People file for business registration at the Ho Chi Minh City Department of Investment and Planning. Photo by Diep Duc Minh
Government leaders Friday approved amendments to the Business Law which will free firms from having to register their business purposes and sticking to them.
Firms can do any business that is not illegal under the amendments being drafted by the Central Institute for Economic Management and to be presented to the National Assembly this year or next.
Current regulations, effective since 2005, require firms to spell out their business areas when registering and doing any other business is punishable.
Deputy Minister of Investment and Planning Nguyen Chi Dung said at a conference that the law over the past nine years has constrained business freedom since setting up one is complicated and unnecessarily costly.
“That is why Vietnam’s business environment gets low rankings,” he said.
He said firms complain that the requirement to spell out their areas of business increases risks and cost.
Nguyen Dinh Cung, head of the institute, was quoted by Tuoi Tre newspaper as saying: “Sometimes a company sees a new business opportunity, but has to wait to change its registration.
"However, by the time that is done, the chance might be gone.”
He said the removal of this clause would save businesses the cost of repeated registrations and mitigate risks.
Deputy Prime Minister Nguyen Xuan Phuc hailed the amendment as a big step in cutting red tape and improving the business environment.
Prime Minister Nguyen Tan Dung also called it a right move.
But both leaders warned that the freedom has to be accompanied by better supervision by relevant authorities.
The amendments to the Business Law are set to simplify procedures for starting businesses by both local and foreign investors and ease restrictions on the latter who are now barred from several sectors like pharmaceuticals and fuel distribution.
A World Bank report said establishing a business in Singapore or Malaysia involves just three procedures, all done online, while in Vietnam it takes nine.
The changes are expected to cut this to five and improve the ranking of Vietnam’s business environment from its current 99th out of 189 countries to around 50th, officials said.
The PM was pleased with the amendments also because they are explicit about the roles and functions of state-owned enterprises in each sector and require them to issue regular reports like listed firms.
He said state firms are the spearhead of the economy and so the law needs to define them clearly.
The law will also regulate for the first time the functioning of social enterprises, which are defined as businesses working for social purposes and reinvesting their profits into the community.
Deputy PM Vu Duc Dam agreed that there should be regulations for this kind of business since they have become a global trend and there are some of them already in Vietnam.
Dung objected to removing the need for a license to invest abroad since Vietnam does not encourage investors to take money out of the country.
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