Businesses still face difficulties due to procedures

The economic recovery and development program requires institutional reform, administrative reform, and improvement of the investment and business environment.

Accordingly, it is necessary to continue reviewing and removing barriers in institutions, mechanisms, policies and legal regulations that hinder production and business activities; speeding up the roadmap for cutting and simplifying administrative procedures, improving the investment and business environment; and enhancing the handling of administrative procedures on online platforms.

Looking at the weak health of businesses, the increasing number of businesses withdrawing from the market, and the decline in exports, Mr. Dau Anh Tuan, Deputy General Secretary, Head of the Legal Department of the Vietnam Federation of Commerce and Industry (VCCI), said: In addition to the objective causes of the global economy that have been negatively affecting the production and business activities of businesses, there are also many causes from within the country, from institutions and policies.

The biggest difficulty that Vietnamese private enterprises are facing is accessing capital. Photo: Hoang Ha.

In the current difficult context, to bring the economy back to a high growth trajectory, it is necessary to focus on removing barriers and bottlenecks from institutions and policies that are hindering development.

According to the results of the 2022 business survey by VCCI, the biggest difficulty that Vietnamese private enterprises are facing is access to capital. Specifically, in 2022, access to capital has become the biggest problem with about 55.6% of businesses reflecting, a continuous increase from 34.8% in 2019, 40.7% in 2020 and 46.9% in 2021.

According to Mr. Dau Anh Tuan, businesses have encountered many difficulties in accessing capital after the COVID-19 pandemic. On the one hand, due to the global monetary tightening trend, interest rates are still quite high for businesses in need of borrowing. On the other hand, businesses also face barriers in terms of various processes and procedures when borrowing capital. Most typically, businesses said they could not borrow capital without collateral, businesses were imposed with unfavorable credit conditions, and borrowing procedures were too complicated and troublesome for businesses.

Although overall, administrative reform activities have helped improve the business community's perception of land access, Mr. Tuan assessed that "the actual level of change is not comprehensive".

Some aspects are still considered by many businesses to be cumbersome and have high compliance costs. The most common problem is “the time to process procedures is longer than prescribed”, with more than 61% of businesses choosing this. In addition, businesses also reflect on issues such as “having to pay unofficial fees”, “determining land prices takes too long”, “officers handling procedures do not provide adequate guidance”, “not following the correct procedures” and “land prices are not in accordance with regulations”.

Among the above issues, paying informal fees is a rather painful situation and is more common among domestic private enterprises. According to estimates from PCI survey data, about 40% of enterprises carrying out land procedures have accepted to pay informal fees to speed up the procedure settlement.

Remove barriers, open up business environment

According to the General Statistics Office, it is necessary to fundamentally improve the investment environment in the direction of liberalization, facilitation, reduction of business costs for enterprises, and encouragement of socialization. Implement tax reduction policies, increase credit guarantee activities for small and medium enterprises from support funds for enterprises with a part of State capital; continue to promote the equitization process of all State enterprises.

Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, said: It can be said that we have made a long and very fundamental step forward in business freedom; people and businesses have the right to freely do business in professions that are not prohibited by law. However, there is still a lot of room to expand and further develop the right to freedom of business.

Business freedom is associated with business safety, reducing legal risks and compliance costs. To achieve safety and minimize legal risks and compliance costs, Mr. Cung noted that several factors are needed. That is, the law must be clear, consistent, transparent and especially predictable; there must be a judicial system (courts, arbitration, etc.) that provides fair, reliable and effective justice services; there must be an impartial, fair and transparent law enforcement institution.

Luong Bang