Sublicenses Still Upset Businesses

According to a recent survey conducted by the Vietnam Chamber of Commerce and Industry (VCCI), there are up to 3,000 sublicenses out of nearly 7,000 existing business conditions. Dr Vu Tien Loc, President of VCCI, said that the fight to eliminate sublicenses is seeing no ending. And, if it is successful, enterprises will be freer to do business.

 

Vietnam has started getting rid of sublicenses for a quite long and but it is not very effective. This work was intensified after the Prime Minister gave opinion to this in April 2016.

 

VCCI reviewed 267 sectors and found that least 30-40 sectors can be removed because they do not meet four requirements of the Law on Investment specifying conditional businesses (national defence and security; social order and security; social morale; and public health). Besides, laws still permit ministries issue circulars to specify business conditions. Notably, after this review, many conditions in circulars failed to be upgraded to stay in decrees and they were transformed into technical requirements/standards, i.e. from business conditions to operating standards. And, these standards still lie under the cloak of state mechanisms. Companies will be posed to more post-audit inspections.

 

Mr Tran Quoc Khanh, Deputy Minister of Industry and Trade, said, sublicenses not only exist in some business sectors but also in the Law on Planning. He pointed out that a Japanese company wanted to invest in production and processing in a locality but it was turned down because the regulation on planning in that province specifies that the chosen locality needs only one processing plant for that product. Meanwhile, the licensed company had not embarked on construction of its registered factory for 5-7 years. The Japanese company was serious with the construction of the plant but it was forced to leave. He proposed ending ineffective and unnecessary planning because it wastes resources. Typical ridiculous plans include rice exporter planning, public notary provider development planning, wine production planning, wine production village planning, cigarette production and cigarette trading network planning.

 

Recently, the Ministry of Planning and Investment proposed the Government further reduce 76 conditional business lines in a bid to get rid of sublicenses for enterprises, while adding 14 business lines to this list. As a result, the list of conditional business fields will decline from current 267 to 214. Business fields proposed for crossing from the list include coal trading, debt trading services, insurance agent, driver testing, surrogacy, gold bar production and money printing and minting.

 

Remarking on the sublicense review scheme, lawyer Truong Thanh Duc, said the Ministry of Planning and Investment’s proposal for removing 76 conditional business lines showed its strong commitments to build a government of integrity. However, it is necessary to take strong actions with this because many conditional business fields are not really necessary. Besides, some fields should be encouraged for development rather that subject to conditions, for example, movie publication and dissemination services and overseas study consulting, he added.

 

Economist Pham Chi Lan said that sublicense is created for group interests, citing Circular 20 on import of automobiles with less than nine seats. Irrational regulations include: Domestic automobile importers must have foreign agent authorisation certificate and have garages for repair, she analysed.

 

In fact, sublicense eradication is part of overall macroeconomic restructuring and institutional reform. Minister and Chairman of the Government Office Mai Tien Dung said that this work should be assigned to one lead agency. As in institutional building and perfection, authorities will focus on removing difficulties, obstacles and barriers against enterprises, improving the investment environment, enhancing competitiveness, and providing favourable conditions for citizens and enterprises to do business or start a business. To realise the goal of having 1 million enterprises by 2020 set by the Government, sublicenses needs to be removed as soon as possible.