Benefits of streamlined business regulations

Monday, 2018-12-17 16:37:54
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An estimated 18 million working hours have been saved thanks to reduced regulations.(Photo: Bao Kiem toan)
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NDO - The Prime Minister’s working group has revealed encouraging figures concerning reduced business regulations and goods examination procedures in a recent report, as an estimated 18 million working hours and more than VND6 trillion (US$258 million) have been trimmed.

The cost and money saved will be translated into resources for business activities, helping to create more wealth for the nation. But more importantly, this result is the affirmation of the message to build a facilitating government which always accompanies businesses.

The government is proactive in designing an effective legal system with sound policies and institutions in order to support the economy. The government facilitates rather than replaces the market so that the business environment in Vietnam is able to equal those of the top ASEAN economies. The government’s words come with concrete actions.

In fact, the struggle to cut business regulations has always been a long-running and fierce battle because it is a tug of war between the close-minded who want to keep regulations in place to easily control businesses and the open-minded who want to set the resources of businesses free.

Even the youngest of the generation of experts who first waged the war against regulations, such as Nguyen Dinh Cung (a former member of the task force on implementing the 2000 Law on Enterprises and currently head of the Central Institute of Economic Management) still feel a certain unease about the battle although he is going to retire soon.

Conveying the enthusiasm to the next generation of CIEM officials in the deregulation effort in order to improve the business climate, Cung always encourages his successors to not become dejected and give up because if reform is stopped, everything will have go back to the starting line and it will be very difficult to resume.

A disadvantage to Vietnamese businesses is that in addition to competition in the market, they have to navigate through institutional risks in order to survive. As the world is becoming flat and the difference between the domestic and global business environments is being narrowed, Vietnamese businesses will have more opportunities to rise up.

Vietnam has recorded many achievements in cutting business regulations and improving the investment climate, but its competitiveness remains lower than the world average. Therefore, reform must be bolder and more substantive so that capital will be able to flow into business projects in the fastest and most profitable way.

In 2018 Vietnam fell one place on the World Bank’s Doing Business report despite many indicators having better scores, because businesses have yet to benefit from the reforms. For example, tax refund procedures were faster but the money was not refunded but rather transferred to the tax payment of the following year. As a result, the rank on paying tax still dropped.

Vietnam has obviously taken bold reforms in terms of procedures but changes to the management mechanism have not been made, that is why enterprises have not received the real benefits from those reforms. This is a valuable experience so that Vietnam can continue to implement the government resolution on improving the business environment in a more effective and substantive manner.