Enterprises embracing admin ease-up

Thousands of admin procedures have been done away with over the past decade

Since he undertook the position as Vietnamese prime minister in April 2021, Pham Minh Chinh has met with hundreds of business delegations, investors, and enterprises.

“I have talked with many domestic and foreign enterprises and investors, and they are still complaining about our cumbersome administrative procedures. One of the prime targets of administrative reform is to fight corruption including petty corruption,” PM Chinh said at last week’s meeting of the Steering Committee of Administrative Reform where he acts as the head. “It is ordered that all ministries and agencies need to boost reforms, firstly change their mindset, methodology, and solutions.”

Former Minister, Chairman of the Government Office Mai Tien Dung stated that although regulations have been reduced and simplified significantly, many still remain. In many localities and ministries, when a regulation is cut, another more complicated one can be created, driving enterprises into more difficulties.

Administrative reforms have been underlined in the government’s almost all policies and programmes over the past decades. However, such reforms have become a must since 2016, with three large-scale administrative reform waves.

The first one, from 2007 to 2011, witnessed the review and issuance of more than 6,000 procedures, with an average decrease of $1.6 billion per year in cost for abiding by these procedures. This wave was carried out under the prime minister’s Decision No.30/QD-TTg issued in 2007 on simplifying administrative procedures in state management sectors for 2007-2010.

The second wave, taking place from 2016 to the summer of 2020, saw the removal and simplification of nearly 3,900 out of almost 6,200 business conditions; and over 4,400 out of 5,400 business procedures. In addition, the government also reformed regulations of specialised inspection for nearly 6,800 out of more than 9,900 lines of goods, saving $260 million per year.

What is more, as many as 1,400 administrative procedures were introduced in the National Public Service Portal, saving $291.3 billion annually. This wave resulted from the annually-released Resolution No.02/NQ-CP on tasks and solutions to improve the business environment and national competitiveness, and Decree No.61/2018/ND-CP on the one-door and connected one-door mechanisms in processing admin procedures.

Needed simplification

Since that time, the country has been implementing a new raft of administrative reform under Resolution 02 and Resolution No.68/NQ-CP on promulgating a programme on abolishing and simplifying business regulations in the 2020-2025 period.

This is the most comprehensive administrative reform in history, expected to help enterprises and the public to annually save multi-billion US dollars, said Mai Tien Dung.

The government has set out a number of major solutions, such as annually implementing the plan on cutting and simplifying regulations related to business activities; regularly updating regulations related to business activities that are amended, supplemented, replaced, and abolished; and receiving, collecting and summarising all enterprises and feedback, recommendations, and opinions on unreasonable regulations.

Last year, according to the Steering Committee of Administrative Reform, over 1,100 business regulations were removed and simplified, while schemes were approved to reduce and simplify 924 regulations, and amending and supplementing 166 legal documents on state management of seven ministries.

However, the chronic complicated administrative procedures have been consecutively stressed at the National Assembly (NA) meetings, with many deputies criticising them as one of the key obstructions undermining businesses’ performance and the economy’s competitiveness, while privately-owned enterprises have great potential for development.

Vu Tien Loc, a member of the NA’s Economic Committee, said the private sector is encountering a raft of policy difficulties, and this is hurting the nation’s competitiveness.

He underlined that in Vietnam, though creating up to 40 per cent of GDP, the private sector is now witnessing a big paradox, in which only 10 per cent of GDP is generated by more than 700,000 private groups. Meanwhile, the remaining 30 per cent of GDP is generated by five million business households, including 2 million with business registration.

PM Chinh stressed, “It is targeted that in 2022 we must create big breakthroughs in administrative reforms, especially those related to people and enterprises, in order to tap into and mobilise all resources for national development, attract more investment, and improve the effectiveness and efficiency in the management of ministries and localities.”

The Vietnamese government has set a target of developing the nation into a modern and industrialised country by 2030, and a high-income developed country by 2045.

“In this process, we reiterate our commitment and resolve to provide international businesses and investors with every favourable condition to contribute to and share the fruits of the Vietnamese economy, on the principle that your success is also Vietnam’s success,” the prime minister stated at the Vietnam Business Forum last month.

A defining moment

Over the past years of administrative reforms, Vietnam’s competitiveness in the global ranking indexes has remarkably improved, helping further strengthen confidence.

According to the Ministry of Planning and Investment, Vietnam has achieved significant gains, such as innovation sitting at 44th out of 132 economies in 2021 (World Intellectual Property Organization); e-government standing at 86th place in 2020, up by two ranks in 2018 (UN); sustainable development at 51st out of 165 economies last year, up by 37 places compared to 2016 (UN); and cybersecurity in 25th place out of 194 economies in 2020, a rise of 25 places against 2018 (International Telecommunication Union).

The government has committed to better addressing difficulties facing businesses, including foreign-invested enterprises, in Vietnam.

“The government has established a special working group to address outstanding issues. Having considered foreign direct investment as an important part of our economy, we pledge to protect the legitimate and lawful rights and interests of investors, and ensure the shared benefits of the state, investors and labourers,” PM Chinh said. “We have recently endorsed a special and preferential decision on investment pertaining to timeframe and conditions applied to large-scale projects, utilising advanced technology and having a close connection with Vietnamese businesses.”

Economist Raymond Mallon told VIR, “Administrative simplification in Vietnam has reached a defining moment. If successfully applied, the reduction of sub-licences could encourage enterprises to engage more in the market and create healthy competition among them. They will help foster economic growth via improvement of labour productivity, curb corruption, and also help create a more level playing field for all.”

Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, has been expecting more improved policies in the service of the business community as this would help Vietnam woo more investment and further increase business confidence.

He suggested that it is necessary to accelerate the use of e-government, e-commerce, e-banking, fintech, hyper-scale cloud computing, and the overall reduction of paper and cash for all businesses. Replacing Vietnam’s local cloud technical standards in state agencies with internationally recognised cloud certification and compliance mechanisms and adopting cloud-first policies will enable the government to choose the best technologies, strengthen digital resilience, and develop a robust e-government technology ecosystem.

“Setting good policies that enable the use of mobile wallets and other electronic payment systems can help facilitate more productive e-commerce and reduce opportunities for corruption and fraud. Accelerated implementation of these digital economy objectives can permanently reduce administrative costs and time burdens for both the government and all businesses, and will attract new investors looking for global standards and ease of doing business,” Sitkoff told VIR.

“We also need to ensure a favourable climate for existing investors and appreciate that the government has prioritised administrative reform to improve the ease of doing business,” he added. “It is critical that all companies and investors encounter a fair, transparent, predictable, and streamlined regulatory environment that values innovation - not only to attract new investment but also to maintain and grow the investment that is already here.”

Meanwhile, the Vietnamese government also vowed to ensure synchronised and modern institutions and intensive integration, and constitute one of the three strategic breakthroughs for national development in the next 10 years.

“We are amending many important laws, including the Law on Public Investment, the Law on Investment, the Law on Public-Private Investment, and the Law on Business in ways that strengthen delegation of authorities and post-check, and minimise business and investment procedure,” PM Chinh said. “To foster the development of key sectors in the digital age, Vietnam is improving its legal framework on intellectual property and legal foundation for new business models, e-commerce, digital banking, and fintech.”