Slow progress in business environment reform 

The Vietnam Chamber of Commerce and Industry (VCCI)’s Business Legal Flow Report shows improvements to Vietnam’s business and investment environment over recent years, with Resolutions No. 68/NQ-CP, 02/NQ-CP, No. 01/NQ-CP, and No. 105/NQ-CP clearly revealing the government’s determination to move forward with reform and remove the difficulties facing businesses.

Fewer business regulations

Various ministries have been developing and implementing plans to reduce or simplify business regulations within their State management scope. From 2021 to the end of November 2023, ministries and sectors reduced or simplified 2,483 business regulations in 201 legal documents, while the Prime Minister approved plans to reduce or simplify 1,191 business regulations in 221 legal documents related to business activities for the 2020-2025 period.

However, the VCCI report notes that these reductions and simplifications have fallen short of expectations and remain somewhat superficial. Significant issues affecting businesses, such as technical standards on fire prevention, problematic business conditions like requirements for cameras in vehicles with nine seats or more, and conditions on gold, jewelry, and fine arts production and business are absent from reform plans.

Its survey of the business community regarding difficulties and overlaps in business regulations identified 94 issues, ranging from laws to decrees and circulars. The report notes that the challenges facing businesses are only minimally reflected in proposals from ministries, indicating that reduction and simplification activities do not fully echo the actual desires of enterprises. As of November 2023, or more than halfway through the 2020-2025 period, some ministries were still to submit reduction and simplification plans to the Prime Minister.

Barriers to reform

According to VCCI, the number of conditional business sectors has increased over the past two years. Assessments of conditional business sectors have not been prioritized, leading to some sectors being unreasonably classified as conditional and inadvertently creating barriers for businesses. The reform of conditional business sectors has actually stalled.

Dr. Nguyen Thi Minh Thao, Head of the Research Department on Business Environment and Competitiveness at the Central Institute for Economic Management (CIEM), said that, in 2023, CIEM reviewed conditional business sectors across 15 State management fields and identified several existing issues.

First, the actual number of conditional business sectors is greater than the 229 listed in Appendix IV of the Law on Investment. Many sectors have been “reduced” mainly through name consolidation or broadening sector names to streamline the appearance of the list.

Second, the number of conditional business sectors increases with each revision of the list.

Third, there are inconsistencies and a lack of uniformity in the names of conditional business sectors between the Law on Investment and specialized laws.

Fourth, conditional business sectors listed in the Law on Investment are not found in specialized laws.

Fifth, conditional business sectors listed in the Law on Investment lack corresponding regulations from the government.

Sixth, some sectors removed from Appendix IV still have effective regulations in decrees.

Seventh, there is inconsistent identification of conditional business sectors.

Eighth, some sectors’ designation as conditional lacks persuasive justification.

Ninth, some specialized legal documents stipulate business conditions, but the sectors are not listed in Appendix IV.

“Clearly, the reduction of conditional business sectors has not been substantive and does not align with the spirit of reform to facilitate business and reduce compliance costs for enterprises,” Dr. Thao emphasized.

Continued reforms

It is necessary, according to Dr. Thao, to intensify the reform of sectors and business conditions to reduce compliance costs for enterprises. For conditional business sectors, the names proposed for inclusion in the Appendix IV of the Law on Investment must be detailed, specific, transparent, clear, and easily identifiable. The names of the sectors in specialized laws should also be consistent with those in the Law on Investment.

For conditional business sectors not listed in Appendix IV of the Law on Investment but regulated by specialized laws, a review, impact assessment, and recommendations for amending Appendix IV should be conducted. If these sectors must be regulated as conditional business sectors, they should be added to Appendix IV. If they are unnecessary or can be managed more effectively by other means, they should be removed from Appendix IV.

When proposing new conditional business sectors for the Law on Investment, a specific impact assessment report, based on scientific and practical evidence, must be provided. The process should include extensive consultation with affected parties and public dialogue to build consensus.

For broadly named conditional business sectors, ministries should propose amendments to narrow their scope in Appendix IV. The names should be detailed, specific, transparent, and easily identifiable.

For conditional business sectors lacking a scientific and practical management basis, unclear management objectives, or better alternative management measures, ministries should propose amendments to remove these sectors from Appendix IV. If new conditional business sectors need to be added, a comprehensive impact assessment report must be included.

Additionally, any business conditions found to be illegal, unnecessary, impractical, lacking a clear scientific basis, or replaceable by more effective management measures should be abolished.

Business conditions that do not reflect practical realities or excessively interfere with business activities must be removed or simplified to reduce compliance costs and ensure minimal interference with business operations.

Vague, unclear, or non-specific business conditions should be revised to be specific, transparent, clear, understandable, and feasible. If specific and transparent criteria cannot be established, these business conditions should be abolished.

Dr. Thao also recommended that ministries review and eliminate unnecessary certificates, consolidate overlapping certificates to avoid any cost to society, decentralize training and certification processes, and promote the socialization of these activities.