Amending the Laws on Investment and Enterprises


The Law on Investment and the Law on Enterprises are two very important laws in our country's business legal system, which directly affect the development of the business community and the growth of the business investment environment.

The registration of enterprise establishment was easier, but going into details of industries and trades encountered many obstacles.

The registration of enterprise establishment was easier, but going into details of industries and trades encountered many obstacles.

The provisions of these two laws have supported new pioneering ideas, innovative reform thinking, and inspired and guided the functioning of Vietnam's legal system.

Innovative reform thinking

In the past, establishing a new business took months, but now it takes only one or two days, and sometimes even just a few hours. From the time one had to be cautious, and go through many layers of certification to set up an enterprise, to the current open, convenient and fast track system that cuts down on much red tape, setting up a business is now a very fast process. In particular, the Enterprise Law and the Investment Law 2014 have been strong in institutionalizing the 2013 Constitution to guarantee the rights of all citizens to do business. This important feature has contributed significantly to creating a favorable environment for business and investment, while also strongly promoting entrepreneurship and start-ups.

Some important milestones in these two laws, such as the Law on Investment 2014, was the abolishing of the requirement of a certificate for enterprises that must specify the business registration lines. Enterprises will now be allowed to do business in industries and trades that are not prohibited. The procedures for establishing an enterprise are simpler and show a progressive understanding, and the establishing of an enterprise does not require permission but registration, demonstrating a major change in thinking. For the first time, the Enterprise Law 2014 has removed many obligations, so that businesses can be autonomous and self-decisive; representatives of businesses can be expanded, and not limited to just one person as before; and social enterprises can promote, encourage and support this type of enterprise development. These are landmark changes, solving many practical problems, and especially focusing on business freedom for enterprises.

In the Investment Law, for the first time the principle to define conditional business lines has been introduced, which emphasizes the prohibition of trading in certain industries, or sets conditions for doing business in specific industries in order to ensure national security, defense interests, and public interests, and must be prescribed at the decree level or higher. As for the people who have the freedom to do business in the remaining industries, no one has violated this important right. For the first time in the history of business law in Vietnam, a list of 243 conditional business lines was issued. This is a major step towards transparency in policies, and a measure to control the issuance of regulations on business conditions.

It can be said that these two laws not only create a breakthrough in the field of investment and business establishment, but also are the guiding documents for business law. The Government has implemented programs to reduce and simplify business conditions, shifting the focus of state management from pre-inspection to post-inspection, and solving many administrative procedures. Business and investment environment of our country has had favorable changes. In the last three years, the speed of establishing new businesses has reached the highest level compared to the past 20 years, and the private sector has made remarkable progress.

Must modify in accordance with reality

However, with strong changes in the economy, as well as targeting future goals, the dynamics of development require us to make further reforms, starting by revising these two very important laws. There is still a lot of work to be done, a lot of problems need to be resolved and a lot of regulations need to be amended in these two laws.

For example, business registration procedures are praised as a step forward in administrative procedure reform, but there are still some problems and difficulties for businesses. For instance, the identification of level-4 codes when registering business; the time to complete the actual business registration with the provisions of the law are still mixed; and business households must carry out many unnecessary procedures such as notify tax authorities, and market management at business locations. These inconveniences may be hindrances and send a reverse message for reform. According to the World Bank ranking, Vietnam's market is still one of the lowest indicators of a growing business environment.

In addition to the progress recorded in the Law on Investment and the Law on Enterprises 2014, reality still raises many issues that compel us to re-evaluate and amend the two most important laws in our business legal system.
Our country currently has nearly five million household businesses, making a very important contribution to the country's economic development. Although accounting for more than 30% of GDP, the policy framework applied to the household business entity is still lacking, and does not equal businesses operating officially. Many current policies make individual household businesses hesitant to convert into enterprises even though the Enterprise Law has provisions for such conversion. Although there are many other documents related to the conversion of individual business households, such as tax, accounting, land, and labor, the Enterprise Law needs to continue to create motivation for individual household businesses to transform into formal enterprises, create a favorable and fair business environment, and strengthen the quality of governance to gradually form a generation of private enterprises that are large and strong enough.

Regarding the Law on Investment, although it has defined targets on conditional business lines and business conditions, in reality, the directive for business lines is still unclear and the quality of business conditions in legal documents is still very problematic. Every time there is a major review, as in 2018, with strong pressure from the business community, drastic changes from the Government and ministries are announced to simplify business conditions. But questions remain about the sustainability of the cuts, and how to control the issuance of new business conditions. This is an issue that the Law on Investment needs to solve, in order to avoid a situation whereby reforming business conditions would be like "throwing a stone in a pond”.

Although investment procedures have made much progress and are more open, there are still overlaps in related documents. For example, is the time to evaluate environmental impact before or after the approval of investment policies? Does the investment procedure of the Investment Law have to be uniformly applied, and are other legal documents entitled to request additional documents in the file? These issues relate to land auctions, and land bidding of investment projects that require land allocation by the state. The relationship between the Investment Law and other specialized laws such as Law on Environmental Protection, Land Law, and Bidding Law should also be discussed and addressed in the amending of the Investment Law.

Translated by Hoa Nam

Dau Anh Tuan, Director General of Legal Department, VCCI

Các tin, bài viết khác

Đọc nhiều nhất

Illustrative photo.

Market manipulators set to devalue stocks

(SGI) - The last trading sessions on the stock market in Vietnam in 2021 witnessed the old trick of spreading bad news for the purpose of devaluing stocks and buying cheaper shares, which also led to several investors suffering heavy losses.