Business Licence Management System Needs Transparency

 

The Constitution 1992 stipulates that every Vietnamese citizen is permitted to do business in the fields and branches the law does not forbid. But, in fact, individuals and enterprises are facing numerous difficulties and troubles in production and trading due to the existence of “sub-licences.” Under the umbrella of the State management enhancement, ministries, branches and local governments issue hundreds of procedures, leading to limitations in the business freedom of enterprises.  

The enactment of the Enterprise Law 1999 was regarded as the killer to rampant “sub-licences” and the Prime Minister eliminated hundred kinds of unsuitable “sub-licences” issued by ministries, braches and local governments. However, on a national scale, Vietnam has no agency in charge of monitoring and managing the issuance of “sub-licences.” In addition, Vietnam has no document specifying contents, requirements, principles, sequences, formalities and files for the issuance of licences. As a result, the release of “sub-licences” is still on the rise. According to statistics from the VCCI, there are some 300 “sub-licences.”

 

For example, in the banking industry, as of December 31, 2004, there were 34 kinds of business licences in use. However, only 12 of them were produced under the instructions of circulars and decisions of the State Bank governor. Mr. Truong Thanh Duc of the Vietnam Maritime Commercial Joint Stock Bank explained some unsuitable kinds of licences as follows. The State Bank allowed credit organisations to set up subsidiary companies, the State Bank governor permitted joint stock banks to list, trade and issue shares on the stock exchange. However, under the Decree 02/2000/ND-CP by the Government (supplemented and amended under the Decree 125/2004/ND-CP to implement the Enterprise Law), 12 above licences and several others were not produced in accordance with the law, ordinances and decrees. Consequently, they must be terminated. 

 

Mr. Nguyen Dinh Cung, Director of the Department for Macroeconomic Policy under the Central Institute for Economic Management (CIEM), said, at the moment, there is no clear and common definition for the licence as well as no discourse-on-method or criteria to define which industries need a licence. Furthermore, there is no systematic mechanism, monitoring regulation and assessment for the issuance of licences. He stressed, at present, the release of licences is defined as jobs of management agencies while concerned people remain outside the licence production process.

 

The Enterprise Law 2005, to become effective from July 1, 2006, needs several decrees to implement the law. Many are underway, including the Decree on business licence management system. According to Mr. Tran Huu Huynh, VCCI's Legislation Department, the biggest target of this decree is to secure the transparency and publicity of the under-construction business license system. 

 

The Draft Decree lists industries that may need licences. It proposes that licences be introduced only when other management tools fail to reach the objective of protecting related public interests and having lower costs. The draft rule also cites principles in drafting and issuing licences, the set-up of a national committee for business licences, principles for registering and implementing licence regulation.

 

Accordingly, the construction and issuance of a licence in all forms are only valid when it is provided in the laws, ordinances or decrees of the government. All information about the licence must be made public in accordance with instructive decrees. All licences or related requests must be registered and publicized at the registration offices under the national committee for business licences. The Draft Decree also provides that related sides, including VCCI, associations, business clubs and State management agencies, must be asked for advice when the draft and issuance of business licence regulations are made.

 

The national committee for business licences will be set up by the Prime Minister and is under the direction of the Prime Minister. The committee will be responsible for monitoring, supervising and assessing the release and implementation of regulations on licences in order to guarantee the unity, logicality, transparency, efficiency and effectiveness of a licence. A Deputy Prime Minister will be the chairman of the committee while the Dean of the Government Office will be vice chairman. Half of the committee members will be State officials while the remaining half will be from representatives from VCCI, associations, experts and others.

 

The State agency entitled to receive, process and decide the issuance of the business licence can be a department or equivalent at the provincial or municipal level. The licence will be valid nationwide for five consecutive years and each renewal will have an additional five-year validity.

 

Under Vietnamese law, not every licence needs a validity of five years. For example, the investment certificate, business certificate or lawyer practice certificate need time, effort and money to grant. So they need more than five years validity. In many countries, sometimes, the licence renewal only requires holders to pay a small fee for the renewal process. In my opinion, the validity regulation should be removed because exists in other legal documents.

 

In my viewpoint, the Draft Decree is not satisfactory. If the licensing comes under the State agency, the “give-and-take” mechanism is resumed, it may cause negative impacts on the development of the Vietnamese business environment. If the business condition certificate is introduced, of course, there will be no “give-and-take” mechanism, which helps eliminate power abuse and overlapped procedures and create an favourable legal environment for businesses. If enterprises have satisfactory conditions, they need simple and swift licensing procedures. This is key to the issue we are looking for.

 

 

For me, the Council is not legal if it is an interdisciplinary agency under the Prime Minister. An organisation with its own seals and bank accounts, cannot be both “an interdisciplinary agency” and “under the Prime Minister”. As for the vice-chairman position of the council, I don’t support the Dean of the Government Office because a vice-chairman will have to directly manage the work of the council, not suitable for his/her two positions. I think the vice-chairman position should belong to the director of the Prime Minister’s Research Committee.