Prior to 2000 there were less than 100,000 small- and medium-sized enterprises (SMEs) in Vietnam, with total investment of VND300 billion. Numbers now total 270,000, of which 160,000 were established between 2000 and 2005, with capital reaching $30 billion. Despite their relatively small scale, SMEs contribute 26 per cent to GDP and account for more than 29 per cent of total export revenue.

Prime Ministerial Decision No 181/2003/QD-TTg dated 4 September 2003 on implementing a “one-door mechanism” (also known as a “one stop shop”, or OSS) at administrative agencies in localities was viewed as a key measure to improve the business environment and create favourable conditions for the development of SMEs.

Among the many functions to use the OSS approach, business registration, tax code issuance and seal acquisition have been given the most attention by provinces and enterprises, but many problems are in need of resolution. In recent years many localities have made significant efforts in reform, simplifying administrative procedures, cutting the time required and reducing the legal costs involved in business registration.

Hai Phong and Da Nang cities and Can Tho province have deployed the OSS model, sponsored by the Vietnam Private Sector Support Program (VPSSP), aiming to help local enterprises reduce the time spent visiting different agencies and to promote private sector development. Analysts attending a national workshop entitled “The OSS Model for the Simplification of Administrative Procedures” on March 27 agreed that the implementation of “OSS” has gained significant achievements and is highly regarded by citizens and enterprises. However, the mechanism remains challenging and in some cases more complicated and time consuming.

OSS model in business registration
Dr Tran Kim Hao from the Central Institute for Economic Management defines the OSS concept as being a mechanism for state management agencies to process administrative activities within their authority for organisations and citizens, ranging from receiving dossiers to issuing certificates and the like via a single focal point.

At the workshop, Dr Hao spoke of the different OSS models, including the “concentrated one stop shop” model, known as the single door, in which a single OSS point has staff from three agencies: the Department of Planning and Investment (DPI), the Tax Department and the Public Security Department, and another called the “authorised one stop shop”, or single window, where the OSS points only have representatives from the registration division of the DPI.

Each city or province can choose the model most suitable. Hai Phong, Hanoi, Ho Chi Minh City and a number of provinces are applying the concentrated OSS model. All information regarding procedures, fees, the timeframe for the issuance of business registration certificates, seal registrations, and tax codes are available from the OSS. Co-operation and co-ordination among the three departments will be improved under the model, because of the closer contact and direct exchange. Theoretically, the time for completing such procedures should be much faster

However, the model has been shown to have some problems, according to Mr Hao, as it doesn’t represent absolute reform in terms of administrative procedures and can be described as “one door with three windows”. Enterprises still need to contact the three agencies for all procedures in a business start-up, as was previously the case. Therefore, “cumbersome procedures are unavoidable,” Mr Hao explained. The total time required could actually be longer because the OSS office is not sufficiently independent to issue all kinds of certificates and paperwork for enterprises under the current legal framework. The model also requires a major boost in budget and human resources in the agencies in order for them to have staff on hand at the OSS office.

From Nguyen Hung Quang’s perspective, the Director of Nguyen Hung Quang & Associates, “this model is only suitable for provinces with a small number of enterprises. Hanoi may face many difficulties because of the larger number of enterprises, and its ‘OSS’ model cannot guarantee a shortened timeframe in business registration start-up.” He has never advised a client to use the “single door” in Hanoi.

Inter-ministerial Circular No 02 /2007/TTLT/BKH-BTC-BCA from the Ministry of Planning and Investment, the Ministry of Finance and the Ministry of Public Security stipulates the timeframe for application processing and the co-ordination mechanism among the three departments for business registration, tax registration and seal permit issuance. According to the Circular, the total time the three procedures are to be completed within is around 15 days, instead of the previous 30 days.

Different to this model, the “authorised one stop shop” model, or single window, seems to be more advanced in respect of administrative reform. The single window is being applied in Lao Cai and An Giang provinces and most recently in Da Nang city. The business registration office of the local Department of Planning and Investment acts on behalf of the other two agencies, receiving applications and issuing certificates or paperwork to enterprises, including the business registration certificate, the tax registration certificate, the seal registration certificate and the seal itself.

This model has a number of advantages over the concentrated one stop shop, being less cumbersome for enterprises and the number of visits to agencies is reduced: once to submit the application, once to sign the business registration certificate and once to receive the registration result. “The single window model needs to be improved and widely applied in all cities and provinces nationwide,” Mr Hao suggested.

Taking Da Nang as an example if the single window model, according to Mr Nguyen Duc Xa, Deputy Head of the Business Registration office, “in the two months since applying the model, Da Nang had received 287 dossiers (regarding business registration, tax codes and seal registration) and completed 230 and returned them to enterprises, of which 193 dossiers were delivered ahead of schedule, in six to ten days, accounting for 83.9 per cent the total, and 82 per cent of enterprises expressed satisfaction with the model when asked.”

However, according to the decree on seal management, the Department of Public Security is the agency authorised to hand over seals to enterprises, which creates obstacles for business registration staff because they must wait for the Department to do so. Mr Xa suggested that if, in the near future, the seal carving permit was abolished then the time for business registration would be further shortened. In 2006, Da Nang had 1,700 newly established enterprises and this year the number is expected to increase by 20 per cent.

Ideas for business registration
The seal and seal carving permit were hot topics of discussion at the national workshop on the one stop shop model. According to Mr David Walke from the EU-Vietnam Private Sector Support Program, half of all countries around the world do not require seals as part of business start-up requirements. Of 175 countries, 92 abolished seals in business registration and Russia abolished its Registry of Seals in 2005.

In Vietnam, “there was a draft proposal to abolish seals,” said Mr Nguyen Van Trung, Head of the Department of SMEs under the Ministry of Planning and Investment. “However, the proposal was not approved due to the traditional practice of Asian people to prefer seals in administrative procedures.”

According to information from the World Bank, in a survey conducted by the EU in 2005 many countries around the world apply close to a one stop model, including Australia, Canada, New Zealand, Afghanistan, Denmark, Finland, Sweden and even Kosovo. Enterprises in these countries can conduct business start-up procedures in two steps, with timeframes ranging from two days to 16 days.

Statistics from Hai Phong city show that since August 2006 many positive results have been seen in applying the OSS model in business registration, tax codes, and seal permits. The average number of SMEs registering for establishment in Hai Phong is 30 per cent higher in the first three months of this year than in the previous six months. “Thanks to this model, enterprises can receive a reply through the OSS office within 13 to 15 days,” said Mr Le Thanh Son from the Hai Phong Department of Planning and Investment. He suggested some other methods that would help enterprises to obtain certificates even faster, such as submitting applications via an Internet portal and equipping the business registration office and relevant agencies with appropriate software and Internet access.

Mr Phung Tan Viet, Director of Da Nang’s Department of Planning and Investment, expressed concerns regarding seals and seal permits, saying that the Department of Public Security should authorise the DPI to issue the seal carving permit. He also said that abolishing the seal should be seriously considered in the future, because enterprises must spend a great deal of time on obtaining a seal, and that additional fees could be applied for enterprises seeking business registration within an even shorter time period.

In 2007, Vietnam is expected to have 50,000 more SMEs, so the “single window” model in business registration, tax registration and seal issuance would enable these enterprises to set up quickly and easily, contributing to improving Vietnam’s business environment. However, in order to reach such as goal, attention needs to be paid to the efforts of the related agencies and the adoption of a spirit of cooperation. 

Source: VNECONOMY