State pledges to streamline Enterprise Law

Vo Hong Phuc, who also heads the task force overseeing the implementation of the law, said the government’s determination was “very strong” following four successful years since the law took effect.
“The law will continue to be made much more open,” Phuc said in an exclusive interview with Vietnam Investment Review.
“We are in a hurry to remove all potential obstacles for business that may arise during implementation,” he added prior to a national conference on the progress of the law held this week in Hanoi.
Between January 2000 and September this year, more than 72,600 new enterprises were licensed, against 45,000 firms in the previous nine years.
Their total registered capital was estimated at $9.5 billion, four times the accumulated capital of the 1991-1999 period.
According to the MPI’s Central Institute of Economic Management (CIEM), around 1.6-2 million new jobs were created by private enterprises over the past four years.
CIEM estimated that a private enterprise needed VND70-100 million on average to create one new job, while a state-owned company required at least VND210-280 million.
“The Enterprise Law has undoubtedly had a powerful effect on the economy as well as creating an unprecedented entrepreneurial spirit,” Phuc said.
The country’s two economic locomotives, Hanoi and Ho Chi Minh City accounted for 53.6 per cent of the total number of new enterprises and over 52 per cent of registered capital.
However, the minister admitted the impact of the law had not been as “strong as expected” in rural and remote areas.
For example, the total number of new private enterprises registered during the past four years was equal to only 21 per cent of the total in the previous nine years in Tra Vinh province, 36 per cent in Ben Tre and 39 per cent in Tien Giang.
On the other hand, northern provinces such as Quang Ninh, Hung Yen and Thanh Hoa witnessed four- to eight-fold increases in the number of registered private businesses between 2000 and 2003, against 1991-1999.
“The government will introduce more policies supporting the law to encourage private investment in these poor localities,” Phuc said.
CIEM officials admitted that, despite a boom in the private sector, the overall number of businesses from the private, state and foreign sectors was still small compared with other nations.
On average, for every 800 Vietnamese there is one enterprise, compared with every four people in Singapore, eight in England, 13 in German and 21 in Australia. Phuc said that one of the measures to bridge the gap was to improve management of state agencies as well as to enhance the current business environment.
The MPI is currently reviewing the Domestic Investment Encouragement Law, the Law on State-owned Enterprises, the Enterprise Law and the Law on Foreign Investment.
“We want to create an equal playing field to benefit all businesses, irrespective of their investment form,” he said.