Efforts taken to reduce costs for businesses

A total of 675 business conditions in eight sectors, equivalent to 55% of the 1,216 business and investment conditions under the Ministry of Industry and Trade (MOIT)’s management, have officially been reduced, following the Government’s issuance of its Decree No. 08/2018/ND-CP amending some decrees related to business conditions within the State management scope of the MOIT.

More drastic measures are expected to be taken to reduce costs for businesses in 2018.
More drastic measures are expected to be taken to reduce costs for businesses in 2018.

This is good news for the business community at the beginning of the new year, which has ignited expectations towards further strong improvements in the investment environment this year. There have no longer been empty promises concerning the reduction of business conditions, but many ministries and sectors have actually taken drastic actions, in line with the spirit of creating a facilitate Government in service of both the people and enterprises.

However, according to the Ministry of Planning and Investment, by the end of 2017, only five ministries had reviewed and proposed reduction measures, with the Ministry of Agriculture and Rural Development proposing the abolition and revision of 118 conditions, (34.2% of the total business conditions under its management); the Construction Ministry proposing the abolition of 89 conditions (41.3%) and the simplification of 94 other conditions (43.7% of the total); and the Ministry of Information and Communications proposing the reduction and amendment of 51 business conditions (16%).

There still remain many other ministries and sectors which have yet to review and propose measures to cut and modify business conditions within their State management scopes. This is also one of the reasons leading to many businesses’ complaints about delays in performing administrative procedures, which cause difficulties and troubles for them. Even though the law stipulates that enterprises have the freedom to do business in the professions which are not prohibited by the law, and that business conditions are only stipulated in documents at the level of the Government’s decree or higher, there remain local authorities who grant business registration certificates, but restrict the conditions by industries and business venues in the decisions of the People’s Committees.

2017 is considered to be a year for the reduction of costs for businesses, with many outstanding recorded results. However, in reality, barriers related to costs still remain, causing difficulties for companies. Feedbacks from enterprises and business associations show that many areas still report inadequacies and high costs, such as the logistics industry with high costs and long transport time, or the health and agricultural sectors with high costs for specialised inspection.

Many enterprises and business associations have proposed that the Government should continue to focus on reducing costs for companies with drastic measures in 2018, aiming to produce clearer impacts on the business community. This requires the drastic and effective implementation and the synchronous coordination between ministries and sectors, and between the central and local level. Hopefully, after the MOIT, other ministries and sectors will put aside their partial interests, whilst continuing to strongly reduce business conditions under their management scopes, aimed at reducing input costs and creating a favourable environment for firms’ operations.