Vietnam businesses see red as admin reforms rolled back

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People wait for registering for business license at the Ho Chi Minh City Department of Planning and Investment

With the issuance of the Business Law in 1999 and then its revision in 2005, it was said that Vietnam had succeeded in significantly reducing red tape.

The laws scrapped many unnecessary licenses that businesses were asked to acquire.

However, economists and business representatives say a lot of red tap has recently resurfaced in new regulations issued by state agencies.

Le Dang Doanh, former head of the Central Institute for Economic Management (CIEM), said he was certain that the add-on licenses have reappeared "a lot."

Since they are present in laws, decrees, ordinances and other legal instruments, laws need to be revised to get rid of them, he said.

"In the meantime, these licenses are affecting the local business environment very negatively," Doanh said.

CIEM Deputy Chief Nguyen Dinh Cung agreed, saying that the licenses are "definitely" showing a tendency to "flourish" again.

Trinh Van Quyet, general director of the SMIC Law Firm, said a recent study by his company found that businesses in most fields were being required to apply for licenses to do specific activities, years after they were removed. 

For instance, he said, in the securities field, besides the business license, businesses have to apply for additional licenses to operate as a broker, to supply depository services, or to operate as a guarantor.

Meanwhile, in the banking sector, there are specific licenses for foreign currency services, bond trading and even for the very basic activity of banks like operating as a delegated lender (lending on behalf of the government or other agencies), Quyet said. 

A recent study by CIEM concluded that "businesses are being lost in a forest of legal documents." It said there are at least 11,240 documents issued by state agencies of uncertain validity.

For example, a joint-circular issued by the Ministry of Finance, the Ministry of Industry and Trade, and the Ministry of Public Security with regulations on the receipts and documents of goods imported and then circulated in local market is still valid. But, all related decrees have already expired.

According to the Ministry of Justice, the central government and its ministries issued nearly 200 legal documents last year, while local governments issued 3,852 documents.

The ministry said that inspections last year found that 1.77 percent of 564,524 checked documents "failed to secure legality."

In trouble

Businesses are complaining that the return of a lot of red tape has created a lot of difficulties for them.

Sigmund Stromme, representative of the Nordic Business Association in Ho Chi Minh City, said businesses who invest in Vietnam's feed and fertilizer producing plants are in trouble.

He said they are required to complete very complicated procedures to get permission to sell their products, although the products are made in accordance with their investment certificates.

Vietnamese agencies should have included the sales license along with the investment license, Stromme said.

Once a company is licensed to manufacture a product, it should be allowed to sell that product without going through more paperwork to register it, he said.

Nguyen Huu Dung, vice chairman of the Vietnam Association of Seafood Exporters and Producers, said seafood businesses are also in the same situation, despite being one of the main foreign currency earners in the country.

He said all seafood imports are required to go through quality tests, but "only" six state-owned labs are allowed to do the testing. 

Businesses, therefore, have no other choice, even if they want to have the tests conducted by other labs, Dung said.

There is no way businesses can avoid harassment from corrupt behavior by staff of the authorized labs, he added.

In another example, Dung said, some members of his association once had their consignments of chicken legs imported from the US and the Europe to export to another country, detained at the Hai Phong Port.

Port authorities kept the consignments without telling the businesses what to do to get them discharged, while they had to pay VND4 million (US$188.74) per container a day as port fees, Dung said.

"Agencies in Vietnam torture us more than when we operate overseas," Dung had told Vu Duc Dam, chairman of a council tasked with advising the Prime Minister on administrative reforms.

Lawyer Tran Huu Huynh, director of the Legal Department under the Vietnam Chamber of Commerce and Industry, expressed his regret about the situation after efforts the government made between 1999 and 2005.

"It's a pity that we have left the work unfinished. Now the business environment is getting worse and worse."

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