On July 1, 2006, the 2005 Enterprise Law will take effect. Some decrees of the Government, stipulating the implementation of content of the law, have been drafted. Among them is a draft decree on the management of business licences.
It is a surprise that so far lawmakers have not defined ‘business licence’ and issued regulations on business licence management yet. We suppose that business licences, a product of a centrally-planned mechanism, should be removed. Instead, only ‘certificates of qualified business conditions’ can exist at present.
Firstly, in principle ‘citizens can do anything not prohibited by law’. Business licences cannot theoretically exist. This is because there are no licences for fields prohibited by law. However, in some fields, citizens can do business providing that they meet a few certain conditions to ensure the interest of the community. These are business conditions, which can be understood as one or more regulations imposed by State management agencies, which are compulsory for business owners. For example, business conditions include regulations on legal capital, practice certificates and regulations on area of rooms for hotel business. For stably established business conditions, such as practice certificates and legal capital, business owners should show evidence that all business conditions have been met without applying for any licences. For those conditions which can change, such as regulations on the area of hotel rooms, or food hygiene and safety, after checking, authorised agencies should grant business owners certificates on meeting all business conditions.
Secondly, the granting of sub-licences has recently become more tightly controlled. As a result, in many cases, authorised agencies have taken advantage of legal loopholes, using other management tools, which are naturally similar to the regulations on practice certificates or legal capital. Accounting practices, price evaluation and tax agent certificates in the Tax Management Law, and legal capital of VND 5 billion for debt business in the Government’s draft decree on debt business are examples of this in Vietnam’s context, despite decrees being issued by the Government and drafted by ministries and agencies. Therefore, in many cases, subjective plots on improving the power of management agencies and restoring the ‘begging and giving’ mechanism have been put into decrees. A decree is needed to stipulate business conditions.
Thirdly, under the 1999 Enterprise Law, business licences granted before 2000 were converted to certificates of business registration, which state that enterprises are allowed to perform their business activities when meeting all conditions. Certificate of business registration is not a business licence but like a birth certificate. The existence of a concept of business licences is a consequence of a subsidy in management awareness. Many licences have been renamed in accordance with their nature as certificates. For example, ‘investment licences’ have been renamed ‘investment certificates’. The use of certificate on meeting all business conditions is just a case of renaming of the business licence.
Fourthly, the granting of business licences in recent years shows many disadvantages. The management role of licences is unclear while it constrains business freedom and offers corruption opportunities to those who have power to grant licences. Also, when licensed enterprises violate the law, those who sign business licences are not involved. Therefore, there is no valid reason for the existence of business licences.
Jurist Vu Xuan Tien
Vietnamese
