Prime Minister Nguyen Tan Dung is urgently seeking recommendations from ministries and local governments for ways to improve the business climate and attract more investment as the nation joins the WTO.

PM Dung made the Ministry of Planning and Investment (MPI) the point man in an inter-ministerial team with the function of collecting and evaluating recommendations before they are forwarded to the government for approval before the end of the first quarter this year.
“All ministries and local governments are required to strictly enforce the new investment and enterprise laws and other regulations governing enterprises nationwide.
“Priority attention should be given to the procedures on starting a business, applying for a business licence, managing investments post-registration, paying and refunding taxes, and closing a business,” Dung said.
These procedures are some of the indicators by which the World Bank and its financial arm, the IFC, objectively measure business regulations and enforcement in each measured economy worldwide.
These indicators also include employment of workers, registering property, obtaining credit, protecting investors, trading across borders and enforcing contracts.
A senior MPI official said Dung’s directions were the government’s immediate response to Vietnam’s slip from 2005 of six places on the World Bank’s Doing Business 2006 Report. The report, which was released in September listed Vietnam’s business climate as 104th out of 175 measured economies.
Vietnam ranked a dismal 170 out of 175 for investor protection due to lapses in legislation clearly regulating the authority of enterprise managers and members of the board of directors, and the right of minority shareholders to sue, as well as a lack of measures for protecting shareholders against abuse by directors.
Vietnam also stood at 120th place for tax procedures, which measures the cost of paying taxes in both the percentage of profits and administrative time.
Closing a business in Vietnam, which measures the time and cost required to resolve bankruptcies, sat at 116th place due to the time taken to complete procedures and the small recovery rate of assets from insolvent firms.
Vietnam received better recognition for initiating more favorable procedures for dealing with licences (25th place) which measures the procedures, time, and costs to build a warehouse, including obtaining necessary licenses and permits, completing required notifications and inspections, and obtaining utility connections.
The employing workers indicator strengthened for Vietnam from 137 in 2005 to 104 in 2006, reflecting that it’s very easy to hire but much harder to fire a worker in Vietnam.
Overall, the Doing Business 2006 Report stressed that, although there were still many challenges in doing business in Vietnam, there were indicators that the country would gradually improve its grades over the next couple of years as new laws were fully implemented.
“In order to better Vietnam’s business climate, both central and local government must enforce newly passed laws to create the most favourable environment for the business community.
“Priority must be given to enhancing administrative reform and building a market economy that will operate efficiently,” the MPI official said.

Source: Vietnam Investment Review