Government continues paring down business and investment conditions

Photo: Le Toan

Prime Minister Nguyen Xuan Phuc said that he expected Vietnam to become “a new Asian economic tiger,” and this year will see a record number of 150,000 newly established enterprises, up from a record figure of 127,000 last year, and 110,000 in 2016.

“To reach this target, we will have to do many things, including continuing to remove hundreds of unnecessary investment and business procedures,” Phuc stressed at a Ministry of Planning and Investment (MPI) conference organised a few days ago in Hanoi. “Today I will sign a document on annulling 675 business and investment conditions, which are often considered sub-licences in the industry and trade sector.”

Specifically, in order to open the domestic petrol and oil industry, Phuc has signed Decree No.08/2018/ND-CP on amending some decrees regarding investment and business conditions managed by the Ministry of Industry and Trade.

In Decree 08, in the oil and petrol sector, the government has annulled some articles and clauses of Decree No.83/2014/ND-CP issued in September 2014 on trading petrol and oil—one of the sectors that the government considered “sensitive” and was eyed by many private firms, including foreign ones.

Specifically, the government has removed Decree 83’s Article 5 on developing petrol and oil trading systems; Article 7’s Clause 6 on conditions for traders to export and import petrol and oil products; Article 10 on conditions for producing petrol and oil products; and Article 24’s Clause 1 on conditions for retail petrol and oil stations.

The government has also eradicated the condition in Article 7(3) of Decree 83, which stipulated, “Three years after being granted a petrol and oil import or export license, the trader shall own or co-own (with a capital contribution of at least 51 per cent) a depot system, which is capable of meeting at least one-third of the trader’s reserve demand as prescribed in Article 31(1) of this decree.”

In another case, in Article 7(3) of Decree 83, the government erased the provision that “Two years after being granted a petrol and oil import or export license, the trader shall own or co-own (with a capital contribution of at least 51 per cent) vehicles for domestic petrol and oil transport with a total loading capacity of at least 3,000 cubic metres.

According to the prime minister, Decree 08 will be among the documents that the government will release this year on reforming administrative procedures.

“I highly appreciate MPI’s efforts of proposing the government to remove 1,930 conditions, which have also been regarded as sub-licences affecting enterprises’ performance over the past many years,” said the PM

He said that MPI’s proposal encouraged many other ministries and sectors to also make proposals that the government amend, supplement, and simplify many administrative procedures in favour of enterprises.

“Some ministries have quit their imbedded interest and power by erasing business and investment conditions, and I highly appreciate that,” PM Phuc stressed.

For example, the Ministry of Construction has reduced the number of its administrative procedures to only 46, cutting the processing time by 25 per cent.

The Ministry of Agriculture and Rural Development (MARD) has also reported that after removing and simplifying 118 business and investment conditions in late 2017, it will continue reviewing and removing another 227 out of the 345 conditions it manages.

“We want to attract more investment into the agricultural sector,” said MARD Deputy Minister Ha Cong Tuan. “Currently, foreign direct investment into the sector accounts for only 1 per cent of total FDI in the country.”

This year, MARD will continue reviewing and simplifying 508 administrative procedures, and 287 will be proposed to be removed.

For example, many imported goods packages will be granted certificates within two or three hours, instead of one or two days as before. Also, the time for quarantines will also be reduced to four hours, from the existing one day.

Ousmane Dione, the World Bank’s country director for Vietnam, told VIR, “Government reform programmes are in the right direction. If these reform programmes are sequenced and implemented effectively, they would open many positive opportunities for Vietnam.”

First, they would help the country consolidate and enhance macroeconomic stability as well as resilience amid the fast-changing and volatile global context. Second, reforms will help Vietnam improve the quality of economic development and lift productivity growth. This is critical for the country’s long-term sustainable growth.

“I would expect an opportunity for Vietnam to benefit much more from international integration, not only in economic terms, but also through skills and technology transfer/spill-over as well as improvement in governance,” Dione said. “I hope that Vietnam will be able to take advantage of these opportunities to realise its ambitious goals set out in the Vietnam 2035 Report and become a successful upper middle-income country in the near future.”

Raymond Mallon, a senior economist from Australia who has been studying Vietnam’s economic situation for decades, told VIR, “Administrative simplification in Vietnam has reached a defining moment. If successfully applied, the reductions of sub-licences can encourage enterprises to engage more in the market and create healthy competition among enterprises. They will help foster economic growth via the improvement of labour productivity, curb corruption, and also help create a more level playing field for all enterprises.”