On July 1, 2006, the 1999 Enterprise Law will be replaced with the 2005 Enterprise Law, which is one of the basic reforms in the enterprise law system in Vietnam on a basis of the widely recognised successes of the 1999 Enterprise Law. However, experts say that a systematic implementation from centrally-run to locally-run agencies is needed for the new Enterprise Law.
The 1999 Enterprise Law: Successes and Shortcomings
At a conference held recently in Hanoi by the German Co-operation Agency (GTZ) and the Central Institute of Economic Management (CIEM) to review six years of the implementation of the Enterprise Law, most attendants said that the 1999 Enterprise Law had brought important changes to Vietnam. The most outstanding feature of the law, said Nguyen Dinh Cung, director of CIEM, was people had been free to do business in those fields, which were not prohibited by the law, making a contribution to the liberation of production and promotion of economic growth.
According to statistics from the Department on Development of Small and Medium-sized Enterprises, the Ministry of Planning and Investment, 160,672 enterprises were registered in the 2000-2005 period, or 3.3 fold against the total number of the previous ten years. Newly registered capital reached VND 312.2 billion and supplemented capital, US$6.3 billion. With an impressive growth rate of the private sector, the proportion of Vietnamese people and enterprises in Vietnam’s total investment capital increased from 22.6 per cent in 2000 to 32.2 per cent in 2005.
Also, the simplification of procedures for enterprise establishment with the removal of hundreds of licences and regulations which are no longer suitable with present business conditions, and the development of a new system of guidance documents, the Enterprise Law has made a breakthrough in administrative reform, helping reduce corruption and improve consistency, transparency and equality within business law in Vietnam.
Despite these advantages, as Cung said, the 1999 Enterprise Law did not provide any concrete regulations on the organisation of the system of business registration agencies as independent agencies. Provincial business registration offices are part of departments planning and investment and at the district level, there are no business registration offices. At the same time, business registration agencies remain fragmented and unprofessional, hampering the reference of people, the business community and State agencies. Most business registration agencies, especially in Haiphong, Da Nang, Hanoi and Ho Chi Minh City, lack staff members.
A new wave of business licences, on the other hand, is emerging and may produce negative impacts on the local business environment. The number of business licences increased rapidly, from 194 in 2002 to 246 in 2003 and 298 in late 2004. Therefore, a new licence emerged every week, let alone hundreds of licences in the form of ‘approvals’ and ‘agreements’ which do not have any official name.
Systematisation is needed
According to experts, the content of the 2005 Enterprise Law inherits and develops the content and the renovation spirit of the 1999 Enterprise Law. However, to that end, it is very difficult, even more difficult than the implementation of the 1999 law.
Le Dang Doanh, member of the Prime Minister Research Commission, said that consistent business environment, administrative, quality, food hygiene and safety conditions would be much higher, so serious evaluations should be made. The 2005 Enterprise Law will implement more completely administrative reform and practise the people’s freedom to doing business.
Pham Chi Lan, member of the working group on the implementation of the Enterprise Law, said that it would be more difficult to upgrade and improve the 2005 law from the 1999 one. Business registration agencies should be consistently established from the central to local level with qualified equipment and capability.
According to lawyer Tran Huu Huynh, head of the Legal Department of the Vietnam Chamber of Commerce and Industry (VCCI), for a good implementation of the 2005 Enterprise Law, the formation of a consistent system is very important. Otherwise, it may be very difficult to implement the law. Business registration, legally, recognises the registration right of business owners but does not check the preciseness of the registration.
Business registration, in fact, is not only a legal procedure but also a necessary factor to ensure the safety for the whole system and the business community, to establish a partnership, and to investigate enterprises’ capability.
Lan Anh
Vietnamese
