these three provincial agencies. This way of working is imperceptibly causing overlapping and taking more costs, efforts and time from investors.
With respect to the business registration, he added that it is important to unify business registration procedures according to the Law on Enterprise irrespective of business operation forms and investors. The regulation on legal representative must clearly define an enterprise’s responsibility to third parties in case of more than one legal representative in such enterprise and power abuse in performing transactions.
Besides, concerning emerging land and natural resource management, Mr Nguyen Manh Hien, Former Deputy Minister of Natural Resources and Environment, said, to remove overlapping regulations on in-principle investment approval between the Law on Investment and the Law on Housing, the provision in the Law on Housing was proposed to be eradicated and all project approval contents should be specified and provided in the Law on Investment. Relevant investment authorities will consult related agencies like the Department of Construction and the Department of Natural Resources and Environment before submitting the Provincial People’s Committee for approval of investment principle. To remove overlapping procedures on permission for transfer of real estate projects between the Law on Investment and the Law on Real Estate Business, it is necessary to merge regulations on this effect into one.
In addition, he pointed out that inconsistency in regulations has resulted in different interpretations among localities. For example, the Law on Investment stipulates that a project is terminated if its investor(s) does not carry out or cannot carry it out after 12 months while the Law on Land allows a 24-month extension if its investor pays land-use and land-lease fees for its belated project to the State. Furthermore, there are also discriminatory regulations on land-use forms for domestic investors and international investors. Specifically, some land access rights of foreign-invested enterprises shall be restricted in comparison with economic entities, including the right to “receive land use rights transferred of organisation and family household.” Or put it another way for easier understanding, this form of enterprise is only allowed to receive land granted by the State, rent land or receive land transferred in industrial zones, export processing zones, high-tech zones, economic zones health and new urban areas to carry out their investment projects, Hien said.
Voices of enterprises
Expressing his displeasure about binding terms in specialised laws, Mr Nguyen Van Duc, Deputy General Director of Dat Lanh Real Estate Company, said that business conditions seem to cause more and more difficulties for enterprises. He pointed out that construction procedures were quite simple before 2006 and investors only needed planning before starting their projects. But, in 2006-2010 when Decree 90 and Decree 71 took effect, construction companies had to solve more conditions in investment projects and construction clearance. From 2010 to date, they must put a lot more efforts into completing design verification, art design certification and construction clearance. Therefore, more procedures plus interest issues are two nooses around the necks of businesses. And, in reality, additional costs arising from these works will be borne to consumers.
Before these annoyances, he proposed authorities consider adopting regulations on specialised contents in the construction sector as before 2006. Current regulations take more time from enterprises and many will seek to dodge the laws to compensate the quality of constructions for costs arising.
Thus, if procedures become more cumbersome and complicated, they will have to spend more time, efforts and costs for their projects, when the projects are launched onto the market, selling prices may climb 10 - 20 per cent but the quality of constructions is not necessarily higher, he noted.
Mr Nguyen Manh Hien, Former Deputy Minister of Natural Resources and Environment
For the time being, procedures for debuting an investment project look like a “matrix” with over 24 items and processes provided by various authorities like natural resources and environment , investment, industry and trade, fire prevention and police. A handsome amount of expenses is required to complete procedures in these agencies.
Dr Le Dang Doanh, Former Chairman of the Central Institute for Economic Management (CIEM)
At present, housing prices are far above people's incomes. In other countries, the average house price is more than 5 times of people’s incomes but in Vietnam this rate is up to 20 - 25 times. It is paradoxical and tragic as well.
Mr Nguyen Phuong Bac, Director of the Institute for Socioeconomic Development Studies and Vice Chairman of Bac Ninh Business Association
As early as 2008, Bac Ninh province conducted surveys on inappropriate regulations for eradication. However, there were a lot of overlapping provisions for enterprises and the province could not resolve. There was a need for integrated processes to quicken the fulfilment of procedures. If the central authorities do not do, local authorities will hardly do alone.
Anh Phuong

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