Red tape continues to confound in Vietnam

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Entrepreneurs register their businesses at the Planning and Investment Service of Ho Chi Minh City in this file photo / PHOTO: NGHIA PHAM

After several faltering starts, Vietnam began its efforts to cut red tape in right earnest in 2007, but seven years on, local and foreign businesses are not breathing any sighs of relief.

They say their projects are still snagged in complicated and confusing paperwork.

The results of a study released by the Vietnam Chamber of Commerce and Industry (VCCI) at a meeting earlier this week show that administrative procedures related to investment, land and construction are considered the most troublesome by investors.

The meeting was organized by the VCCI in collaboration with the Prime Minister's advisory council on administrative reforms.

The study covered 8,053 Vietnamese and 1,540 foreign companies, the Tuoi Tre (Youth) newspaper reported.

Many businesses said local policies and laws regarding investment are quite complicated, inconsistent and overlapping; therefore, they are not effective when enforced and the process lacks transparency and stability.

To start a project in the country, investors have to complete at least 18 kinds of paperwork related to investment, land, environment and construction, the study found.

It said the procedures are regulated by five codes, ten decrees, nine circulars, and "incalculable" guiding documents issued by local governments.

"Each locality has different procedures, confusing investors and businesses as if they have been lost in a matrix," the Thoi bao Kinh te Saigon (Saigon Times) newspaper quoted Dau Anh Tuan of the VCCI's Legal Department as saying at the meeting.

Under current regulations, it can take businesses as many as 60 days to get licenses for their projects, but in reality, the time taken is much longer, said Nguyen Quoc Hiep, chairman of the Vietnam Association of Construction Contractors.

First, businesses have to file their application for licenses with the local department of investment and planning and wait for 40 days to get the agency's review, he said.

After that, they have to submit the application to the local People's Committee, and wait again for at least 30 days before the authorities send letters to related agencies to collect their opinions on the project.

It takes another 30 days for related agencies to send their responses, Hiep said.

Totally, it takes more than four months for a project to be licensed, but in some cases it is even longer, Hiep said, adding that one of his company's (GP Invest) projects had to wait for up to 14 months.

Hiep said the situation is "more terrible" for foreign investors.

Red tape remains a big barrier to attracting foreign investment into Vietnam, despite the government's reform efforts over years, VCCI chairman Vu Tien Loc said at the meeting.

"˜Getting worse'

Loc said "unnecessary" licenses have been resurfacing in regulations recently issued by local governments and ministries.

"Compared to other countries in the region, Vietnam's investment environment is getting worse, and we now have a humble rank on foreign investors' list of priorities," Loc said.

According to the VCCI study, businesses were also concerned about the consistency of Vietnam's investment policies, including regulations on preferential treatment.

For instance, the Law on Investment regulates that projects in industrial zones are eligible to enjoy preferential policies. But the Law on Corporate Income and the decree guiding its implementation says the preferential policies can only be enjoyed by projects in industrial zones that are located in disadvantaged localities.

Hiep said that when his company was constructing a high-rise building in 2009, the government ordered Hanoi to ban high buildings in four central districts. In the end, they could not do anything but follow the government's decision, he said.

Tuan from the VCCI's Legal Department also said that rules have been changed two to three times while many projects were still in progress.

"Businesses have no choice but to accept risks related to administrative procedures," Hiep said.

Authors of the VCCI study said it is time Vietnam mapped the whole set of procedures that businesses have to follow, from preparing for investment to undertaking their projects, remove redundant and unnecessary ones, standardize them, and finally adjust related legal documents.

They also suggested authorities apply the principle that one dominating law regulations or a decree on administrative procedures related to investment is allowed to prevail over any other law that contradicts it.

Nguyen Dinh Cung, deputy head of the Central Institute for Economic Management, agreed with the proposal, expressing the hope that the National Assembly will revise laws related to investment next year, cutting a lot of red tape.

He said: "If we want breakthrough reforms in the business environment, we need to have quick reforms on a big scale. At the moment, we talk a lot, but do not do much."

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