Business rules must make sense

Last month, Prime Minister Nguyen Tan Dung called for the reform of administrative procedures for individuals and businesses saying improvements to the business environment contributed substantially to Viet Nam's rapid and sustainable development— Photo petrotimes

HA NOI (Biz Hub) — Ministries that want to continue issuing business licences to the community may soon have to demonstrate that the requirements they demand make sense.

And the many other Government departments and bodies that issue certificates for a multitude of reasons may also be forced to do the same thing.

Vice Minister of the Ministry of Planning and Investment, Dang Huy Dong, explained the likely developments at a Government task-force meeting on Monday.

The task force, which included officials and experts from ministries, was charged with evaluating current regulatory requirements for businesses.

Complaints have been made that there are too many rules – and that most of them are too complicated.

The total variety of business licences issued by Vietnamese ministries is 398. There are also rules for hundreds of certificates required from Government departments and other official bodies.

Under the new proposals, ministries will have to explain the reasoning behind all regulations for business licences.

Dong said the task force's mission was not to get rid of as many regulations as possible, but to remove those that were unnecessary in administrative procedures. He said this should produce a convenient and transparent business environment.

Le Duy Binh, an independent consultant with the task force, said business regulations today were too complicated and sometimes illogical. This was not serving the nation's objective of boosting economic development, he said.

"One poorly-thought out regulation may stop thousands of entrepreneurs from entering the market," said Binh.

He referred to a regulation that forced businesses to acquire fixed assets worth of US$50,000 to be eligible to declare value-added tax using the credit method. The requirement was later dropped.

He suggested ministries shift their focus from pre-control to post-control, saying that pre-control often burdened start-ups with complex requirements.

Independent consulting companies, such as Economica Viet Nam and MCG Management Consulting, also recommended that in many cases it was best to leave it to natural selection in the marketplace to eliminate businesses.

Phan Duc Hieu, from the Central Institute for Economic Management, said there was a need to build standards on categorising types of businesses before regulations could be set.

Members of the task force agreed that businesses and requirements deemed illegal, unnecessary and inappropriate must be terminated while current regulatory requirements must be revised and simplified.

Hieu cited a regulation that dictated labour-hire agencies must have their head offices at a permanent address for more than three years, noting that this was highly restrictive and unnecessary.

Another example was a requirement to have a certain number of vehicles to start a transport company. The requirement effectively forced individual entrepreneurs, who are often short of capital or simply want to remain cautious, to spend a large amount of money unnecessarily.