Vietnam government should redefine its role in market economy: Experts

Vietnamese government should redefine the relationship between government agencies and enterprises in the market economy, in turn making substantial changes in the business environment, according to economist Pham Chi Lan.

Nevertheless, Vietnamese business and investment environments have been improving significantly, thanks to positive impacts of two government resolutions No.19 and 35, Lan said in a conference on November 20. The introduction of Resolution No.19 in 2014 was seen as a bid for Vietnam to become one of the top three business-friendly countries in ASEAN, which incorporates international standards on evaluating business environments, including Doing Business Indicators of the World Bank. 

Meanwhile, Resolution No.35 sets the  target of having at least one million operational enterprises by 2020, and the private sector would contribute 48-49% of the GDP, along with 49% of total social investment. 

Dau Anh Tuan, director of the Legal Department of Vietnam Chamber of Commerce and Industry (VCCI), said two indicators of “starting a business” and ”electricity access” have seen the most notable improvements thanks to Resolution No.19, citing a survey of 10,000 private enterprises. 

However, others indicators including “trading across borders”, “protecting minority investors” and “resolving insolvency” have not improved much, Tuan added. 

Removal of business conditions is also another important aspect in improving business environment. According to Prime Minister Nguyen Xuan Phuc, removal of business conditions is one of the key measures for economic growth and efficiency. 

As of October, the government has issued 15 resolutions on removing business requisites but the efficiency of the process remains inconsistent, said the VCCI representative. 

According to the 2017 Provincial Competitiveness Index (PCI) report, 58% of respondents said they have to seek sub-license for operation, 42% of which faced difficulties in obtaining these papers, Tuan added. 

Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM), said ministries and agencies have completed removing at least 50% of business requisites following the PM’s request, however, 10% proved insubstantial. 

On July 13, Prime Minister Nguyen Xuan Phuc issued a directive requiring ministries and ministerial-level agencies  to report to the PM on a quarterly basis on the remaining number of business requirements and goods subject to specialized control regulations as the government seeks to smooth the business environment.

The directive requires there should be a clear justification of changes in the number of business conditions and goods required for specialized inspection. 

Moreover, proposals on removing business requirements must be substantial, avoiding grouping  many business requirements into one mathematically, or just simply changing the name of the requirements.

The PM strictly prohibited government agencies and ministries from creating new business requirements or abusing specialized inspection. 

Vietnam has moved down one notch from the 68th to 69th place out of 190 economies in the World Bank’s 2019 Ease of Doing Business ranking, although its score went up 1.59 points compared to a year earlier to 68.36 out of the maximum 100 points.

Vietnam along with Indonesia carried out three reforms each during the past year. The former has made two fewer reforms compared to the Doing Business 2018 report. In Vietnam, improvements were made to make it easier to enforce contracts, pay taxes and start a business.