Government prioritizes enterprise development, administrative reform11/03/2019More than 40 percent of Vietnamese enterprises have reported improvements in their export activities due to government reform efforts to cut administrative red tape. However, a review of the reform five years after the start of its implementation has also found that some improvements were unsustainable and were applied inconsistently.
Government Resolution 19/NQ-CP of 2014 set out tasks and measures to improve the business environment and enhance national competitiveness, containing guidelines on reform of management and specialized inspections. The government ratified the resolution in each of the ensuing years, each time noting significant improvements.
Resolution 19 created a wave of reforms from central to local levels. At the central level, ministries and sectors made plans to cut red tape, facilitating the development of enterprises. The Ministry of Industry and Trade took the lead in abolishing 675 investment and business conditions, equivalent to 55.5 percent of total procedures.
Localities paid special attention to promoting administrative reforms, easing bottlenecks and creating favorable conditions for enterprises. Le Duy Thanh, deputy chair of the Vinh Phuc People’s Committee, said that to help enterprises operate and expand trade and production activities, the province conducted surveys among enterprises and organized meetings between business and government officials to discuss proposals for resolving difficulties encountered by enterprises.
In late January, a workshop to review five years of Resolution 19 implementation was held by the Central Institute for Economic Management (CIEM) under the Ministry of Planning and Investment in Hanoi. Nguyen Thi Minh Thao, head of CIEM’s Business Environment and Competitiveness Department, told participants that 43 percent of enterprises reported positive changes in their export activities, while improvements were also seen in business procedures.
During the reviewed period, the Vietnamese business environment improved, but improvements were unsustainable and inconsistent in ministries, sectors and localities throughout the country. In addition, enterprises faced difficulties in accessing land and capital, and were burdened by informal costs related to doing business.
According to the latest Ease of Doing Business report compiled by the World Bank, Vietnam ranked 69th among 190 economies, down from last year’s 68th place. In addition to improved indexes, several indicators lagged behind regional and global levels, such as low rankings on tax collection and resolving insolvency, at 131 and 133 respectively.
Further red tape cuts urged
Enterprises play a particularly important role in the economy, making significant contributions to job creation, productivity growth and social stability. Given an increasingly volatile regional and global economy, deep and wide international economic integration, and strong fourth industrial revolution, the Vietnamese economy is forging ahead despite many difficulties and challenges.
To overcome these difficulties and challenges, while strengthening macroeconomic stability, controlling inflation, and ensuring major balances of the economy, Prime Minister Nguyen Xuan Phuc asked ministries, departments and localities to keep strengthening administrative reforms, build e-government, improve the business environment, promote non-cash payments, publicize transparency in active missions, and create favorable conditions for the development of enterprises.
Ministries and ministerial-level agencies continue to review their bureaucracies and to slash more red tape. They have been instructed to report their progress to the government before the third quarter of 2019, including full disclosure of abolished and simplified business conditions in 2018. Localities are not allowed to set their own business conditions against the law.
The completion of institutions, laws, mechanisms and policies must be considered a key task in 2019. Those that are no longer appropriate need to be amended or eliminated immediately.
Prime Minister Nguyen Xuan Phuc has praised his working group for its role in slashing government red tape and accelerating reform. Speaking at a session in Hanoi in late January to review the group’s 2018 performance and set 2019 tasks, he asked its members to work harder with party secretaries and chairpersons of cities and provinces, ministers and deputy ministers to improve the business environment, increase competitiveness, protect minority investors, increase tax collection and cross-border trade.
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