The realities of cutting down on business licenses

	Ministry of Finance to reduce another fee
	Foreign e-commerce floors must supplement business licenses before January 1

Law making must originate from practice, with people and businesses at the center. Illustration photo: H.Dieu

Licensing procedures remain a barrier

According to the Administrative Procedure Control Department (Government Office), from 2021 to present, Vietnam has reduced and simplified more than 3,000 business regulations in 261 legal documents. At the same time, the Prime Minister has established a Working Group and completed the Prime Minister's Advisory Council on Administrative Procedure Reform to mobilize the participation of the private sector, people and the business community in the reform process.

According to the new Business Ready report of the World Bank Group (WB), Vietnam is assessed to be in the good group regarding the legal framework and public services, especially Vietnam is ranked in the best group in terms of operational efficiency. These are the results of efforts in the process of improving and facilitating the business environment.

However, in the bright picture of the business environment, licensing procedures are barriers, especially for foreign enterprises and foreign-invested enterprises (FDI) in Vietnam. In the Business Confidence Index (BCI) report for the third quarter of 2024 by the European Chamber of Commerce in Vietnam (EuroCham), one of the three biggest obstacles in the operations of European enterprises in Vietnam is the difficulty in obtaining licenses. Specifically, according to survey statistics, 66% of enterprises currently employ between 1% and 9% of foreign employees, while 6% of enterprises have over 20% of foreign employees.

Although enterprises show a desire to maximize the potential of domestic and international labor resources, they face many barriers in recruiting Vietnamese workers. For foreign professionals, EuroCham believes that the main challenges come from complicated visa and work permit procedures, strict labor regulations and high associated costs, along with difficulties in obtaining the necessary documents and approvals.

This issue is especially serious when up to 1/3 of the businesses participating in the survey said that they had negative experiences with the visa system in Vietnam, making many international professionals concerned about entering the Vietnamese labor market.

Not only the issue of work permits, the Investment and Trade Working Group (ITWG) of the Vietnam Business Forum (VBF) believes that Vietnam can significantly promote foreign investment by simplifying and streamlining the procedures for applying for and renewing Business Licenses. This is especially important for foreign investors - who may be discouraged by complicated processes.

For example, the licensing procedures for applying for a Business License under Decree 09/2018/ND-CP. According to ITWG, the procedures and time for foreign-invested enterprises (FDI) to apply for a business license for industries including retail, equipment rental activities and e-commerce are complicated, it can take up to a year.

Cutting resolutely down unnecessary and inappropriate licenses

Given the remaining difficulties, the report on the socio-economic situation at the 8th Session of the National Assembly's Economic Committee requested strong innovation in the work of building, perfecting and enforcing laws. Law making must originate from reality, take people and businesses as the center and subject, promptly remove difficulties and obstacles, clear resources, resolve and overcome bottlenecks, expand space, and create momentum for development. Regularly evaluate the effectiveness and quality of policies after promulgation to promptly adjust inadequacies and conflicts, and minimize loss and waste of resources.

Previously, supportting businesses in overcoming difficulties and promoting production and business activities in late 2024 and the following years, the Prime Minister's Official Dispatch issued in early October 2024 requested ministries, agencies and localities to promote decentralization and delegation of authority in conjunction with enhancing the implementation responsibilities of agencies and units; reduce unnecessary and inappropriate administrative procedures and licenses, increasing compliance costs.

Currently, many ministries and branches have been drastically implementing solutions to reduce and simplify administrative procedures, especially regarding business licenses.

For example, in the first nine months of 2024, the Ministry of Finance focused on reviewing and issuing nine decisions to announce the abolition of eighteen administrative procedures; amending, supplementing and replace twenty four administrative procedures; and announcing five new administrative procedures. As of September 14, 2024, the Ministry of Finance has 752 valid administrative procedures under its management, a decrease of thirteen procedures compared to the first six months of 2024.

In particular, the Ministry of Finance has continued to operate the model of receiving and returning results of administrative procedure settlement under the one-stop mechanism; at the same time, digitizing records and settling administrative procedures under its authority. In addition, the Ministry of Finance has submitted to the Government for approval fourty two plans to reduce and simplify regulations related to business activities under its management. As of September 14, 2024, 11/42 plans have been implemented.

Recently, contributing to the Draft Resolution approving the Program for reducing licenses and innovating licensing activities at ministries, branches and localities in the period of 2025-2030, the Vietnam Federation of Commerce and Industry (VCCI) said that it is necessary to separate the target rate for reducing licenses and converting licensing forms to ensure more practicality and efficiency. Accordingly, VCCI proposed to add cases of reducing licenses, simplifying licensing procedures for unreasonable licenses, and being able to convert from "pre-inspection" to "post-inspection".

On the other hand, extending the validity period of licenses will contribute to reducing the burden of administrative procedures for businesses. However, in reality, through reviewing documents, there are many types of licenses that do not need to have a term, and state agencies can manage them through inspection and audit tools. Therefore, VCCI proposed to add the requirement to "extend or abolish the validity period of licenses".