Target of truncating business conditions seems hard to fulfil

A woman carries out procedures to establish a business at the Hanoi Department of Planning and Investment

This is the fifth consecutive year that the Government has issued Resolution 19 and the first year that the Government has set the highest target of improving business environment from eight to 18 places on the World Bank's Doing Business Rankings in 2018.

Concerning component indicators, Resolution 19 aims to raise the country's “Starting a Business” by at least 40 places and the indicators of “Enforcing Contracts” and “Resolving Insolvency” are each set to move up ten places in the WB’s rankings.

In addition, 50% of business conditions will be removed or simplified, while at least 50% of the list of goods subject to specialised inspections will be cut in addition to accelerating the application of technology in handling administrative procedures and providing online public services.

Dr. Nguyen Dinh Cung, director of the Central Institute of Economic Management (CIEM) said that Resolution 19 issued this year is aimed at reforming indexes related to operations of enterprises and market institutions. In 2017, Vietnam's “Starting a Business” indicator ranked 123th among 190 economies (down two places compared to 2016) and enterprises had to complete nine procedures in 22 days to establish a business. This is a very worrisome figure because countries around the world have made considerable progress in this area. For example, it takes Singaporean firms just 2.5 days to complete online business registration procedures.

Meanwhile, the indicators of “Enforcing Contracts” and “Resolving Insolvency” have occupied low positions for years which are now standing at 129th out of 190 economies. "These are very important indicators of a market economy as an effective dispute settlement mechanism and a professional court system is crucial to the effective operation of the market", Dr. Cung said.

In particular, business conditions remain a burden for the enterprise community which creates costs and barriers for enterprises while distorting the business environment and destroying initiatives of investors despite considerable efforts from the Government and concerned agencies.

A representative from An Do Agricultural Services and Trading Company said that when the company called to the Hanoi Department of Planning and Investment for instructions about business registration procedures, they were suggested that they should directly visit the department for quicker implementation of procedures. But when the company's staff came to the department's office, they were told to find out information on the notice-board themselves. Finally, the company had to give money to staff at the department in order to finish the registration procedures.

In the field of education, there also remain unreasonable conditions which force investors to cheat so that they might fulfil all required procedures. Nguyen Xuan Khang, Principal of Marie Curie Hanoi School complained about the cumbersome and overlapping procedures on applying for the establishment of a private school such as his.

Statistics released by the Ministry of Planning and Investment showed that ministries and sectors had eliminated and simplified just 738 business conditions by the first quarter of 2018. In particular, the Ministry of Information and Communications simplified 11 business conditions but added 115 new conditions.

Currently, only the Ministry of Industry and Trade has completed the task of streamlining business conditions with the removal and simplification of 675 business conditions, while the Ministry of Construction has submitted a draft decree on truncating business conditions to the Government.

The other five ministries including the Ministry of Transport, the Ministry of Health, the Ministry of Agriculture and Rural Development, the Ministry of Natural Resources and Environment, and the Ministry of Justice have developed draft decrees but have yet to submit them to the Government.

Meanwhile, the Ministry of Finance, the Ministry of Culture, Sports and Tourism, the Ministry of Education and Training and the State Bank of Vietnam have reviewed their business conditions but have yet to submit any plans on reducing conditions to the Government.

Dr. Nguyen Dinh Cung said that if these ministries take more active measures, decrees on streamlining business conditions may be issued on schedule, before October 31, 2018, which will eliminate as many as 1,968 business conditions. But most ministries and sectors are still in the review stage and have not produced draft decrees on the reduction of business conditions. Therefore, the target of reducing a half of the business conditions in accordance with Resolution 19 will be difficult to fulfil without drastic measures by concerned ministries and sectors, Cung added./.

NDO