Removing Troublesome Procedures

Attended by more than 200 enterprises, questions raised are related to investment licensing, employment, tax and customs. Especially, the most pressing issue is investment licensing. Accordingly, a representative of Pizza Hut Company complained that they spent nearly four months applying for permission to open fast-food restaurants in Hanoi. The company filed all necessary legal documents to authorities but the authorities did not require it to complete its documents but asking for new requests after it fulfilled the previous ones. Pizza Hut now has more than 20 fast-food restaurants in Ho Chi Minh City. Its legal documents are sufficient but Hanoi authorities still requested the company to prove the capacity and financial statement of the parent company. All these documents were already proven when Pizza Hut opened its branch in Vietnam. In response to this, Nguyen Thi Thanh Phuong, Lawyer at Baker & McKenzie's, said the Law on Enterprises specifies that a branch of a company can carry out business operations as a parent company. Branches of foreign-invested companies also have that function. Hence, in the perspective of authorities, only branches of foreign-invested companies with projects in Vietnam can carry out business operations of parent companies in Vietnam while other branches can only perform activities as representative offices only. If the law is interpreted in this way, it will cause inconsistencies and overlapping and enterprises will have to spend more unnecessary time and costs, she said.

 

Vo Quang Hue, CEO of Bosch Vietnam, candidly pointed out many contradictions in law enforcement. He said one regulation is interpreted and understood differently in sub-law documents. This inhibits foreign investors from investing in Vietnam. Hence, according to Mr Hue, Vietnam needs a root law to serve as the basis of reference for other laws.

 

Specialised in international trade services, BC Furniture, a foreign-invested export woodwork company licensed by the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) in 2006 with a validity of 34 years, invested millions of US dollars to build warehouses and employ some 30 workers. However, in November 2013, the Decree 164 of the Government provides that export processing companies engaged in trade services must set up separated branches outside their located export processing zones. Immediately local customs offices halted export, import and trade activities and the company incurred huge damage.

 

Le Manh Ha, Vice Chairman of Ho Chi Minh City People’s Committee, said, Ho Chi Minh City had 4,990 projects with a total investment capital of US$34.118 billion from 1988 to March 15, 2014. In 2013, the largest city of Vietnam received 2,218 investment applications, including many late documents. Specifically, the biggest number of late days was 222 days (averaging 22 days) the longest time for settling an application was 257 days (averaging 58 days).

 

He said when receive investment applications; authorities also confront difficulties like asking opinions from ministries and relevant agencies. And, most cases need over one month. In some cases, it takes up to two months to receive the answer from ministries and branches. This drawback reduces the attractiveness of Vietnam’s investment environment and inhibits foreign investors.

 

To remove these setbacks, he suggested that asking for opinions of ministries when necessary, publicising document settlement processes on internet, handing investment certificates in the residence of investors, and reducing procedures among others. And, from March 24, 2014, when receiving investment registration applications, the Department of Planning and Investment of Ho Chi Minh City will ask for email addresses of investors in order to update information about the licensing process.

 

Mr Bui Quang Vinh, Minister of Planning and Investment admitted that investment licensing is one of the biggest hindrances to foreign businesses because it requires a lot of sub-licences.

 

Minister Vinh said his ministry will ask the lawmaking National Assembly to remove investment licences and issue regulations allowing localities to grasp the investment situation of foreign companies. And, what authority belongs to localities needs to be decided by localities.

 

Besides, the ministry advocates simplifying investment procedures while still managing this form of businesses.

 

While drafting the amended Investment Law, the Ministry of Planning and Investment proposed the Government to ask the National Assembly to remove investment certificates of FDI enterprises. However, four business fields are considered to be conditional: fields requiring establishment licences (like banking), fields relating to land (like using a huge area of land), environmental pollution (environment-polluting technology) and enterprises in need of investment certificates for incentives, Minister Vinh said.