Vietnam needs a ‘conductor’ for renovation

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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.

The prolonged outbreak of Covid-19 in the past two years has had a heavy impact on businesses and people, and at the same time, the reform of the business environment has been slowing down. There have not been many changes in regulations and legal documents on investment and business conditions.

Vietnam needs a 'conductor' for renovation

Economic expert Nguyen Dinh Cung, former director of the Central Institute for Economic Management and Research (CIEM), has said that in the past, when he proposed cutting three-quarters of existing business conditions, “many people scolded me about this. They asked me what is the foundation for cutting business conditions, and how to manage businesses without business conditions? They blamed me and said I was an extremist.”

“However, the most important thing is that management tools that are not effective should be cut out. Otherwise, they are just a tool for the concerned officials to take advantage of and benefit themselves,” he said.

According to Cung, in 2018, ministries and agencies were very active in cutting and simplifying business conditions under the direction of the Government. Many ministries and agencies reduced and simplified up to 50-60% of business conditions and related decrees were issued.

“But I think that the real effect was not much,” he added.

In fact, there are still many business conditions, and overlaps and contradictions in legal documents, which hinder business investment activities.

In 2019, the Vietnam Chamber of Commerce and Industry (VCCI) reviewed more than 400 documents related to legal regulations, market entry conditions, and organization and operation of enterprises. It found 106 articles of 93 documents that need to be amended, supplemented and replaced.

Recently, the Ministry of Planning and Investment reviewed 252 legal documents related to the approval, and organization of implementation and termination of investment projects. and it discovered a number of conflicting and overlapping regulations causing difficulties for project implementation in 19 documents.

The Ministry of Natural Resources and Environment reviewed 440 documents related to land, natural resources, environment, construction and real estate business, and it named 30 documents with inconsistent and inadequate content.

In addition, most of the cuts and simplifications of business conditions are in the operating stage of enterprises, when they carry out specific business activities. In the previous period, from having a business idea to deciding to invest in a project or setting up a business, there are still many barriers.

At many dialogues between businesses and state management agencies, while enterprises demanded to remove, reduce or replace business conditions with other management tools, state management agencies wanted to issue more requirements on business conditions.

A “conductor” is needed

The prolonged outbreak of Covid-19 in the past two years has had a heavy impact on businesses and people, and at the same time, the reform of the business environment has been slowing down. There have not been many changes in regulations and legal documents on investment and business conditions.

Resolution 02/2022/NQ-CP on key tasks and solutions to improve the business environment and enhance national competitiveness in 2022 was issued recently by the Government.

Accordingly, the main tasks and solutions will be reducing the list of investment and conditional business lines and reforming business conditions; removing barriers to investment and business activities due to overlapping, contradictory, unreasonable and different legal regulations; and strengthening reform, reducing and simplifying administrative procedures and business regulations, associated with promoting decentralization, local empowerment and inspection and supervision.

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. Resolution 02/2022 has a new approach of “cutting from the root” rather than “cutting the top” regarding business conditions.

Economist Ngo Tri Long said that more than ever, amending regulations to make favorable conditions for businesses at this time is most needed. “Some businessmen told me that as long as the barriers are removed, they would find a way to develop. Such support does not cost the budget, but also helps remove the interests of a certain group,” he said.

Phan Duc Hieu, Standing Member of the National Assembly Economic Committee, said that institutional reform is facing difficulties because the power of ministries and state agencies is too great. Current procedures call for proposals on amending regulations to be submitted to the Government, but ministries and state agencies are the ones that make the amendments. The proposals and recommendations are aimed at cutting off privileges, which many officials at ministries and state agencies do not want to happen.

In South Korea, a specialized committee was formed to cut business conditions and perform renovation, led by the Prime Minister. Perhaps Vietnam also needs such a “conductor”.

Lawyer Nguyen Duc Manh said that there should be sanctions against civil servants. It is a must to develop clear and strong sanctions to force civil servants to work and take responsibility in that process.

Along with macroeconomic stability, a favorable, open and competitive business environment is always an important factor in the effective use of resources for socio-economic development.

Tran Thuy

Thirty-five years of renovation have transformed Vietnam from a country confronted with food shortages in the 1980s into a middle-income economy and one of the world’s 20 leading international trade powerhouses.

Resolution 02 has been issued by the Government with the goal of continuing to improve the business environment and enhance the country’s competitiveness in 2022.

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