Institutional reform needed to improve VN business environment

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Institutional reform is facing difficulties because the power of ministries, State agencies and local authorities is too great. Proposals to cut off privileges and the “ask-give” mechanism are not welcome by many people who benefit.

Without strong determination, it will be difficult to implement reform.

The business environment

Institutional reform needed to improve VN business environment

According to the Ministry of Planning and Investment, on the global ranking of 2021, Vietnam’s business environment reform saw many indicators fall.

Specifically, the Innovation Index decreased by 2 places, from 42nd to 44th; Sustainable development fell from 49th to 51st; Property rights down from 78th to 84th; and Corruption perception down from 96th to 104th.

According to the Ministry of Planning and Investment, since 2020, Vietnam’s business environment index has slowed down, possibly because relevant agencies and the authorities focused their attention on the prevention of the Covid epidemic. The Ministry mentioned this situation in a report recently submitted to the Prime Minister.

According to the Vietnam Chamber of Commerce and Industry (VCCI), the legal system for business has huge shortcomings, mainly the lack of consistency and overlap between legal documents on investment and business activities.

For example, the Laws on Investment, Land, Construction, Real Estate Business, Housing, Environmental Protection, and Natural Resources do not reach consensus on conditions, authority, records, and time deadline for carrying out the related procedure. Thus, investors do not know which procedure should be done first. Due to the inconsistency of legal documents, project implementation takes a long time, causing increasing costs and risks for businesses. This makes the business environment less favorable.

Resolution 02 to cut off privileges

Resolution 02/2022/NQ – CP on “main tasks and solutions to improve the business environment and enhance national competitiveness in 2022”, issued by the Government, is considered an action plan to drastically improve the business environment. This resolution is said to “touch” the power of many ministries and agencies.

To implement Resolution 02, the Government asked ministries and agencies to work out specific programs, action plans and specific documents and submit them to the Government for consideration prior to January 20, 2022. But many agencies failed to meet the deadline.

Institutional reform needed to improve VN business environment

Expert Nguyen Dinh Cung said that Resolution 02/2022/NQ-CP aims to reduce the list of conditional investment and business lines and reform business conditions; remove barriers to investment and business activities caused by overlapping, conflicting, unreasonable and different legal regulations; promote reform of management, specialized inspection of exported and imported goods; speed up reform of land registration and renewal of land administration; and reform, reduce and simplify administrative procedures and business regulations in association with promoting decentralization, empowering local authorities…

These tasks cannot be done by an individual ministry or agency.

On February 14, 2022, the Minister of Planning and Investment signed Decision No. 170/QD-BKHĐT, establishing a working group to implement Resolution 02/2022/NQ-CP.

Economist Ngo Tri Long said that in 2021, more than 100,000 businesses left the market, and in January 2022 alone, this number was 38,409. This is the largest number ever. More than ever, regulatory reform to create favorable conditions for businesses at this time is the most important. The removal of procedures and regulations that are barriers will help businesses to recover.

Some argue that institutional reform is facing difficulties because the power of ministries, state agencies and local authorities is too great. Proposals to cut off their privileges, thus, are not welcomed by many people. Therefore, without strong determination, it will be difficult to execute reform.

According to economic experts, serious improvement of the business environment in the current circumstances will not only help improve the country’s position on international rankings, but also increase the resilience of the economy amid the pandemic.

Tran Thuy

Improving the business environment and enhancing competitiveness are priorities in the tasks assigned by the Government to ministries and agencies in 2022. This is a necessary addition to the recently approved economic growth and recovery plan.

In recent years, businesses and people have increasingly participated in the policy making process.

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