Investment Environment: Less Strict in Licensing Stages

According to Dang Duy Dong, Deputy Minister of Planning and Investment Vietnam, firstly, to improve the investment environment and enhance the capacity of State management of foreign investment, the central task is to promote the review and fully assess the difficulties and problems in investing activities, especially the problems and shortcomings of the regulations on conditions and investment procedures stipulated in the Enterprise Law and other related legal documents to complete the legal framework for investment - business.

 

The findings of the Foreign Investment Agency (FIA), Ministry of Planning and Investment showed that, in most countries of the world, when managing the foreign investment, at first, the licensing is very simple, but later it will be managed very closely. Meanwhile, in Vietnam, by contrast, we are cautious in licensing, but then we have lax management.

 

Mr Do Nhat Hoang, Director of FIA said: "We do not meet the management needs. Ministries and agencies provide lax mechanism. While the development rate of the business is too fast, we have not issued enough sanctions to manage it. Taking a simple example, in Vietnam, businesses discharging toxins into the environment have not been forced to close. But in the U.S. or many other countries, businesses causing environmental pollution have to close business."

 

To improve the investment-business environment in Vietnam in the present time, according to Mr Hoang, “In Vietnam, there is not enough mechanism. However, it should be more open at first and then tighten management in later stages. We have talked much about the post-test; we should strengthen this phase. Reinforcing this phase requires not only the Investment Law, but to consolidate all other laws. Vietnam cannot be open as other countries, but the licensing phase should be carried out more openly.”

 

The amended draft Investment Law contains provisions on the certificate of investment registration which will only apply to conditional projects and sectors. For other projects, it will not be granted unless investor proposes. Accordingly, Prof Dr Nguyen Mai, Chairman of Association of Foreign-invested Enterprises said that in fact, a number of investors and businesses do not see this amendment as facilitating them, because the certificate of investment registration is the legal base for the procedures related to investment projects, such as granting land, construction, environment. Furthermore, due to limited management capacity of many local governments in monitoring and guiding investors and businesses in the process of implementing the project, the abolishment of certificate for investment registration for general projects will not bring effect for investors and reduce state management performance.

 

Prof Dr Nguyen Mai said the removal of profession specification in business license (except conditional businesses) needed to be discussed in a specific way to apply to the actual situation. It is not clear whether the abolishment of profession specification will facilitate business or complicate state management. If the change is more harm than good, then it needs to be adjusted in time.

 

Currently, there are many small FDI enterprises which had been granted license while not knowing their true capacity. Therefore, many experts say we need to give local businesses investment projects that they have enough capacity to carry equal to or better than the FDI enterprises. If we don’t specify professionalism and minimum amount of capital for each industry and sector, when we do not manage well, it will create a huge loophole. There may be cases where backpacker tourists with a few million VND could easily establish businesses.

 

Therefore, it is needed to have mandatory regulations for foreigners to set up business in Vietnam with the necessary procedures to select genuine investors with capacity to implement priority projects in the orientation to attract FDI in Vietnam.