This content is from: Local Insights

Vietnam: Business conditions eliminated

On September 20 2017, the Ministry of Industry and Trade (MOIT) issued decision 3610A/QD-BCT announcing a plan to remove 675 business and investment conditions from the 1,216 existing conditions under its management for the 2017 to 2018 period. This is the MOIT's first move in response to the government's recent call for a comprehensive review and removal of unnecessary business conditions which restrain foreign investment and reduce national competitiveness. Since its issuance, decision 3610A has made headlines due to its unprecedented reduction of business conditions in the history of the MOIT.

The 675 conditions to be eliminated relate to 17 business sectors, including food safety, commercial examination, goods exchanges, e-commerce, multi-level marketing, logistics, chemicals, alcohol, cigarettes, industrial explosive materials, oil, gas, petrol, franchising, industrial precursors and electricity. For example, the MOIT plans to abolish the existing requirement that foreign franchisors must register a proposed franchise with the MOIT before granting a franchise to a Vietnamese party. The main objective of the reduction plan is to shift the state's focus from pre-investment management to post-investment management.

The MOIT's plan for reducing business conditions and simplifying administrative procedures, if fully implemented, is expected to substantially reduce red tape and ease the investors' burden of compliance in the industry and trade sector. One concern, though, is that it is not clear how the MOIT will implement this plan in practice. Since business conditions are mostly provided under government decrees, any changes to them will lead to amendments to the relevant decrees, which is a very complicated and time-consuming process. Basically, this process entails: preparation of draft amended decrees by the MOIT; proposal of the draft to the government; collection of comments from the relevant state authorities and the public; revision of the draft based on public comments; and, the issuance of the amended decrees by the government. The entire process might take years to finish. It is hoped that the MOIT already has a detailed and practical roadmap for amending the relevant legal documents so that the ambitious goal of decision 3610A can be achieved quickly and smoothly.

Ha Hoang Loc and Nguyen Thuy Trang
Nishimura & Asahi

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