No old wine in a new bottle: Vietnam's business law revolution

Policymakers are discussing changes to decrees and the legal interpretation of the Business and Investment Law. The aim is to liberate the private sector's potential and facilitate economic and social development, said Prime Minister Nguyen Xuan Phuc.

“The cabinet has reached an unanimous agreement on the roadmap that Vietnam should adopt to make institutional reforms as well as to improve the business environment,” said Minister of Planning and Investment Nguyen Chi Dung.

Minister and Government Office Chief Mai Tien Dung said the Ministry of Justice has assessed 49 out of 51 drafts.

“We are determined not to create a situation where special interest groups can control policy decisions,” said Phuc.

Prime Minister Nguyen Xuan Phuc at a government meeting to revise legal documents on business and investment. Photo by VGP

Old wine in a new bottle?

The most challenging task for the government is how to give private businesses more freedom but at the same time exercise control over companies to achieve social goals, such as protecting public health and the environment.

“Some newly-revised drafts show that policymakers are still holding on to the old way of thinking,” said Deputy Minister of Planning and Investment Dang Huy Dong.

“There are different ways [that the government can use] to regulate businesses. We don’t necessarily regulate by imposing too many primary legal requirements for setting up a business,” Minister Dong added.

He likened those requirements to market entrance barriers.

He also cited a case study on helmet manufacturers who are currently subject to several quality requirements before they can set up a business.

The Vietnam Chamber of Commerce and Industry (VCCI), the Central Institute of Economic Management (CIEM) and the Government Office said that instead of making it more difficult for helmet companies to start doing business, policymakers should lay out strict rules to monitor the quality of helmets before they are placed on the market.

The VCCI, speaking on behalf of the business community, asked policymakers to remove about 70 of the investment and business conditions.

Sometimes there exists a very thin line between business requirements that specify what a company needs to do and technical requirements that specify quality standards companies need to hit.

Minister Mai Tien Dung said under such circumstances, policymakers should not turn technical requirements into business requirements.

Minister of Justice Le Thanh Long shared the same view.

“I think [policy makers] should lay out more technical requirements rather than requirements for setting up companies in order to create favorable conditions for businesses,” said Long.

“It feels as if we are just putting on new clothes on the same body,” lawyer Le Viet Tho told state-run television VTV.

Another lawyer, Nguyen Thanh Binh, said: “Too many decrees [that need to be revised at the same time] will put mounting pressure on the Ministry of Justice.”

“This is an opportunity to reassess the relationship between the state and the market so that the state can work out what to regulate and how to monitor [businesses],” said Minister of Planning and Investment Nguyen Chi Dung.

“Good institutions will create conditions for businesses to grow. If ministries hold on to the old way of thinking, misusing their power, they will harm development,” said the Prime Minister at a government meeting last month, implying that authorities must put their interests aside to support the business community.