Further promote institutional reforms to reduce business implementation costs

Speaking at the opening of the forum, Mr. Hoang Quang Phong - Vice President of the Vietnam Federation of Commerce and Industry (VCCI) said that according to a nationwide survey by VCCI, only 32% of businesses said they would expand production and business in the next 2 years.

Although there are nearly 1 million businesses in operation, Vietnamese businesses are still mainly micro, small and medium-sized enterprises (accounting for 98%) and only about 2% are large enterprises.

This shows that the business community in general still faces many difficulties and challenges. The production and business activities of the business sector are still subject to many adverse impacts of the objective context, geopolitical conflicts, and disruptions in supply chains and input materials. Therefore, in order to make a breakthrough in 2025, reforming economic institutions, improving the business environment, and promoting and supporting businesses will be the key.

According to experts, administrative procedures are just one difficulty because along with administrative procedures there are also fees, not just application fees, other taxes and fees are also a big problem. Besides, there are investment costs to comply with the law and what businesses fear most is opportunity costs.

It is argued that although there are many programs to support businesses, implementation is difficult due to procedures. Therefore, these programs need to demonstrate compliance with administrative procedures and costs must be less than 1% of the revenue of small and medium enterprises because if the fee is over 1%, it will be difficult for businesses to develop.

“Institutional reform is not only about cutting administrative procedures but also about cutting compliance costs,” affirmed Mr. Phan Duc Hieu, member of the National Assembly's Economic and Financial Committee.

According to Mr. Hieu, institutional reform is not only aimed at improving the business investment environment but also needs to create strong breakthroughs. Recalling the positive results from the implementation of the Enterprise Law in 2020, Mr. Phan Duc Hieu emphasized the need for breakthrough reforms in both thinking and implementation measures.

Accordingly, after implementing the Enterprise Law 2020 with many changes in thinking when enterprises are allowed to do what is not prohibited by law along with the abolition of 161 licenses, the time to establish an enterprise from 15-30 days has fueled the business spirit in the business community. In just 5 years, from 2020 - 2025, the number of established enterprises is 10 times higher than before, creating the foundation for having a large business force as it is today.

Therefore, Mr. Hieu believes that there needs to be a sustainable mechanism for institutional reform. In the world, there are 4 forms of institutional reform, of which Vietnam has undergone 3 forms, including promulgating good institutions; single reform; implementation in a number of sectors and fields at the initiative of one or several agencies. However, reform is very difficult if it only originates (single) from the law enforcement agencies themselves.

For that reason, there needs to be a sustainable mechanism to implement the fourth form of institutional reform. That is “making institutional reform a legislative and systematic culture, no longer dependent on any individual or organization” – Mr. Hieu said.

Mr. Hieu also said that to reform the institution, there are three things that need to be done immediately: first, the quality of current regulations must be improved; second, regulations that cause difficulties in implementation must be abolished; and the third, which is also the most challenging factor, is to control the quality of newly issued regulations.

Ms. Nguyen Thi Hong Minh - Director of the Institute for Policy and Strategy Studies (Central Policy and Strategy Committee) commented that the enterprise development policy has not created the most favorable conditions for Vietnamese enterprises, especially small and medium enterprises, to invest and improve production and business capacity to participate in business linkages, forming domestic, regional and international production and supply chains. The effectiveness of implementing policies to support small and medium enterprises is still low.

Therefore, in the next 2-3 years, it is necessary to cut all unnecessary regulations and barriers for businesses, and at the same time simplify regulations, aiming to cut at least 50% of the cost of complying with business regulations.

Hoang Tu

Source: https://baophapluat.vn/day-manh-cai-cach-the-che-hon-nua-de-giam-chi-phi-thuc-thi-cua-doanh-nghiep-post545717.html