Favorable administrative reforms expected in 2020

SGI

In a talk with Saigon Investment, Mr. Vũ Tiến Lộc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that the year 2020 will see many favorable laws with positive administrative reforms, especially those concerning administrative procedures for companies, which all will create a better environment for investors and businesses in coming times.

In 2020, we must continue to strongly reform administrative procedures, especially in import and export inspection procedures.

In 2020, we must continue to strongly reform administrative procedures, especially in import and export inspection procedures.

JOURNALIST: - Sir, this year Vietnam is going to take charge of the Chair on ASEAN. What do you think about Vietnam's economic competitiveness in the region?

Mr. VŨ TIẾN LỘC: - The Standard Chartered Bank's new Trade20 Index looks at 20 countries with promise around the world, and Vietnam ranks No. 6 on the index. But Vietnam is rated just average in the lists introduced by the World Economic Forum and the World Bank, and our technology and work performance is not high either, compared with other countries in the region. Our reform administrative procedures for new companies are just average in ASEAN as well.

What is unique is that the specialized border administrative inspection procedures are still twice as many as the average of ASEAN. The reason is that some specialized administrative import-export inspection procedures have just been changed from pre-inspection to post-inspection, rather than completely eradicating these procedures.

The fact that Vietnam stopped climbing up the global business environment rating in 2019 is a warning that Vietnam could fall behind if there were not any more significant reforms. According to JETRO’s survey, Japanese companies described Vietnam as their favorite investment place, but they all said the biggest difficulty for their investments in Vietnam were the current administrative procedures.

After much efforts by the Government, relevant ministries, departments and companies during the period 2014-2018, Vietnam jumped 30 places up in the competitiveness rating. That was an impressive result. Basically, however, Vietnam’s competitiveness is still average in the world, and Vietnam is not even among the top four in ASEAN countries.

-  In 2019, the Government introduced strong reforms in reducing administrative procedures and business requirements, but the reforms were not enough. What do you think about this issue?

- I believe there are still areas that badly need reforms in business requirements and administrative formalities. The latest Decree by the National Assembly also requested that the Government continue to reduce and simplify business requirements and administrative formalities for specialized inspection. This means the Government still has to make more effort. In the context of a digital economy and step-by-step construction of an electronic Government, lots of procedures will have to be digitalized in 2020, making it possible for us to move closer to the goal of becoming one of the top four economies with the most favorable business environment among ASEAN countries.

In recent years, businesses have positively responded to Government efforts in making the procedures more and more favorable for businesses. Over the past three years, companies have sent more than 3,000 letters to Vietnam Chamber of Commerce and Industry, including responses, opinions and petitions regarding this issue. It has come as good news that the competent agencies have sent back appropriate answers or settled most of the problems. Only around 20% of the problems have not been resolved. Of the 80% problems resolved, 60% of the companies have been satisfied with the solutions, and 40% have not been pleased. This indicates that the companies do not find the agencies’ solutions quite reliable because the agencies have just given explanations rather than satisfactorily cope with the problems.

It is certainly difficult to solve all the problems as said in the petitions from companies because of binding requirements in applicable legal regulations. This situation requires the concerned agencies to simultaneously solve two problems of discrepancies and conflicts of laws and transparency in laws and their enforcement.

- What do you think the Government should do in 2020 to promote corporate growth?

- I strongly believe that 2020 will see a breakthrough in reforms in policies and administrative procedures, especially ones applicable to companies and business activities. Particularly, specialized inspection must comply with international regulations, with a switch from pre-inspection to post-inspection. If everything goes well, at least 5-7% administrative procedures for specialized inspection will be reduced this year, paving the way for international rules like the ones in developed countries to be applied in Vietnam within the next one or two years.

Under the bill of the revised Corporate Law, companies may request the Government and competent agencies to consider their wishes and expectations. I also hope that the agencies will move from giving explanations to listening to their problems and having dialogues with companies in order to take appropriate measures to help companies satisfactorily settle their problems.

Reality shows that there is a huge gap between listening and solving problems. That is why I really hope we will make great strides in this field this year. It is vital that the relevant agencies adhere strictly to the requirements set forth by the Prime Minister. That is, the agencies are supposed to accompany and provide essential support for businesses, and consider companies’ losses or responsibilities to be actually those of the agencies.

First and foremost, it is important to satisfactorily solve problems such as discrepancies and conflicts of laws and lack of transparency in legal regulations, because risks for companies will still be huge until all the problems of discrepancies and conflicts of laws and lack of transparency in legal regulations have been resolved thoroughly and convincingly.

-  This is the final year for the goal of one million companies operating in accordance with Resolution 35 by the Government. What is your opinion about this goal?

- As far as Resolution 35 is concerned, the Government considers private companies a main force that will help drive economic growth. In fact, the goal of having one million companies by 2020 is very challenging, but not out of reach. I do believe this is quite a reachable goal if we change our idea about household businesses and very small enterprises. I highly value the Government’s plan suggesting that five million household businesses be put in the scale of amendments for revised Corporate Law, expected to be approved by the National Assembly in May 2020.

In particular, each household business must be registered with one individual representative. That is, basically, a household business is a company with one owner as generally interpreted by international definition. With regard to the economic and legal concerns as well as practical activities, a private household business must be a registered household business. It is a type of company, but is not considered to be a company yet, even though some household businesses now have even more workers than companies. That is one of the biggest faults of the system of applicable corporate legal regulations.

- Thank you very much.

Translated by Nguyễn Gia

Hoàng Sơn (Interviewer)

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