Central Institute for Economic
Management
Implementation of the Enterprise Law:
New way of policy enforcement in
Vietnam
By
Nguyen Dinh Cung
Director of Department for Macroeconomic Policy
68 Phan Dinh Phung, Ha Noi, Vietnam
Tel: (84) 08044929; Mobile: (84) 0913571596
E-mail: cung@netnam.org.vn
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1. Scope of Enterprise Law Application
The Legal framework for forms of business
organization:
1. Law on foreign direct investment in Vietnam
2. Cooperative law
3. Law on state owned enterprises
4. Enterprises Law (1999): stipulates 4 types of
business organization:
- Sole Proprietorship
- Partnership
- Limited liability company
- Join Stock Company
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2. Core changes of Enterprise Law
1. Introduction of automatic procedures for
incorporating private enterprises
Under the previous company laws:
- Complicated: 20 steps and 20 documents for getting
permissions and approvals from numerous state
agencies
- Time-consuming: it took from 6 to 12 months to
complete
- High cost: 10 to 20 VND millions (700-1400 USD)
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2. Core changes of Enterprise Law
Investors
Communal
People's Committee
Preparation of establishment file
Preparation of business registration
Establishment Certificate
District People's
Committee
Certificate by Notary Office
Certificate by Bank
Local Police Station
Required Professional License
Bank
Office of Provincial
People's Committee
Enterprise Statutes
Line Department
List of Board Members, Inspection,
etc..
A completed establishment file
File submitted to:
Department of Planning & Investment
or Office of Provincial People's Committee or Line
Department
Line Ministries
Provincial (city)
People's Committee
Establishment is allowed
Issue Establishment License
Enterprise Owner founding Members'
Identification Certificate or
Household registering Book
Department of Planning and
Investment
Business registration is approved
Business Registration Certificate
The end
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2. Core changes of Enterprise Law
2. Abolishment of 150 business licenses (among 400
existing ones)
3. Abolishment of approval or agreement letter of relevant
state agencies for any changes in enterprise activities, such
as:
- Entering into new industries
- Setting up branches or representative offices
- Changes in investment, shareholders, headquarters' address...
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3. Responses of vested interest groups
1. From Government officials
- Delay of implementation reasoned by:
+ lack of guidelines
+ have not received official document yet,...
- Realization of regulations inconsistent or contradict to the
EL
- Issue licenses which had been already abolished
- Criticized that the implementation of EL resulted in
loosing state management or creating social disorders:
“ghost enterprise”, tax evasion, transportation accidents,
social evils, ....
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3. Responses of vested interested group
2. From existing Registered enterprises
Complaints:implementation of the EL leads to:
+ collapse of cooperatives
+ Unfair competition
+ Unhealthy enterprise, including inefficiency of
resources
Lobby for recovering of barriers or licenses
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4. Impact of EL implementation
-- Number of newly registered enterprise dramatically
increased
- Number of enterprises expanded their activities,
created branches, representative offices, increased
investment capital, ... In 2000, over 9000 enterprises
expanded their scope of activities
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4. Impact of EL implementation
Chart 1: Number of registeredenterprisesbyyear
(1991-2001)
18252
14413
7421
7176
6158
5485
3985
5782
4636
4252
1997
1998
110
1991
1992
1993
1994
1995
1996
1999
2000
Est 2001
Char t 2: Register ed capital by year (1991-2001) (VND
M illions)
22260
(1,484,000 USD)
13780
(918,666 USD)
6575
3015
3458
2
3
2588
2880
2506
2987
4
5
6
7
4042
118
1
8
9
10
11
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4. Impact of EL implementation
Reasons:
1. Content of the EL is clear, consistent, especially
market-oriented and business - friendly; no room for
discretion by officials.
2. Strong commitment of government: The special Task
Force found by the P.M
- 20 members: experienced economic and legal experts
- headed by First Deputy Prime Minister
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4. Impact of EL implementation
- Duties:
+ Drafting regulations
+ Supervising implementation of the EL
+ Regularly report to the PM
3. Public support
+ closed co-operation between the Special task force
and mass media: TV, Radio, Newspaper, ...
+ Any barriers, unwillingness of vested interest groups
has been quickly disclosed => remedies therefore
timely and effectively introduced.
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Thank you very much
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