Last updated: Monday, April 22, 2019


Enforcing Resolutions 19 and 35: Better but Slow and Uneven

Posted: Thursday, November 29, 2018

The Vietnam Chamber of Commerce and Industry (VCCI) recently hosted the Launching Workshop on “Report on the implementation of Resolutions 19 and 35 on business environment reform and enterprise development” in Hanoi.

The targets stated in the resolutions are very ambitious, the solutions proposed are also very specific and practical. However, in practice, the enforcement quality among ministries, sectors and localities is still uneven, said VCCI in its recent survey.

VCCI noted that, after five years of carrying out Resolution 19, businesses that were surveyed shared the viewpoint that the business and investment environment has improved significantly. However, the level of improvement is uneven among different localities and sectors.

The survey among 10,000 private enterprises on different areas of Resolution 19 showed that, among 11 areas listed, the two best performers are business establishment and access to electricity. Meanwhile, import and export procedures, investor protection and corporate bankruptcy are considered to have no significant improvement.

The weighted business sentiment in the 11 areas can be seen in a preliminary measure of local efforts to execute Resolution 19. Some provinces and cities highly appreciated by the local business community include Dong Thap, Da Nang, Binh Dinh, Bac Lieu, Can Tho, Vinh Phuc, An Giang and Long An. The region with the highest percentage of respondents is the Mekong Delta. The Mekong Delta has the highest business sentiment.

Regarding the task of improving the business and investment environment at central agencies by reducing business conditions, according to the survey, this job is uneven among ministries, even across different sectors of the same ministry. By the end of October 2018, 15 decrees on reduction of business and investment conditions covered the Ministry of Industry and Trade, the Ministry of Construction, the Ministry of Labour, Invalids and Social Affairs, the Ministry of Culture, Sports and Tourism, the Ministry of Natural Resources and Environment, the Ministry of Education and Training, the Ministry of Transport and the Ministry of Agriculture and Rural Development.

From a business perspective, applying for sub-licences it is still a common and tough practice. According to the business survey concerning the Provincial Competitiveness Index (PCI) 2017, up to 58 per cent of respondents have to apply for conditional business licences and 42 per cent of them face difficulty in applying for this type of permits.

With respect to specialised inspection reform, according to Mr Dau Anh Tuan, Director of Legal Department (VCCI), although there are thousands of specialised inspection procedures for various types of goods, only 68 procedures were launched on the National Single Window (NSW) electronic portal as of September 2018. It is expected that 284 procedures will be available there by 2020.

Nevertheless, among these 68 procedures, only one procedure (declaration of chemicals) is completely electronic, while others still need paper copies. The reform is thus very slow.

The results of executing Resolutions 19 and 35 is not substantially high, accounting for about 40 per cent and this number is still higher than reality. In general, the reform process remains slow, costs a lot of money, resources and personnel of the State apparatus, and needs press coverages on the performance of the resolutions. To date, the actual result is not comparable to what has been spent, said Economist Pham Chi Lan.
She estimated that Decree 15 alone, on food safety and hygiene, can help businesses reduce costs up to VND3,700 billion (US$159 million) a year. Assuming this value applies equally to all 15 decrees, the money saved will amount to VND55,500 billion (US$2,377 million) a year.

Thus, VND3,700 billion had been lost in five straight years before the business condition reform was achieved. Mathematically speaking, we would have lost a lot with 15 decrees issued in five years of their enforcement.

She frankly admitted that higher authorities must urge their subordinates to reform business conditions. In the context of imminent effectiveness of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), if the Government is unable to adapt its institutions to institutions of this agreement to which Vietnam is a party, it will not be able to take full advantage of opportunities. Then, difficulties and challenges will seriously burden the business community.

In addition, in order to protect their interests, business associations and the business community also need to take stronger action and actively share with VCCI, unite altogether and speak more about common issues of the business.

Enterprises are always complaining about excessive, repeated inspections performed by authorities. According to the PCI 2017, nearly 40 per cent of respondents are checked twice or more a year, of which 13 per cent complain about repeated contents among different inspection teams.

Notably, most respondents said they have never received any cross-sector inspection team. Authorities still prefer operating alone to acting with others, and this takes a lot of time from enterprises. Up to 43 per cent of businesses are subject to tax inspections, 30 per cent to fire safety and 20 per cent to market management.

“In general, the business community sees certain improvements in the business and investment environment as well as support efforts from authorities from central to local levels. However, the room for reform remains vast and more effort is needed from ministries, sectors and localities. A lot of reforms have been put in place but it seems to be a long way to go directly to businesses. The distance from support policy to beneficiaries is still relatively far,” said the report.

Luong Tuan

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