Business environment in 2019: Which industries "stride", which industries "stand"?

VCN - From the beginning of the year, the Government has reminded ministries and agencies about improving the business environment and creating favourable conditions for enterprises. The year 2019 is about to end and many reforms have been made, creating good conditions for enterprises to operate, but there are still some bottlenecks and some sectors ”stand in place” which cause difficulties for firms.
tin nhap 20191224105348 Minimize the overlap in specialised inspections
tin nhap 20191224105348 New FTAs put pressure on VN to reform business practices
tin nhap 20191224105348 Vietnam makes stride in improving business environment, competitive capacity
tin nhap 20191224105348
Assessment of changes in some areas of Resolution 19 and Resolution 02 across the country in 2019.

Bright spot of reforms is the Customs and the Taxation

The resolution of the Government's meeting of November 2019, recently promulgated by the Government, said the Prime Minister set up a special working group headed by the Minister of Justice with the participation of ministries and agencies to review overlapping, inadequate and unsuitable regulations, causing difficulties, hindering development; make a list of legal documents that need amendment and submit to authorities for consideration.

On January 1, 2019, the Government issued Resolution No. 02/NQ-CP (Resolution 02) on key tasks and solutions to improve the business environment and enhance national competitiveness in 2019 and orientations to 2021. In replacement of Resolution 19, Resolution 02 has introduced many new points, with goals for 2019-2021 to bring Vietnam into the group ASEAN-4 in all rankings, with solutions for ministries, branches and heads of ministries and branches. Following these directions, all ministries and branches have made efforts to reform. As a result, Vietnam has been promoted in assessment of reforms and assessment of business potentials of some international economic organisations. The World Economic Forum recently announced Vietnam increased by 10 spots in the global competitiveness rankings in 2019.

A report on the implementation of Resolution 02 in 2019 and Resolution 35 in 2016 of the Government - from the enterprise perspective published recently by the Vietnam Chamber of Commerce and Industry (VCCI) shows fields of business registration and access to electricity continue to be highly appreciated; the Taxation and Customs are also perceived to have positive changes. For tax payment, the improvement in 2019 is significant as the General Department of Taxation has issued many solutions, action plans and information technology applications to support enterprises.

A survey of VCCI with more than 1,700 enterprises on the satisfaction of tax administrative procedures in 2019 showed that 97 percent of enterprises agreed that electronic tax payment procedures are easy to implement, only 3 percent said it was difficult mainly due to congested data transmission problems when tax periods were due and the cost of using digital signatures was expensive. As a result, Paying Tax and Social Insurance ratios in the Doing Business 2020 report decreased significantly compared to 2019.

Also in Resolution 02, the Government made many requirements on specialised management and inspection. The resolution requests ministries and branches apply the principle of risk management, switch to post-inspection and are transparent about the list of goods. According to the General Department of Customs,in the second quarter of 2015, the number of items subject to specialised inspection and management were more than 82,600, so far has cut more than 12,600 items, remaining more than 70,000 items. However, the review results of VCCI at the enterprises showed that only about 15-27 percent of enterprises thought implementation of the above procedures easily or very easily. With the specialised inspection procedures conducted on the National Single Window which are commented by enterprises, the number of procedures and records through the one-stop system is increasing. However, the number of administrative procedures that can be done entirely at level 4 (completely electronic) is small, most still need a paper copy.

tin nhap 20191224105348
Enterprises have high expectations for the improvement of the business environment. Photo: collected.

Enterprises still "complain"

Despite many reforms, there are still many complaints about delays, not even reforms, but "backward reforms" of many fields. Enterprises also reflect on the changes and uncertainties of policies that make them unable to forecast long-term business plans.

According to the VCCI's report, when 48 percent of enterprises still had to apply for sub-licenses, it means that if the ratio was multiplied by more than 714,000 enterprises, nearly 350,000 enterprises would still have to apply for a kind of sub-license. In addition, with provisions on business conditions, in 2019, according to Resolution 02, the ministries have continued to issue a decree to reduce business investment conditions in fields under their management. However, according to the VCCI, only a few ministries, namely Industry and Trade, Health, Agriculture and Rural Development, have drafted a decree to cut, and many other ministries and branches seemed not to want to continue this task because they did it in 2018. Therefore, the level of reduction is no longer as strong as the previous year; many business investment conditions are unreasonable, non-transparent, and unfeasible.

Sharing the difficulties of enterprises, Nguyen Hoai Nam, Deputy General Secretary of Vietnam Association of Seafood Exporters and Producers (VASEP) said ministries and branches seemed to have a lot of respect, so that, when enterprises propose amendments, but did not achieve 100 percent amendment results, some recommendations were repeated many times but not yet amended. For example, emission targets of the Natural Resources and Environment sector are making it difficult for firms. Many seafood processing factories are facing difficulties after inspection and examination of State environmental management agencies when applying the National Technical Standard QCVN 11-MT: 2015/BTNMT on processing seafood wastewater. The major violations in the content exceeded the threshold of phosphorus and nitrogen. However, up to this time, the revised draft of the National Technical Regulation on seafood processing wastewater (QCVN 11: 2015) has not been in the plan to promulgate Vietnamese standard. The association also conducted a survey in October last year, but it was still difficult over last year. Nam said that this delay made it difficult for enterprises to compete when exporting, especially when the Vietnam - EU Free Trade Agreement (EVFTA) would be ready for implementation.

Talking about the overlap of legal provisions, PhD. Nguyen Thi Huong, Vice President of Vietnam Veterinary Medicine Production and Trading Association, General Director of the Central Veterinary Medicine Joint Stock Company 5 (Fivevet), said that the Government had many directions and solutions to remove difficulties for enterprises, but many documents were overlapping and continuing implementation would cause difficulties for enterprises. Regarding veterinary drugs, Circular No. 28/2012/TT-BKHCN dated 12/12/2012 of the Ministry of Science and Technology and Circular 18/2018/TT-BNNPTNT of the Ministry of Agriculture and Rural Development gave regulations on declarations of standard conformity. But veterinary drugs are manufactured with specific conditions, producers must have factories, testing laboratories and storage warehouses that meet international standards, so they must be managed according to national regulations of standards, making overlap. Moreover, Circular 28 stipulates the validity of the certificate of conformity is three years along with the frequency of monitoring and evaluation at least every 12 months, while the validity of the certificate of product circulation is five years, it means that while the product is still in circulation, enterprises must perform the procedure of announcing the conformity once again.

Jacques Morisset, Chief Economist of the World Bank (WB) in Vietnam: Vietnam makes more efforts and determination.

In 2010-2016, Vietnam has had very good reforms, rising to a high level in international rankings. However, in the last 2-3 years, many rankings of Vietnam have not increased significantly. This is because simple and easy-to-implement reforms have already been completed, leaving more difficult and more complex reforms. Therefore, Vietnam must make more efforts and have determination. The WB will always accompany and support Vietnam to provide experience and solutions to improve reform activities, as well as enhance competitiveness and the business environment in Vietnam.

By Huong Diu/ Binh Minh

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