19 June 2017

Excess preconditions drag economy


Hanoi, June 19 (VNA) – A report on 2017 Business Conditions launched recently by the Central Institute for Economic Management (CIEM) shows that 234 business sectors require new legal prerequisites. There currently are around 300 legal documents laying out business sector prerequisites. 

Sectors with the most prerequisites include industry and trade, transportation, health care, finance and agriculture and rural development. 

“All of this legal red tape has been a major barrier to the country’s progress toward improving the business and investment climate in recent years,” Phan Duc Hieu, CIEM’s Deputy Director, said. 

Business conditions should be classified into categories such as preconditions concerning legality, production capacity, human resources and financial capacity. 

Vietnam aims to develop a market-based economy, but the current amount of regulations and prerequisites intervenes too much and causes “the economy to suffer,” said Hieu. 

Hieu pointed out that unreasonable business preconditions are creating a number of problems: creating business risks, limiting creativity and undermining business stimulation, eroding competitiveness, pushing up costs and badly affecting resource allocation and small and medium – sized enterprises. 

“It is important that State management must not hinder business operation,” Hieu stressed. 

Worried about the “distortion” of business conditions, Dau Anh Tuan, head of Legal Department under the Vietnam Chamber of Commerce and Industry, said that business conditions are more complicated and “distorted” into other forms such as notices or plans. “Business conditions are sometimes issued to eliminate competitors,” he said. 

Tuan said that an independent agency should be founded to evaluate the impacts of business conditions and simplify conditions to facilitate business operation. 

Director of CIEM, Nguyen Dinh Cung, said that a renovation in thinking is needed. 

To boost business development, Cung said that it was critical to remove conditions that create risks, push up costs, and prevent competition and unfairness to businesses. 

Drastic measures should be taken not only in removing unreasonable business prerequisites but also in other unwieldy regulations, he said. “For too long, we have not seen significant improvement.”



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