UEL and CIL Benefit not only Enterprises

UEL and CIL Benefit not only Enterprises

In order to observe bilateral and multilateral commitments and improve the investment environment, the Government has submitted its proposal on the building of the Unified Enterprise Law (UEL) and the Common Investment Law (CIL), regardless of ownership of enterprises, to the National Assembly. Many enterprises have been expecting the issuance of the two laws.

More benefits for investors and enterprises

With the building of a common legal corridor for investors, UEL and CIL will be applied to four basic forms of enterprises, including companies of limited liabilities, joint stock companies, partnerships and private companies, regardless of their ownership and economic sectors. The two laws will continue to simplify procedures and reduce barriers to market accession. Especially, foreign investment will apply for business registration instead of licences. According to experts, this may be a turning point in the opening of the domestic market and may result in a new investment wave.

IF the UEL and CIL take effect, freedom for businesses will be promoted. When investors can join any business field not prohibited by the law, they will have more favourable conditions for renewing their activities and investing in other new fields. Lists of prohibited or conditioned fields will be announced publicly. This will help reduce corruption and improve the allocation of resources. In particular, the regulation on ownership for foreign investors will basically be removed.

Also, foreign investors will have their right to choose the form of enterprises. This means that they can choose one of the four forms of enterprises, instead of companies of limited liabilities. Foreign-invested enterprises will have more autonomy in organising and developing their business activities and they can invest in many projects at the same time. Interference in foreign-invested enterprises’ activities will no longer exist.

When articles of the UEL and CIL are amended to ensure the ‘indiscrimination of investment activities’ many local enterprises will be able to access foreign capital with added value brought by foreign investors via modern technology, management support and market access. The removal of constraints in the participation of foreign investors in domestic enterprises will offer enterprises opportunities to attract investment from suitable investors. The value of shares will increase from the sale of shares to foreign investors.

Business registration instead of licences

The replacement of licence granting mechanism with the business registration one, applied to all kinds of enterprises, connected nationwide and internationally, will help reduce costs and risks, encourage investment and create more jobs. Also, the allocation of resources will become more effective and productivity will increase with cut administrative costs.

Via the business registration system, the State will have adequate information about enterprises, their business activities, investment capital and financial status. This information is necessary to help State agencies have a more solid basis to issue suitable economic management policies. At the same time, the common business registration mechanism will help the State develop its macroeconomic management policies. The State will provide enough information for start-up enterprises, helping them reduce their market access and boosting the socialisation of investment as well as making suitable decisions during production and business activities.

Lan Anh