Nguyen Dinh Cung of the Central Institute for Economic Management (CIEM) says that starting today, business licenses and conditions are only considered legal if they are recognized by laws or government decrees, which means those specified in bylaws issued by ministries and local authorities are no longer valid.
Enterprises can file lawsuits against agencies that ask for unnecessary business licenses, and obtain compensation for any losses incurred thereof, Cung adds.
According to the Enterprise Law that was passed in 2005, besides business activities that are completely banned, and those that can be conducted unconditionally, there are others that have to conform to certain conditions stipulated by the law.
However, the law does not authorize ministries and local authorities to set conditions for a business activity, notes Tran Huu Huynh, head of the Vietnam Chamber of Commerce and Industry’s Legal Department.
Ministries have been stipulating many conditions for businesses through their circulars.
Huynh says that many licenses and conditions not stated in laws and government decrees should have been abolished when the Enterprise Law took effect in 2006.
A decree issued last year gave ministries and state agencies more time to review the business conditions and get rid of those that were unreasonable, but few such conditions have been reduced by the deadline that falls on September 1.
Many conditions should be invalidated or amended, he says, citing some examples including approvals required for promotional programs or permits granted to mend tire punctures.
Cung told Thanh Nien that the number of licenses and permits that enterprises have to obtain has increased rapidly since 2000, alongside the increase in business activities subject to specific conditions.
A recent study carried out by CIEM shows that business activities falling under the purview of numerous requirements imposed by various government agencies number nearly 400. And the documents proving compliance with the requirements are also of similar magnitude.
At least 50 of these activities have their operating conditions listed in different documents issued by different agencies, leading to inconsistencies and confusion, Cung observed.
Furthermore, many conditions are not clearly defined and most of them can be confused with the ethical code of conduct for doing business.
For example, one condition stated for employment agencies is that they have employees of good virtue and provide assistance to visitors who are disabled, elderly, children and pregnant women, he said.
The CIEM study found out that it takes more than 400 days to finish all the paperwork for an investment project outside industrial parks, with an average of 314 documents required to be filed.
Huynh said if procedural reforms that stem from the decree are successful, it will help businesses save more than US$1 million a year. According to him, half of the 400 licenses and certificates should be eliminated as of today.
Authorities in the same boat
It is not just businesses, but authorities also have difficulties with licensing, says Pham Ngoc Van, head of the Dong Nai Province Department of Planning and Investment’s Business Registration Office.
There are many documents concerning business conditions that are irrational but the office still has to follow the procedures strictly, she says.
She suggests a fresh effort to ensure that legal documents are created with clear purposes and be considered very carefully before they are issued.
Dinh Van An, director of CIEM, says the institute is going to propose that the government withdraws 43 such irrational documents this month.
According to the World Bank’s Doing Business in 2008 report, Vietnam is ranked 63 out of 178 countries in “Dealing with Licenses.”
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Foreign firms say still entangled in red tape
While foreign firms operating in this country agree there has been an improvement in the general business climate, paperwork continues to be a vexatious problem.
The CEO of Ho Chi Minh City-based business consultancy Star Corporate Vietnam, Chris Jones, says the central Department of Planning and Investment (DPI), for instance, tends to be highly inflexible when it comes to leases.
An investor’s license application may include a signed lease, but if the landlord is a Vietnamese company, the DPI requires that company’s business license to show it can rent out its premises.
Meanwhile, the Housing Law allows a Vietnamese entity to sublease part of its premises. It does not call for a license if leasing office space is not part of the business’ normal activity.
Jones says that if this hurdle is somehow overcome, the DPI then asks for the landlord's certificate of ownership or land use rights and the building construction contract.
When such demands become “impossible to fulfill,” the department simply asks the investor to find new premises if it wants a license.
Jones also laments that though a license should legally be issued within 15 days, this “has never been met because the time is stated to be from the time a dossier is ‘accepted’ by the DPI.”
At a recent conference between investors and officials from several southern provincial DPIs, Ngo Thanh Tung, senior partner at Vietnam International Law Firm, told Thanh Nien Daily it seems easier and quicker to apply for licenses in the north than in the south.
Frederick Burke, managing partner of Baker & McKenzie law firm, said for various reasons Japanese and Korean investors tend to open high-tech factories in northern locations, and this is an issue southern authorities should ponder.
But Phan Huu Thang, director of the Department of Foreign Investment rejected the claim as unjustified, saying the south has always attracted massive FDI projects worth billions of dollars and Binh Duong, Dong Nai and HCMC are leading localities for foreign investment.
He conceded, however, that there are discrepancies between the law and WTO commitments that need to be sorted out.
Reported by Vinh Bao |
Source: TN, TT |
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