Business Licence: Vague Picture

 

Business licence and business licensing system reform are always the top concerns of enterprises, experts, policymakers and management agencies of Vietnam. In the past, a lot of efforts made to reform the business licensing system in Vietnam have generated initial effectiveness. To help reach the targets, the Vietnam Chamber of Commerce and Industry (VCCI) has cooperated with relevant bodies to carry out many programmes to study and check the license system and submit to the Government. In particular, VCCI joined hands with the Central Institute of Economic Management (CIEM) to collect expert opinions for the making of the Decree on Management of Business Licence System.

 

Competent organisations have put forward the target of stiffly reforming the business licence system but the results are below expectations, Doctor of Law Thu Trang of VCCI Legislation Department - a member of surveying group - said. The core reason is the lack of proper concerns from all related subjects, she added. As for the business community, each enterprise only struggles for the licence of its concerns. As for the State, all types of licences are issued by ministries; hence, it is very difficult to require those ministries to reform their business licensing systems.

 

To maintain efforts to the effective reform of the licensing system, VCCI experts noted that the most suitable current approach is the concrete and direct measure to specific licences. This method possibly doesn’t bring in breakthrough and long-term reforms for the licensing system of Vietnam but it can act as a “filter” to make a facelift to individual licences before having an absolutely new mechanism for licence management in Vietnam.

 

To this end, VCCI has joined hands with the UNDP to conduct a survey in 37 types of effective business licences nationwide, mainly in the sensitive fields such as security, culture, information, health and transport. 

 

 

Through the survey into a large number of enterprises operating in Vietnam, VCCI found companies had encountered difficulties in obtaining business licences. On average, each company needs 3.51 licences of various types. This figure excluded “vocal regulations” - a sort of “licence” that all companies must follow. According to the survey, the obtainment of a business licence is a hard task. Master of Law Dau Anh Tuan, a member of the surveying group, said: “If an enterprise wants to obtain a licence for advertisement; it must work with six state-funded organs to have 12 sealed documents. The licence for specialised solutions or products is a harder task.”

 

The survey results show that 19 out of 37 business licences (or 51 per cent) have the problems in legal foundation. Under the Enterprise Law 2005, all licences and conditions related to licensing must be provided on documents issued by the Governmental level upwards but many of the 37 checked licences were issued based on documents of the ministerial and local levels. A good example is the Joint Circular on online game management - an issue of debate in terms of public benefits. To date, the regulations on online game management are provided in joint circulars issued by Ministry of Post and Telecommunications, the Ministry of Culture and Information and the Ministry of Police. However, no legal foundation for this issue from the decree level upward has been promulgated.

 

Several licences were released on the basis of void documents. For example, the certificate on sufficient conditions for domestic trading of petroleum products was promulgated based on a Decree issued in 1999, which was replaced by the Decree No. 59/2006/ND-CP. However, to date, there are no documents to instruct the implementation of the Decree issued in 2006.

 

Thirty five per cent of investigated licences ignored or failed to protect public interests. Some licences showed the protection of public interests but those interests were protected by another tool, or even another licence. Dr. Thu Trang said it was very complicated to run a domestic oil trading business. First of all, the sales agent must obtain the certificate on sufficient conditions for domestic trading of petroleum products and the conditions are very complicated. For example, the conditions include fire prevention and public security but the sales agent must have certificates for fire prevention and public security granted by the Ministry of Police.

 

All checked licences were non-transparent, unfeasible or meaningless. For instance, the seal engraving requires certificates related security and order, fire prevention and workshop. Those conditions failed to reach the target of preventing the manufacturing of false seals.

 

As for the licensing order and procedure, the result showed 89 per cent of licences have troubled in the granting procedure. There are several licences that applicants will never reach while some are too complicated in procedures and some must be considered and issued by the central level. This means that if enterprises are located in far-lying provinces, they still have to appear at the central level to have their documents ratified. In fact, it is unnecessary to have the intervention of the central level.

 

The results of the survey by VCCI showed that the business licence actuality and business environment in Vietnam were very different from assessments by the World Bank and other organisations. According to the assessment by the World Bank (WB), Vietnam is ranked as ‘good’ in relation to its business licence index. According to the World Bank Report 2007, Vietnam is rated 25 out of 175 countries in terms of business licence index. Experts warned that the public should not be happy with the result because the WB based its index on different criteria.