Last updated: Saturday, April 22, 2017
VCCI: Pioneering Mission for Fair Environment for EnterprisesPosted: Friday, March 31, 2017
It is no longer a task but a mission. The mission of the Vietnam Chamber of Commerce and Industry (VCCI) is to fight for the benefit of enterprises, especially small and medium sized enterprises (SMEs), as well as for the transparency and fairness of the business environment. Supporting and facilitating the private sector in Vietnam has never received as much focus and care as it does now from the Government, ministries, departments and enterprises themselves.
Signing cooperation agreements: Nature or surface?
Resolution 35/NQ-CP has fuelled burning reform at the local level. The Government has worked drastically to support and develop businesses. The Prime Minister has never been so aggressive with every promise made. Ministries and branches have also been placed under review and monitoring.
By this time, all 63 provinces and cities have signed commitments with VCCI in the spirit of the Government’s Resolution 35/NQ-CP on supporting and creating a favourable business environment for business development to 2020.
The signing is not superficial, but real. Signatory localities must develop action plans to implement the Resolution and sign commitments with VCCI to shape a favourable business environment for enterprises.
Since Resolution 35/NQ-CP was enacted, nearly 10,000 enterprises have been established a month and 2016 was the first year Vietnam had more than 100,000 business start-ups. The target of having one million enterprises by 2020 stated by Resolution 35/NQ-CP is certainly within reach.
In practice, many local governments have changed their thinking and actions in light of Resolution 35. Some districts meet weekly to tackle emerging issues in the business community in order to have prompt solutions, set to be launched after one week. Unit heads at the district-level government are also assigned with clear accountability. This has thus created momentum to inspire all individuals and organisations to work with responsibility.
Nevertheless, some companies complained to VCCI that progress in reforms in some localities is still quite slow. Though things may be not solved immediately, the time required to address issues has been slashed significantly.
In the time to come, VCCI will coordinate with the Ministry of Planning and Investment to develop a set of business support indicators like the Provincial Competitiveness Index (PCI) to improve business environment of local governments. Enterprises must not only exist, but also operate effectively to inspire the spirit of start-ups.
To carry out the tasks assigned by the Government in Resolution 19 and Resolution 35 on “collecting business opinions on policies of ministries, sectors and localities” and present them at the Meeting between Prime Minister and Businesses in 2017, the Vietnam Chamber of Commerce and Industry (VCCI) hosted a programme to rate business-related regulations.
Right from the very start, the voting revealed mixed opinions from target audience. Some ministries even asked VCCI not to include them in the programme. But, with the aim of encouraging and honouring the best regulations, and drawing the attention of ministries and branches to existing problems, VCCI completed the rating and announced the results with strong support from the business community.
The jury screened, assessed and reviewed 237 regulations, including 114 good ones and 123 bad ones, from laws, decrees, circulars and other documents. VCCI reported this rating to the Prime Minister, and asked the Prime Minister to commend 30 good regulations and correct 24 poor regulations.
Actual policymaking in Vietnam is still inadequate, as policymakers and policy enforcers are the same. Hence, they are inclined to make regulations for their sake, not for the sake of citizens and enterprises. When there is no clear separation, VCCI recommendations will perhaps continue to be raised strongly.
Through this rating, it is important to note that competent ministries and bodies need to enhance business-authority dialogues to bring laws into life. Information about the lawmaking process must be published publicly.
Indicators with spillover effects
The Ministerial Efficiency Index (MEI) and the Provincial Competitiveness Index (PCI) have so far been key indicators to measure the governance capacity of ministries and branches, as well as competitiveness in local investment attraction.
Enterprises lacked interest in MEI rankings. It is clear that businesses are displeased with and not assured of the enforcement of legal documents issued by ministries and branches, while this is the most important tasks of these bodies.
The low satisfaction of businesses with ministries and branches has sent a strong message about the demand for further institutional reform in the coming time. It is quite clear that ministries and branches want to focus their entire forces on institutional reform rather than embracing external functions such as business administration and public service. Abolishing the function of administering State-owned enterprises (SOEs) and transferring public services to society will help ministries and branches to work better with institutional tasks.
Remarking on the PCI Index, VCCI President Vu Tien Loc said that PCI rankings faced enormous pressures at first. In the early years, some localities asked VCCI to exclude them from PCI rankings or asked the Government not to allow to rank them. But, things have changed positively in recent years. Localities, even low-ranked ones, have understood the impact of PCI on local economic development. They found it necessary to hear the voice of the business community. Before PCI ranking improvement request was added to the Government Resolution, many localities have seen this as a central task for local governments.
“The most important thing in PCI rankings is not the rank but reform progress and good practices shared. Many localities seem to be receiving investment capital totally based on their favourable locations, infrastructure and seaports rather than the quality of administrative procedures,” said Dr Loc.
The PCI is also used to gauge the quality of governance. Policies must be based on the voice of the private sector, create a standard system for local authorities to build and develop their own development policies. This is because the private sector is the backbone of the economy and decisive to economic sustainability.
At present, localities are learning from each other to improve every PCI component index. This is the success of PCI, although it initially caused certain pressures for its authors.
Clear, fair business environment needed
Before the Meeting between the Prime Minister and Businesses, VCCI held three staff meetings in three regions to gather opinions and recommendations from businesses and associations, to report them to the Prime Minister.
It is evident that, in previous years, difficulties such as access to capital and access to land interested businesses most, but they were not major issues this year.
What businesses need is a fair business environment, government support policies and clear business definitions.
Therefore, to enable all tiers of authorities to achieve their objective of creating a favourable business environment, many businesses have asked the National Assembly to ratify the Law on SME Support, and competent bodies to draft decrees that guide the enforcement of the Law on SME Support once it was passed.
In addition, the National Assembly was also proposed to endorse the Law on Supporting Industries. In reality, there is a need for a regulatory framework to connect domestic SMEs with foreign transnational supply chains, and strong policies to revitalise presently stagnant supporting industries.
Moreover, after one year of implementing Resolution 35, some leaders are at odds over standpoints to tackle emerging issues. Hence, there is a need for continued training for civil servants and officials.
Besides, businesses recommended that VCCI provide short-term training programs to raise corporate awareness and build corporate culture.