A motive for substantive changes

Sunday, 2019-02-03 10:57:04
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The government is making bold efforts to make it easier to do business in Vietnam. (Photo: Dien Dan Doanh Nghiep)
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NDO - The Vietnamese business environment is witnessing positive changes never seen before in terms of the elimination of business regulations and the removal of bottlenecks in the state management mindset. But a great deal of challenges still wait ahead.

A leap in state management

In November 2018 the government decided to scrap a decree stipulating the regulations on the trading of helmets for motorbike and scooter users. In order to completely remove this business from the list of conditional business lines, an additional step is needed, that is revising the Law on Investment. But the most important aspect is that government authorities have acknowledged the irrationality of the regulations they imposed in the past.

It should also be noted that during the two years of reviewing business regulations, the Vietnam Chamber of Commerce and Industry (VCCI) found that companies involved in the helmet business have to buy a wide range of equipment in order to be licensed to manufacture helmets, while such equipment could be leased from other companies.

Furthermore, state management agencies also specified the quantity of machines that an enterprise must possess. Such regulations were completely useless for the purpose of preventing fake products as stated by the Ministry of Science and Technology. But it took two years for the ministry to reach that conclusion.

Besides the aforementioned example of the helmet business, those in various businesses such as gas, education and rice exports are also being afforded new opportunities when half of more than 6,000 business regulations have been revised or removed. This means the reduction of millions of US dollars’ worth of compliance costs and working hours of state management agencies and businesses.

Nguyen Dinh Cung, Director of the Central Institute of Economic Management, has shared that, since November 2018, most ministries have completed formulating plans to cut and revise at least 50% of the current business regulations under their jurisdiction in response to the Prime Minister’s request.

Dau Anh Tuan, head of the VCCI’s legal department, is even more excited with the fact that ministries and agencies took the initiative to streamline business regulations. He calls this effort a change of mindset. He says “In the past I witnessed that ministries only paid attention to two things when giving feedback on a draft decree on revising business regulations. The first was if any of their functions or tasks were taken away. And the second was if they were assigned any more responsibilities. I almost never heard the question, what will enterprises gain or lose with such regulations?”

Remaining gaps

The changes in both the working attitude and working style could be seen at almost all state management agencies but such changes have been inconsistent, which was noted by the Ministry of Planning and Investment in a recent report.

The consequences could be seen in a VCCI report on the implementation of Resolution 19 on improving the business environment and enhancing national competitiveness in the eyes of enterprises.

Six indexes seen by enterprises as having improvements or very good improvements include business start-up, access to electricity, property registration, contract dispute resolution, access to credit and social insurance. Other indexes were improving slowly and lower than the expectations of enterprises. Such results are completely in accordance with the World Bank’s report on the ease of doing business in Vietnam.

A preliminary review by the CIEM into the business regulations of the four ministries, namely Agriculture and Rural Development, Construction, Information and Communications, Culture, Sports and Tourism have exposed new problems. The regulations that are considered truly beneficial to enterprises when removed belong to the Ministries of Information and Communication, and Culture, Sports and Tourism, while the regulations scrapped by the Ministry of Agriculture and Rural Development are low in both numbers and substantive changes.

A worrying concern is that this method of revising regulations is leading to complexities in the compliance with new regulations. Even the CIEM, which is experienced in this task, needed a week to review the new changes, therefore how can enterprises deal with such complicated regulations. The method of using one decree to revise many decrees provides for quick changes but will make implementation harder.

And then whether enterprises can really benefit from such deregulation as calculated by policy-makers depends on whether local leaders make earnest efforts with this task and whether civil servants can feel the pressure to change.

The quality of business regulation reduction relies heavily on the leader of each sector. The ministries whose leaders are active and proactive will bring about positive changes and vice versa. And now leaders at the lower levels of government also need to change themselves.