Project procedures must be truncated

At last week’s Vietnam Business Forum, Seck Yee Chung, vice president of the Singapore Chamber of Commerce Vietnam (SingCham), said Vietnam could significantly boost foreign investment by simplifying and streamlining the procedures for obtaining and renewing business licences, permits, and certificates.

“This is particularly important for foreign investors, who may be discouraged by complex processes discouraging,” Chung said. “For instance, it took one year for one of our members in the petroleum industry to obtain a business licence for the wholesale distribution of lubricants.”

Specifically, he highlighted the licensing procedure to obtain a business licence under Decree No.09/2018/ND-CP, detailing the Commercial Law and the Law on Foreign Trade Management regarding goods purchase and sale and related activities of foreign investors and foreign-invested economic organisations in Vietnam.

So far, the licensing procedure and timing for foreign-invested enterprises to obtain business licences for sectors including retailing, equipment leasing activities, and e-commerce from the Ministry of Industry and Trade (MoIT) is burdensome and time-consuming.

“Typically, this involves several rounds of submissions and follow-up questions with the MoIT and municipal and provincial departments of industry and trade (DoIT). This can take up to 12 months,” he said.

Under Decree 09, the statutory timeline (depending on the specific activities and application dossier) for obtaining the business licence from the DoIT is 13 working days. If the department needs to obtain a further opinion from the MoIT, it takes another 28 working days for a response.

In most cases, the approval or opinion of the MoIT would be required regardless of the activities specified. “However, in practice, the timeline can be prolonged for up to three months for each of the internal processes between the DoIT and MoIT. If there are 2-3 rounds of questions and/or requests for the supplement of information from the MoIT, then it takes up to 12 months to complete,” Chung added.

According to a 2023 Japan External Trade Organization survey, complicated administrative procedures such as licence issuance are listed as the biggest risk to Vietnam’s investment environment for Japanese companies.

Japanese enterprises are worried about missing business opportunities in Vietnam due to the slow issuance of business licences in digital fields such as e-commerce.

“In many cases, competent authorities require foreign investors to fulfil stricter conditions and submit additional documents beyond those stipulated by law and regulation when registering activities with relevant authorities or obtaining a business licence, which leads to the delay of administrative procedures,” said Muto Shiro, vice chair of Japanese Chamber of Commerce and Industry in Vietnam.

For example, there are many unreasonable requirements for acquisition permission, investment and business registration by the localities’ department of planning and investment and business registration office, as well as non-statutory conditions and document requirements for the issuance of various business licences by the MoIT and DoIT, Japanese firms claimed.

“We would like to request that administrative procedures be carried out smoothly and promptly without requiring conditions or the submission of documents that are beyond those required by law,” Shiro said.

Joseph Uddo, Hanoi chair of the American Chamber of Commerce in Vietnam, said new laws and regulations continue to introduce new administrative procedures.

“Our members face delays in approval procedures and time-consuming administrative burdens which hinder or stall their projects and impact Vietnam’s competitiveness,” he said. “One-half of the members say they are performing on target or better than expected here, while one-half feel the business climate needs improvement or that Vietnam is not headed in the right direction in some key areas.”

SingCham said that accelerating e-government was a solution to simplify administrative procedures and mitigate negative activities.

“Governments are responsible for providing essential services to residents, but may have limited budgets. They need to find ways to eliminate waste and become more efficient. Technology, especially cloud computing, can be a powerful tool for governments. It can automate processes, save costs, and allow for more innovative services. Cloud computing also makes it easier for different government agencies to work together and share information,” Chung said.

Technologies are the foundation to modernise and simplify administrative procedures for investors. Chung proposed expanding online portals and e-submissions allowing more government applications and procedures to be completed online, making the process faster and more convenient.

He also suggested adopting e-signatures as valid for official documents, eliminating the need for wet signatures; encouraging email communication; and reducing reliance on paper.

“While some procedures, like company registration, are already available online, many processes involving foreign investment still require in-person meetings and physical submissions,” he listed investment registration. Merger and acquisition approvals, foreign loan registration, establishing representative offices, and obtaining retail business licences for foreign investors.

“By offering online options for these procedures, Vietnam can draw in more foreign capital and partners,” Chung said.

By implementing these proposed changes, Vietnam can create a more attractive and enabling legal framework that fosters foreign investment, contributing to sustainable economic development and creating a win-win situation for both foreign investors and the Vietnamese economy.

To improve the local business environment, streamline administrative procedures, this year Vietnam has underlined several key ideas to remove legal barriers to investment; as well as invigorating IT applications, communication, and data sharing among state agencies to improve administrative procedures.

Accordingly, market entry (new formations and resumptions) will grow by at least 10 per cent from 2023, while corporate bankruptcies will rise by less than 10 per cent.

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