Legal Corridor for Perfected Business Environment

In recent years, the Vietnamese Government has made significant efforts to perfect its legal corridors. Basically, the Vietnamese legal system has matched the system of the World Trade Organisation (WTO). This is a result of effective preparation for the shift from a subsidised economy to a market one, as well as efforts by Vietnam to complete its WTO accession negotiations. This is an outstanding feature of Vietnam, as many countries have incomplete legal frameworks, even when they join WTO.

Since the 1999 Enterprise Law took effect, the Vietnamese business environment has become more favourable. This was a breakthrough in administrative reform, which has improved the transparency and equality of the legal framework for business activities in Vietnam. Procedures for business establishment have been simplified with the removal of hundreds of unnecessary licences and legal documents, and the establishment of new legal documents, providing guidelines for business activities. The 1999 Enterprises Law and its enforcement have encouraged the development of business activities of Vietnamese and foreign individuals and organisations. The number of enterprises increased from 62,000 in 2002 to 200,000 in 2006

 

The Vietnamese legal system's strength is the seriousness and urgency with which it is trying to meet the development demands of the economy and match the WTO system. It is possible to say that State management has caught up with economic development. While intellectual property rights became a hot issue in Vietnam and the world, the Law on Intellectual Property was issued as a guideline for settling copyright issues. When the Vietnamese people adapted themselves to e-commerce and the stock market, the Law on E-commerce and the Law on Securities were issued. More importantly, however, two laws, which cost much strength and effort, the Unified Enterprise Law and the Common Investment Law were issued.

 

Despite significant improvements, problems remain in the legal environment in Vietnam, especially the existing business licence system, to which the Government is paying great attention. Since the 1999 Enterprise Law took effect, Vietnam has made great effort to renew its system of licences. Accordingly, the Government has removed licence requirements three times, not to mention efforts by ministries, agencies and localities and many research works reviewing business licences in Vietnam. As a result, more than 300 licences requirements have been revoked and 44 others have been converted into non-licence conditions.

Since the 2005 Enterprise Law was issued, issues relating to licences have heated up because under the law, business fields have conditions stipulated by other laws, ordinances and decrees. In fact, concrete conditions are stipulated in circulars, decisions by ministries and people’s committees at all levels with unclear conditions and times. The Vietnamese Government and relevant agencies are making efforts to filter the system of business licences to facilitate investment and business activities of enterprises in Vietnam.

 

The Civil Code, the Trade Law and other laws stipulating trade activities took effect in 2006. The laws have been applied properly, creating a unique system of law with priorities from the Trade Law to the Civil Code. The method has settled the relationship between common and separate laws, helping people, enterprises, lawyers, arbitrators and judges precisely apply legal regulations. The legal system has gained consistency with the laws supplementing each other. Therefore, the overlapping and conflict of laws has been avoided. This is an outstanding achievement of law enforcement in Vietnam.

 

The Unified Enterprise Law and the Common Investment Law were issued preparing the legal environment for business activities. The two laws have removed the discrimination of market divisions for economic sectors of different ownership, in particular the Enterprise Law and the Investment Law. The two laws treat investors equally regardless of economic sectors they are operating in. This matches WTO regulations, which respect and meet the right to freely do business. The Enterprise Law shows transparency in the building of the law and stipulates that business conditions, which are banned or constrained, should be stipulated by legal documents at the Governmental level. This helps avoid abuse by organisations and agencies which are not qualified to impose business conditions.

 

In 2006, many improvements in the business environment were seen. Apart from the Enterprise Law and the Investment Law which took effect, the Prime Minister took tough measures, asking relevant agencies to reform administrative procedures and apply the one-stop mechanism for transactions with people and enterprises. In fact, some localities have seen a significant progress.

 

However, when the laws took effect, issues relating to business licences emerged. In fact, the system of licences has cost enterprises more. Therefore, it is necessary to review and remove unnecessary licences. To improve the business environment, however, it is necessary to strengthen infrastructure and the relationship between State agencies and enterprises. In terms of the provincial competitiveness index, Binh Duong ranks on top, said to be friendly and responsible in performing their tasks and functions in a transparent and open manner, ensuring a fair competition environment for enterprises. If Vietnam can multiply the model of Binh Duong, the local business environment will improve by 300 times. It is possible to say that the main issues are in mechanisms and policies, with human resources acting as the focal point.