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Improvements needed to local business environment

Update: November, 27/2014 - 09:00

Nguyen Dinh Cung

This year, Viet Nam ranked 78th among 189 countries in the world for ease of doing business, lower than its 72nd rank in 2013, said the World Bank's recent report.

The result has shown that the reform of administrative procedures in Viet Nam is quite necessary, and the Government is determined to get this done by issuing Decree 19 on improving the business environment and national competitive ability.

Nguyen Dinh Cung, head of the Central Institute for Economic Management (CIEM), talks to Vietnam News Agency about the issues involved.

Does Viet Nam's ranking in the recent World Bank report on ease of doing business show the real situation of the country's business environment?

To rank countries in ease of doing business, international organisations have used specific standards, methodologies and criteria as basis. The World Bank had a relatively accurate rank for Viet Nam. However, Vietnamese enterprises have faced numerous risks such as cost of doing business and administrative procedures that are more complicated than the World Bank's assessment of the Vietnamese business environment.

How have administrative procedures affected the competitiveness of domestic enterprises and the attraction of foreign investment to Viet Nam?

Based on the World Bank's ranking, countries that are high on the list provide enterprises with numerous advantages in doing business, including fewer barriers to market entry, low cost of market entry and business operations and low risks of doing business.

Therefore, enterprises encounter stability in doing business and supportive state business policies and have been actively engaged in production and business in these countries.

In conclusion, enterprises need reductions in time, risk and cost of doing business and an increase in investment and business opportunities. If these become possible, productivity and profits will increase as well. In general, for the economy, a reduction in total cost will mean an increase in added value.

What is your comment regarding the State's determination to carry out administrative reform and the interest of the people, domestic enterprises and the economy in reform?

Administrative reform is one of the breakthroughs of institution reform that has been implemented for several years.

With the Government's Decree 19/NQ-CP, there are many differences in methodology and other factors such as more specific targets against previous targets. The decree has also created chances for society to supervise the feasibility of reform.

Meanwhile, the Prime Minister has created pressure for ministries and offices to implement the reform.

With 10 indices for assessing the business environment, each index will have specific effects on the business environment. But according to world experiences and the realities in Viet Nam, the index of trade via border has the largest effect on the economy.

Viet Nam is a nation that is strongly integrated into the world economy, with a total trade value of US$300 billion each year. So, the nation will save $1.6 billion per year if the time for implementing administrative procedures will be reduced by one day from the 21 days at present, according to experts' calculations. The figure will be tens of billions of dollars if the time is reduced by 10 days.

The expectation of experts has been based on the situation of developed countries in the world. However, it is not easy to do that in Viet Nam.

What are the largest obstacles to the reform of administrative procedures?

They are the man and the system of regulations. The state staff must do work according to state regulations. For instance, the regulations stipulate that to solve administrative procedures for one hour, the staff must work for one hour.

Meanwhile, state offices should have efficient co-operation among them to solve administrative procedures smoothly. The offices should avoid situations where one office has solved the procedures quickly but the other office has moved slowly.

They should have an information technology system for administrative procedures to help supervise them.

What are the solutions to the present challenges in Viet Nam's business environment?

We propose to continue implementing five indices and complete other indices. Of these, the state should pay special attention to the index of trade via border.

The state should review 200 kinds of documents as well as sub-licences and licences to cut unnecessary regulations and administrative procedures. It should also issue necessary regulations to ensure a connection between management offices and customs offices and between customs clearance at border gates and the domestic management market.

The state should review the list of conditional business lines and business conditions.

The National Assembly could approve the list of conditional business lines in the future. That is very important because it will have direct effects on business activities of enterprises, spending, risk of market entry and fairness in business activities.

I think business conditions at present are complicated, reduce business opportunities and are characterised by a lack of fairness and the absence of transparency in carrying out business activities and approaching business opportunities.

What international experiences may Viet Nam study to help it implement administrative reform?

The world is in continuous reform to improve its business environment, especially in developed countries. They have done much and quickly. For Viet Nam, I think it needs continuous reform of its business environment and reform of the regular work of the Government, ministries and sectors. Also, there should be an assessment of works that are finished or unfinished every year during the reform process.

Other countries have an independent organisation that controls activities to improve the business environment. In case the organisation finds a sector that needs a breakthrough, it will study the sector and make proposals to the Government. We should have references for this kind of experience. — VNS

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