People file for business registration at Ho Chi Minh City Department of Investment and Planning. Photo courtesy of Tuoi Tre
Amendments to the Business Law do away with the need for firms to register their business purpose and stick to it, ease restrictions on foreign firms and require transparency from state-owned ones.
Firms can enter any business which is not illegal, according to the bill to be presented to the National Assembly this year or next.
Nguyen Dinh Cung, head of the Central Institute for Economic Management, which is drafting the bill for the Ministry of Investment and Planning, said the changes are aimed at creating flexibility in the business environment.
Current regulations, effective since 2005, require firms to spell out their business when registering and doing any other business is punishable.
Tuoi Tre newspaper quoted Cung as saying: “Sometimes a company sees a new business opportunity, but has to wait to amend its registration. However, by the time that is done, the chance might be gone.”
He said the changes to the law would save the costs of repeated registrations and business risks.
But Tran Huu Huynh, a lawyer and chairman of the Vietnam International Arbitration Center, said a new problem of people abusing the bill's provisions to establish companies just for value-added tax and other scams could crop up.
Authorities thus need to oversee businesses better once they become operative, he said.
The bill changes the definition of foreign-invested firms from those with any rate of foreign investment to ones with at least 51 percent.
It simplifies business establishment procedures for both local and foreign firms, and eases restrictions on the latter, which are now barred from several sectors like pharmaceutical and fuel distribution.
Dr Dau Anh Tuan, head of the legal department at the Vietnam Chamber of Commerce and Industry, said the changes would make the business environment friendlier and help draw more investment.
He quoted a World Bank report as saying that establishing a business in Singapore or Malaysia involves just three procedures, all done online, while in Vietnam it takes nine.
Cung said the bill is expected to cut this to five, reducing the time involved from 34 days to 20, which would possibly improve Vietnam’s business environment ranking from its current 99th out of 189 countries to around 50.
The bill also spells out the roles and functions of state-owned enterprises in each sector, and requires them to issue regular reports like listed firms.
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