Removing Business Hurdles

Enterprise Law 2014 has further improved Enterprise Law 1999 and Enterprise Law 2005. It focuses on market integration formalities, business management, State-owned enterprises (SOEs), private enterprises, business formation and reform. There are certain new problems requiring guidance for enforcement. Draft Decree guiding the implementation of Enterprise Law 2014 provides details regarding private enterprises, seals and others.

 

To this end, Vietnam International Arbitration Centre (VIAC), in coordination withCentral Institute of Economic Management (CIEM) and Vietnam Chamber of Commerce and Industry (VCCI) recently sponsored in Hanoi a seminar on the draft decree concerning enforcement and related issues attracting nearly 200 participants.

 

According to CIEM, by July 1, 2015, as many as 1,697 out of 5,850 business regulations will be no longer effective.

 

Mr Nguyen Dinh Cung, CIEM Director revealed that business regulations alone cover nearly 900 pages, excluding those on procedures, documentation and business requirements. In addition, there are thousands of yearly regulations. By July 1, some 6,000 business regulations issued by ministries and local authorities will be no longer valid. Therefore, businesses must be aware whether or not they are fully legal without asking for permission.

 

Mr Tran Huu Huynh, VIAC President, said that a decree can be issued to ensure that by July 1, 2015 all unnecessary regulations will be invalid, clearing all hurdles for business activities.

 

Nonetheless, Mr Ngo Viet Hoa, Russin & Vecchi Law Firm, believed that it is difficult to control the issue of business conditions. Through consultations with VCCI, the business community is trying to develop a mechanism to control the issue of business conditions. If it is successful, business voice is enhanced. However it remains a problem as the final decision still belongs to the State authorities.

 

Consequently, Mr Hoa proposed the establishment of a task force to help the government reviewing all business conditions. The task force should include experts, representatives of business community and State management and be responsible for clearing all illegal, unnecessary and unfair business regulations that hamper free entrepreneurship.

 

Mr Hoa reaffirmed: “The most important thing is to change the thinking, especially that of the authorities, on free entrepreneurship, as it will develop and enforce law on entrepreneurship. Without it, new management and supervision will be less effective in the long run.”

 

Article 3 of the draft decree deals with cross-ownership of companies prescribed by Article 189 of Entrepreneur Law 2014. However, the definition in Article 3 remains unclear: Article 3.1 is still ambiguous, failing to define: “Sister company prescribed in Article 189.2 is related to parental company under Article 189.2 of the Entrepreneur Law”. Article 3.3 defines on cross-ownership: “Cross-ownership means two or more companies are entitled to ownership of the capital and shares”. The definition of cross-ownership of businesses remains unclear. The draft should define specifically direct cross-ownership of two companies, indirect cross-ownership of many companies. Direct cross-ownership means Company A owns share and capital contribution of Company B and vice-versa. Indirect cross-ownership of many companies means Company A owns shares and capital contribution of Company B, Company B owns share and capital contribution of Company C, Company C owns shares and capital contribution of Company A.

 

Article 3.4 of the draft stipulates: “Parental company with State ownership above 65 percent of chartered capital and its sister companies shall not contribute capital to set up enterprises”. Such provision is unclear and contradicting to Article 17.1 of Decree 69/2014/ND-CP which prohibits all capital contributions among companies in economic groups and corporations.

 

Presently Vietnam does not have provisions on E-commerce violations by mobile equipment. Besides E-commerce website, other social networks in particular Facebook are widely used in Vietnam. The number of users has increased from 45 percent in 2013 to 53 percent in 2014 especially between retail sellers and consumers. Therefore the management of social networks in e-commerce is equally urgent. Presently, no such management and equivalent control exists. While Article 6 of Decision 47/2014/TT-BCT mentioned it, Decree 185/2013/ND-CP failed to prescribe it.

 

Furthermore, unclear listing of e-commerce websites causes concerns for customers. Article 63 of the Decree permits Ministry of Industry and Trade to make public e-commerce management and violations by e-commerce websites. The question is how to facilitate business activities without increasing unhealthy competition. Article 63 failed to determine violations; therefore, competitors can abuse it and accuse each others.