Barriers to Resolution 19 Enforcement

Dr Nguyen Dinh Cung, CIEM Director, said, after two Resolutions 19 issued, the business community of Vietnam has harboured their hopes. However, to date, the ripple effects of the above "rough measures" of the Government have not produced desired results. Two issues the business community wants to be addressed: Procedures of business conditions and specialised management of imports and exports failed to meet expectations. The Law on Investment and the Law on Enterprises require the abolition of more than 3,000 administrative procedures. Ministries do not have solutions to abolish unsuitable procedures but introduce circulars with very tragic regulations. Procedures are so cumbersome that businesses do not want to speak up any more.

 

According to CIEM's data, as of September 23, 2015, up to 98 percent of companies have been carrying out electronic tax declarations. The General Department of Taxation has coordinated with 33 banks to deploy electronic tax payment service. Efforts in administrative reform, electronic tax declaration and payment are appreciated by companies. However, the actual time spent on these works is not reduced as much as calculated by the Ministry of Finance. According to companies, the time decreased by 20 percent, or about 110 hours.

 

Besides, with respect to customs procedure reform and specialised export and import management, Resolution 19 requires reducing the time for clearance of exports and imports to 14 days and 13 days by the end of 2015, respectively and to fewer than 10 days and 12 days by the end of 2016. Although the Ministry of Finance and the General Department of Taxation have made a lot of efforts, the time needed for customs clearance remains long. The time for social insurance payment is yet to be cut to 49.5 hours (a year) as requested by Resolution 19. Let alone, the Law on Bankruptcy 2014, effective from July 1, 2015, is a progressive act with many innovative contents but it has not translated its progress into practice like simplifying procedures and reducing settlement time.

 

Ms Nguyen Minh Thao, Deputy Director of Business Environment and Competitiveness Department under CIEM, said that many of solutions proposed by Resolution 19 have not been implemented thoroughly. Therefore, many localities have launched action plans inconsistent with actual conditions and objectives. Thus far, CIEM received only seven reports. More disappointingly, ministries lacked appreciation to practicing workshops held in Hanoi by CIEM. Even, Hanoi is not very active with this work and only a few agencies in the capital city made reports. She added that ministries, agencies and localities are required to make quarterly reports on the implementation and results of implementation of Resolution to the Ministry of Planning and Investment and the Government Office for generalisation before submitting an overall report to the Prime Minister. Nevertheless, the Ministry of Planning and Investment said that it received only six-month reports on the implementation of Resolution 19 from four ministries and agencies - the Ministry of Finance, the Social Insurance of Vietnam, Vietnam Chamber of Commerce and Industry (VCCI) and the Electricity of Vietnam (EVN) - and three localities - Ho Chi Minh City, Dong Nai and Ha Noi as of September 23, 2015.

 

According to the report on the results of implementation of Resolution 19 of the Government of Vietnam dated March 12, 2015 on improved business environment and national competitiveness, the Ministry of Finance said the time spent on tax payment was slashed by 78 percent, better than the target set in the Resolution. However, according to CIEM's study, the time reduced is not as much as that announced by the Ministry of Finance. The actual time reduced is about 20 percent.

 

Ms Thao explained that businesses psychologically do not actually believe in these reforms and they still follow the old path rather than choose the new one. The implementation in the locality is not as good as policy expectations.

 

According to Ms Nguyen Thi Cuc, Chairwoman of Vietnam Tax Consultants Association (VTCA), although there are positive changes, a lot of problems are expected by the business community to be addressed soon. For example maternity insurance payment should be made on a quarterly basis because payment delays distress both employers and female employees or social insurance network breakdowns or congestions are frequent.

 

In reply to the point of view that social insurance premiums in Vietnam are too high in comparison with other countries (32.5 percent) to draw the interest of foreign companies in the Vietnamese market, a representative from the Social Insurance of Vietnam explained that the social insurance premium rate is corresponding to the insurance coverage rate. Besides, the government wants to elevate the social security regime and a change needs to be carefully studied and decided by the lawmaking National Assembly.

 

Regarding tax administration reform, Mr Cao Anh Tuan, Deputy General Director of the General Department of Taxation, also answered some contents in the assessment survey. He said that some companies lacked the trust in the reform because they had certain issues with internal control, not caused by tax authorities. The General Department of Taxation has made public administrative procedures and processes on official websites of tax authorities or relevant bodies and actively informed citizens and businesses of policy changes.

 

Mr Tran Huu Huynh, Chairman of the Vietnam International Arbitration Centre (VIAC), said it is ridiculous to make light of Resolution 19 that Government members voted for. Up to now, only four ministries and agencies out of 22, accounting for 18 percent of the total, submitted reports, and only three out of 63 provinces and cities made reports, accounting for 4.7 percent. "With this case, it is clear that reporting discipline in the business environment reform is a setback," he noted.

 

Seeing the issue at a deeper layer, Dr Nguyen Dinh Cung said that the main obstacle to this matter is just the way of thinking. The little progress is resulted from slow changes in stakeholders' mindset as per this Resolution. The coordination among agencies within a ministry or among ministries, between central and local authorities, among agencies in a province or among districts is very weak. Information technology application for modernisation of business processes is not effective as only a few places apply. In many cases, network congestions also make companies shy of the new method and opt for old ways. Without making a change this reality, Vietnam is unlikely to reach the average level of ASEAN+6 countries let alone ASEAN+4.