Vietnam’s red tape and regulations hold back businesses

HANOI: Major hurdles must be overcome to simplify and streamline regulations governing economic activity, according to the latest report by the Central Institute of Economic Management (CIEM).

The report showed a large number of business sectors, far exceeding the official number of 229. Explaining the discrepancy, the institute said many businesses were simply grouped together to bring down the count.

There have also been inconsistencies in the definitions used by the market authority. To make matters worse, the number of business sectors tends to increase after numerous adjustments are made.

Meanwhile, authorities have been slow in removing businesses that were cleared from the list by the central government.

Old decrees were still in effect, hindering the implementation of more recent laws and regulations.

The issues have been counter-productive to the government’s efforts to create a more favourable business environment and support business development, according to the institute.

Nguyen Minh Thao, head of CIEM’S Department of Business Environment and Competitiveness said the market authority has been unable to effectively reduce the number of conditional business sectors or provide meaningful support to the business community.

Meanwhile, fresh efforts to introduce additional administrative reforms seemed to have lost momentum in recent years.

Thao said failure and delay in delivering real reform could restrict development, and increase risk and costs for businesses.

According to CIEM’S report, major issues with current regulations included unclear definitions of conditions businesses must meet to operate in certain industries, conditions that require permits, conditions that overlap with technical standards and conditions that are obsolete.

For example, under the recently implemented Extended Producer Responsibility (EPR) regulation, producers could be looking at trillions of dong in added expenses.

While producers are fully supportive of EPR and the social and environmental benefits it entails, there have been questions regarding how the contributed funds will be managed and utilised, said Nguyen Hong Uy of Eurocham Vietnam.

Uy said since EPR came into effect on Jan 1 this year, businesses have been reporting issues related to the implementation of EPR as ministries and government agencies were giving them insufficient guidelines.

“Businesses have been waiting for official guidelines to follow, which so far have not been made available to them,” he said.

Uy stressed the importance of building national, unified and detailed guidelines for both the central and local governments on implementing EPR within the country.

Bach Quoc Thang, a representative from an association of veterinary pharmaceutical businesses said excessive red tape has been hindering the industry and putting farmers and their livestock at risk unnecessarily.

“There is no need to set up a technical condition for veterinary pharmaceutical products as they have been subjected to the same vetting procedures under the good manufacturing practice protocols, for example,” Thang said.

“The extra red tape does nothing to improve the safety of the products and goes in the opposite direction of the central government’s efforts to cut down on administrative procedures.”