The Prime Minister asked state administrative agencies to check and change administrative formalities that are no longer suitable and cause troubles to people and businesses and to reject intermediary stages, overloaded formalities and unnecessary papers.

Under the instruction, all state administrative agencies must list all administrative procedures at their offices together with the names of officials in charge and the needed time to complete the procedures.

State administrative agencies must also list at their offices citizens’ rights to complain of harassment by officials, as well as names and positions of those responsible for addressing the denunciations. At offices, officials and executives of state-run enterprises in charge of working with the public must wear name tags, which clarify their positions.

The PM also asked government agencies to crack down hard on officials’ working harassments.

Experts commented that the move shows the government’s determination to improve the business environment from the central level. However, the fall of Vietnam’s rank in the World Bank’s Doing Business Report 2007 originates from law execution in localities, which is clearly revealed through a survey of the Central Institute for Economic Management on the issuing of business licenses in three provinces of Thai Nguyen, Ba Ria – Vung Tau and Ninh Thuan.

According to Nguyen Dinh Cung, Chief of the Macro-economic Policy Research Department of the Central Economic Management Institute, complications in formalities, long times for licensing, and ‘black’ spending will influence investors’ minds.

An example that Mr Cung quoted to illustrate complicated formalities in business registration is the case of a taxi firm in southern Ninh Thuan Province.

To have a business license, the firm had to have at least three kinds of paper, including professional practice certificates, meter evaluation papers, and broadcast frequency band use licenses.

The Asia-Pacific Small and Medium Enterprise Forum will take place in HCM City on October 27-28. At the forum, 500 delegates will discuss issues and problems associated with laws, tariffs, investment environment, and human resources to submit to the government.

As Ninh Thuan is a small province, which doesn’t have an association of taxi companies and the capability of verifying meters on taxi cars, the firm had to go to Hanoi to ask for professional practice certificates for its drivers, and bring their taxi cars to central Nha Trang City to get meter verification papers and broadcast frequency use licenses.

Nguyen Phuong Mai, Chief Representative of the UK Association of Chartered Certified Accountants (ACCA) in Vietnam said that in sideline stories of foreign investors in Vietnam and in some surveys of ACCA, investors always complained of lack of information transparency.

Businesses also complain that the most popular channel to convey policies is websites of ministries and sectors but these websites often provide very old information. As a result, businesses have to seek information from informal channels and take time to verify the information. This has greatly affected their business plans.

Protecting investors

According to economist Le Dang Doanh, before joining the World Trade Organization (WTO), Vietnam needs to pay special attention to the standards on protection of investors.

According to the WB’s Doing Business 2007 report, Vietnam is among the five worst countries in terms of protecting investors.

“In other countries, when the management board or the directorate of joint-stock companies abuses their power to benefit themselves and cause losses for shareholders, they will be severely punished under the law. But Vietnam still lacks a legal framework and rules on the responsibilities of directors or members and management boards and the rights to appeal of minority shareholders,” Mr Doanh said.

Regarding tax, experts said that the tax rate is not as important as how to collect and how to minimize wrongdoings associated with tax collection. Ms Nguyen Phuong Mai said that this weakness can be solved through a strict policy that is being worked out by related ministries and sectors.

New Executive Manager of the WB, Juan Jose Daboub, said that Vietnam can improve its ranking on the WB’s list by speeding up reforms and actions for the interests of people.

Meanwhile, Mr Doanh said that it’s time for Vietnam to take the business environment as the benchmark for reform. The government must rely on the opinions of the people and investors to evaluate the quality of reform, not only rely on subjective appraisals by management agencies.

Worrying indicators:

- Entrepreneurs in Vietnam must make 32 payments, spend 1,050 hours, and pay 41.58% of gross profit in taxes.

- The time and cost required to resolve bankruptcy in Vietnam is 5 years and costs 14.50% of the estate value. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is 17.95. 

- Average time needed to fulfill bankruptcy formalities in Vietnam is five years and the assets that bankrupt firms can revoke is 18%, ranking 116^th among 175 surveyed countries.

- Entrepreneurs can expect to go through 11 steps to launch a business over 50 days on average, at a cost equal to 44.5% of gross national income (GNI) per capita.

Source: VNE