Regulatory Framework for 5 Million Business Households Needed

3:41:30 PM | 4/12/2019

In the private sector in Vietnam, business households play an increasingly important role in employment, social security and economic development. However, the legal framework for their business activities is deemed incomplete, and a lot of shortcomings need to be addressed.

Currently the Government is drafting the revised Law on Enterprises, including regulations on business households. The amended rule is expected to give a strong boost to the business community, including business households.
Dr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), said, the current legal framework has not ensured freedom and equality for business households, which are more vulnerable in case of disputes and have difficulty accessing capital sources in spite of making significant contributions to the country’s gross domestic product (GDP).

“The revision of legal documents must be based on the principle of ensuring freedom and equality in business. Thus, the introduction of legal provisions for business households must be also based on this,” he said.

VCCI President Loc underlined the urgency of recognizing business households as a type of enterprise. This means that business households are not obliged to convert or change their names but they are still protected on a legal basis.

Individual business households are contributing up to 30.5% of GDP and creating 8.7 million jobs. Currently, 1.6 million individual business households are managed by tax authorities and granted tax codes, but 3.4 million households remained unregistered for business operations.

Lawyer Truong ThanhDuc from Basico Law Firm said that business households should not be required to convert, but the law should treat registered entities as a type of enterprise when they reach a certain scale. As for 3.4 million unregistered business households, they must be registered for business operation.

Some experts believe that the formalization and uplifting of the legal status of business households will require other changes in the Law on Enterprises, plus a reasonable roadmap to oblige some individual business households, reduce compliance costs, improve benefits and make it easier for business households to see greater benefits of registering operations under the Law on Enterprise than registering as business households.

In order to encourage business households to grow into enterprises, according to economic experts, the government needs to have timely support policies to ensure simple and favorable legal conditions and strictly handle acts of harassment.

Mr. PhanDucHieu, Deputy Director of the Central Institute for Economic Management (CIEM), a member of the drafting committee of the revised Law on Enterprises, said that it is not important whether business households are brought into law or not because that is only a technical factor. It is important how legal content and framework is built to develop household businesses.

Regarding the regulatory framework for business households, Dr. Vu Tien Loc said that VCCI will report this matter to the Government and the National Assembly for proposal. VCCI will propose many options, but the overall approach is that business households cannot continue to operate as under the current legal framework.

Huong Ly