Enterprise Law and Investment Law 2005: Implementation Falls Short of Expectation

 

After the unified enterprise law and joint investment law came into effect, the Government issued five decrees, two circulars and resolution to instruct the implementation. According to research teams, the implementation of the two laws and instructive documents has had certain effects from the central to local levels, such as the elimination of discrimination toward economic sectors and ownership origins, and the promotion of internal forces to attract foreign investment. Clear evidence of that is seen in the registration of more than US$10 billion FDI capital in 2006, far surpassing the initial target of US$6.5 billion.

 

In addition to the gains, experts and investors have responded to several unclear areas in the implementation of these two laws. Mr Nguyen Dinh Cung, secretary of the workgroup, said many localities are unclear about the enterprise law’s provision in naming and proper name, leading to difficulties for businesses. In his opinion, the Ho Chi Minh City government is dogmatically applying this provision, only allowing establishment with meaningful names. He comically said “It is like my name, Cung, is accepted because it meant ‘circle.’ But, OMX, Vinashin or T&G are turned down because their names have no meaning.”

 

Regarding this issue, Mr Pham Duy Nghia of National Economic University disagreed with the naming of business households being protected at the district level, while the naming of private enterprises, limited liability companies or joint ventures is protected at the provincial/municipal level. In fact, there are many companies have the same names like Hasico, one in Haiphong City and another in Hanoi City. Thus, he said the protection of enterprise names should be at a national level. According to him, there should be step-by-step cooperation between business registration agencies and the National Office of Intellectual Property (NOIP). Then, a company wishing for protection of a commercial name must pay a fee.

 

Mr Vu Duy Thai, Chairman of Hanoi Industrial and Commercial Association, said there are 30 matters that need to be solved in these two laws, including unclear, overlapped or contradicting elements, leading to confusion in implementation. He said although the process of three-in-one (business certification, tax code provision and sealing) is to be conducted in one office, the authorities are incapable of fulfilling all tasks as expected.

 

Mr Cao Ba Khoat, Director of K & Associates Co. said the investment law still discriminates between foreign and domestic investors, with priorities given to foreigners. “Domestic investors have to apply for investment projects as stipulated in the investment law, and set up business organisations as stipulated in the enterprise law, while foreign investors only need an investment certificate, which is also the business licence.” He pointed out that the investor also has to apply for new certifications in relation to land, environment and others. Khoat concluded: Why does an investor need a business licence when it cannot replace the above papers?

 

Mr Nguyen Phuong Bac, Deputy Director of Bac Ninh Province Department of Planning and Investment, with a different approach, recommended that local governments should combine the two laws with efforts to improve the local business environment. Bac Ninh has successfully carried out synchronous solutions improving the business environment, streamlining administrative procedures and polishing their image. This is behind Bac Ninh’s success in attracting world-leading companies like Microsoft, Canon and Sumitomo.

 

Last but not least, many companies and investors are unsatisfied with the two laws, as well as their implementation. Mr Nguyen Van An, director of Central Institute of Economic Management (CIEM) and second chief of the workgroup for the implementation of Enterprise Law and Investment Law, said his workgroup will take all constructive ideas from experts and enterprises. He said, “The amendment to the laws will be taken into account if they caused many difficulties to enterprises.”