Business procedures to be cut

The reduction of sub-licences can encourage businesses to engage more in the market Photo: Le Toan

This Wednesday, August 15 will be the deadline for government agencies to fulfil the task assigned to them by Prime Minister Nguyen Xuan Phuc, namely halving the number of 5,905 business conditions, making it more convenient for the business community to perform.

In Resolution No.01/NQ-CP dated January 1, 2018 on major tasks and solutions guiding the implementation of the 2018 socio-economic development plan and the state budget estimate, PM Phuc ordered that 50 per cent of existing business and investment conditions be cut this year. On July 13, he also promulgated Directive No.20/CT-TTg on increasing reforms on specialised inspections and reducing and simplifying business conditions. Under the directive, ministries and relevant government agencies are required to complete the enactment of documents on increasing reforms on specialised inspections and reducing and simplifying at least 50 per cent of lists of goods, products, and procedures for specialised inspections, before August 15.

Chairman and Minister of the Government Office Mai Tien Dung last week said that as of early last week, only 15.2 per cent or about 900 of the 5,905 business conditions had been removed or reduced, and 14 ministries were conducting this process.

“The remaining 45.45 per cent or 2,690 business conditions will also be erased or reduced,” Minister Dung said. “If this job is completed on August 15, 60.75 per cent of the existing business conditions and specialised inspections will have been removed or decreased, meaning the target of 50 per cent set in Resolution 01 will be exceeded.”

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

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

“And lastly, I would expect an opportunity for Vietnam to benefit much more from international integration, not only in economic terms, but also through skills and technological transfers and 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, an Australian senior economist who has spent decades studying Vietnam’s economic situation, told VIR, “Administrative simplification in Vietnam has reached a defining moment. If successfully applied, the reduction 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 improvement of labour productivity, curb corruption, and also help create a more level-playing field for all enterprises.”

Great benefit

According to the Central Institute for Economic Management, all enterprises in Vietnam had to use 28.8 million days to conduct customs clearance in 2016, with a cost of VND14.2 trillion ($628.32 million). However, in 2017, after reductions and removals of some customs procedures, the average cost for conducting this procedure for a goods package decreased by $19.

“It is estimated that in 2017, businesses saved more than $200 million in customs clearance, saved about 16 million hours in storage at border gates for 5.36 million export declaration forms, and also saved 34 million hours in storage at border gates for 5.72 million import declaration forms,” Minister Dung said.

A few months ago, PM Phuc 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 this decree, the government 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 has often considered to be “sensitive” and eyed by many private companies, including foreign ones.

Specifically, the government decided to remove 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 also eradicated the tough conditions of Article 7’s Clause 3, which said, “Three years after being granted a petrol and oil import or export licence, the trader shall own or co-own (with a capital contribution of at least 51 per cent) the depot system, which is capable of meeting at least one-third of the trader’s reserve demand as prescribed in Clause 1, Article 31 of this decree.”

A source from the Indonesian Embassy to Vietnam told VIR that the easing of these regulations is expected to help foreign investors engage in the oil and petrol market. “Indonesian companies are seeking opportunities in distributing oil and petrol in Vietnam,” said the source.

Last October, Idemitsu Q8 Petroleum LLC (IQ8), a joint venture between Japanese company Idemitsu Kosan Co., Ltd. and Kuwait Petroleum International Ltd. (KPI), officially opened its first Idemitsu Q8 service station at Thang Long Industrial Park in Hanoi, marking the first station of a petrol retail network that will spread across Vietnam.

This year, Vietnam will see a record number of 150,000 newly established businesses, up from 127,000 last year and 110,000 in 2016.