-
 Over
the last four years of implementation of the Enterprise Law
1999, a new license has appeared every week. It may be possible
to determine the number of “official” business licenses that
have been issued in written form until now, but it is impossible
to know the exact number of “unofficial” licenses and
conditions. In addition, regulations related to these licenses
and conditions are unduly prescriptive, of poor quality,
unclear, inconsistent, and poorly enforced. Given the process
for introducing new licenses and the nature of many these
licenses, there is growing concern about how many more will be
issued in the coming years. Licenses add to businesses'
transaction costs, both in terms of time and money. Not only do
they create direct costs but they also allow for increased
discretion by officials that can lead to increased harassment of
enterprises.
The Enterprise Law 1999 also introduced business conditions that
do not require licenses, a new concept in Vietnam that has
helped change the mentality of State administrators,
considerably reduced administrative procedures and increased the
autonomy of enterprises. However, in practice, it is as
difficult to manage the issuance of business conditions that do
not involve licenses as it is to control the proliferation of
business licenses. It is not only the National Assembly, the
Standing Committee of the National Assembly and the Government,
who impose business conditions on enterprises, but also
Ministries, provincial authorities, and even lower level
People's Committees. As a result, the number of business
conditions is on the rise, which increases costs for both
enterprises and administrators. In addition, many of the new
conditions imposed on certain business sectors are unreasonable
(i.e., their legitimate objective is not clear). They also tend
to create monopolies for certain enterprises and individuals
operating in the targeted lines of business, as they may be
designed to create special prerogatives and improve the personal
gain of certain parties. Some conditions are not only contrary
to the powers prescribed for the relevant officials, but have
also been created without a corresponding system and plan for
implementation.
Mr. Nguyen Dinh Cung, Director of the Macroeconomic Policy
Department,
Central Institute for Economic Management (CIEM)
-
The main flaw in our business licensing system is that licenses
currently relate to market entry (i.e., ex ante licensing),
restrict business freedom and impose heavy administrative
expenses, all of which render them ineffective as a management
tool. In other countries, licenses are generally ex post,
requiring enterprises to comply with conditions throughout their
existence. For example, in some countries, a person can freely
open a new restaurant without having to ask the state for
permission. However, the restaurant will be frequently monitored
by both the Food Association (which may require the owner to
attend food safety training courses) and the authorities (who
may perform sudden inspections to ensure compliance with food
safety regulations).
Moreover, in Vietnam, many types of licenses that are issued are
based on legal documents of different levels. Often these
underlying documents contradict each other; for example, there
may be differences between laws and their implementation
guidelines, between decrees from the government and circulars
from particular ministries, between national and local
regulations etc. However, in Vietnam there is no constitutional
court to rule on whether or not disputed laws and other legal
documents are unconstitutional or conflict with superseding
legal documents.
Mr. Pham Duy Nghia, Head of Business Law Division,
Law Faculty, Vietnam National University
-
 When
drafting the regulations related to conditional business lines,
the relevant authorities, who lack business experience, try to
impose requirements and conditions that firms can not afford. As
a result, such regulations are ineffective (i.e., cannot be
implemented). Take the example of doing business in the
logistics sector. A logistics service provider, after completing
the registration process at the Department of Planning and
Investment, would need to apply: i) for the multi-modal
transport license with the Ministry of Transport; and ii) for
the license to be a customs clearance agent with the Department
of Customs and licenses for Inland Clearance, Deportation, etc.
One unreasonable requirement that the firm needs to submit for
the license is a certified list of assets from the firm's
financial management company; however, in Vietnam, most private
companies (i.e., limited liability companies, joint stock
companies) lack their own financial management company! Another
stipulation is that to obtain a custom agent's license, a
business must have qualified (i.e., trained and certified by
customs offices) staff working as customs agents. In summary, it
takes a lot of time for a business to get a license and while
waiting for the license, the business continues to operate
Mr. Nguyen Tham, Vice President,
Vietnam Freight Forwarders Association (VIFFAS)
-
Although the management of sub- (or “baby”) licenses has been
improved, some agencies are creating other tools that
effectively control businesses in the same manner. In Vietnam,
decrees are drafted by relevant ministries and then issued by
the government. As a result, in many cases the drafting
ministries have tended to strengthen their regulatory power,
e.g., by readopting the “ask-give” regime. That is why a decree
on state management on the issuing and implementing of business
licenses is needed.
Mr. Vu Xuan Tien, Director,
VFAM Consulting Firm
-
When designing business licensing regulations, the issuing
agencies must cautiously consider the necessity, effectiveness
and consequences of each license. For example, regarding the Law
on Securities, some key questions must be asked, including 1)
Why is it necessary for investors to get permission to buy more
than 25% a company's shares from both the State Committee for
Securities and the company? 2) Is there any benefit to the
company or the investor; and 3) Is this the most effective tool
for state management of this sector?
Mr. Nguyen Hoang Hai, General Secretary
of Vietnam Financial Investors Associations (VAFI)
-
 From
the experience of the Task force, reviewing and abolishing
unnecessary business licenses is a difficult and lengthy
process. The task force had to discuss the details of each and
every term in the licenses with almost all of the Ministries and
try to convince them to cancel some terms, but in the end, most
of the Ministries did not agree. Ministries have great power and
if they do not approve the cancellation of licenses, ultimately
the Task Force cannot do anything.
Mr. Cao Ba Khoat, Director,
ATYS Consulting and Training Joint Stock Company
(a member of the Task Force for the Enterprise Law 1999)
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