Local businesses have complained about shortcomings in Decree No 19/2016/ND-CP, causing them trouble after it came into effect only five months ago, heard attendants at a conference held in Ha Noi on September 27. — Photo vietnamplus

HA NOI (Biz Hub) — Local businesses have complained about shortcomings in Decree No 19/2016/ND-CP, causing them trouble after it came into effect only five months ago, heard attendants at a conference held in Ha Noi on September 27.

The conference, which was co-organised by the Ministry of Industry and Trade and the European Trade Policy and Investment Support Project (EU-MUTRAP), aimed to collect ideas from organisations and individuals on regulations and administrative procedures of the industry and trade sector.

The decree's ineffectiveness on gas trading was one of the biggest concerns raised by domestic firms about the ministry's administrative procedures. They asked the ministry to review and amend regulations to bring them into line with real-world scenarios.

Pham Thi Hien Luong, a representative from the Binh Dinh Gas Businesses' Association said the decree's regulations stipulating the gas companies had storage tanks and total LPG bottle capacities of at least 2.62 million litres were hard to complete, especially for those in remote and mountainous areas with low population densities.

"Gas companies have to invest in at least several thousands of 12kilo gas tanks to meet the market's demand. It means that we would have to invest around VND4-5 billion (US$179,000-$223,800), excluding expenditure on warehouses, preservation and labour. However, not all of the tanks would be used, leading to high inventory," Luong said.

She calculated that each gas company would have to invest VND25-30 billion in the gas tank system when applying for a business licence, while the investment was unnecessary for production and trading. It was estimated that they had to spend a total of $35 million to apply for and maintain an unnecessary licence.

She added that the regulations were more suitable for large localities with a high population density.

"The decree was unreasonable and could lead to bankruptcy for most gas distributors".

Reiterating the points, Tran Trung Nhat, director of Thai Duong Gas Company in the southern Tay Ninh Province also felt strongly about the decree.

Nhat said the decree took effect on May 15, 2016. However, each locality had their own regulations in granting licences to gas businesses.

"There were two decrees on gas trading within only six years. The latest decree still has business conditions conflicting with each other, causing difficulties for firms," he added.

Nguyen Minh Duc from the Viet Nam Chamber of Commerce and Industry said the ministry's regulations tended towards business' scale and limited small-and-medium sized enterprises (SMEs) or even deterred the development of start-ups.

"The scale differentiation has not only been seen in the gas sector but others such as rice, fertilisers and petroleum. The condition has shown the Government's deep intervention into the market as business' scale depends on market's supply and demand," Duc said.

He noted that Governmental agencies often believed that SMEs had more violations than bigger ones, thus needing more investigations into the firms. However, we should not limit small firms. The conditions could also be a barrier for start-ups.

Responding to the concerns, deputy minister Tran Quoc Khanh affirmed that the ministry had asked relevant departments to collect gas firms' ideas to submit to the Government for review.

"The target of policymakers when making the decree was to ensure benefits for consumers while ensuring the market's healthy competition and transparency. However, the ministry wants to receive contributions from businesses," Khanh said.

Decree No 19/2016/ND-CP was promulgated on March 22, 2016 to replace decree No 107/2009/ND-CP on November 26, 2009 on gas trading. — VNS