Many firms have long complained that red tape was holding their business ambitions back
During the last days of May, 2010 the Hai Duong-based Vina Kyoto Co Ltd became the first enterprise in Vietnam to be granted business certification in a single day via the National Business Registration System.
Another six enterprises in Hai Duong province that applied for business certification on the same day that the Vina Kyoto made its registration, received their licences the following day. On June 6, local authorities in southern Ca Mau province also provided business certification for five enterprises after receiving their registration documents on the same day.
These were big jumps in Vietnam’s business registration history, as local authorities were able to grant business certificates quickly and efficiently, helping reduce time and money for enterprises making their first entrances into the business market.
Although the National Business Registration System (NBRS) is only on a trial basis in Hai Duong and Ca Mau, it has promised a much easier way for enterprises to follow their businesses in Vietnam.
Preparation of localities to access NBRS
“We are ready for the reform of business registration programmes” was the reply of leaders from many planning and investment departments in cities and provinces on the sidelines of the conference on the implementation of Decree 43 on business registration, held recently by the Ministry of Planning and Investment (MPI) and the Ministry of Finance in Hanoi.
Nguyen Van Tu, deputy general director of the Hanoi Planning and Investment Department, said the city was ready to connect to the NBRS. According to Ho Sy Hung, general director of the Ministry of Planning and Investment’s (MPI) Enterprise Development Agency (EDA), localities are actively dealing with their statistics and had started to upload them to the NBRS. “Comparing and checking statistics between business registration and tax agencies are also being carried out,” Hung said.
EDA statistics showed that almost 63 provinces had already linked to the system. It will take them some three to four months to upload statistics from enterprises in their own localities to the system. Their final deadline to fulfill this work will be January 1, 2011.
Government’s long-term efforts for enterprise’s short-time market entry
The building of the NBRS is the result of the Vietnamese government’s constant efforts to improve local administrative environment for the sake of the business community over the past decade.
With the Law on Company and Private Enterprise, established in 1991, and then the Enterprise Law built in 2005, the number of newly-established firms surged more than tenfold during the 2000-2009 period against the previous decade, when only 45,000 firms registered for establishment.
In accordance with the Enterprise Law of 2005, effective from July 1, 2006 and replacing the Law on Company and Private Enterprise of 1991, the government issued Decree 88/2006/ND-CP in August 2006 on business registration, which included simplified procedures for business establishment registration and business content change registration.
The time for enterprises to get business certification was then cut to 10 working days, from 32 days in the pre-2006 period. However, because of a lack of inter-cooperation between related state agencies concerning business registration, taxes and seal provisions, the actual times for enterprises to fulfill their administrative registration work was more like 12-22 days.
In order to deal with these shortcomings, the ministries of Planning and Investment, Finance and Police on February 27, 2007 issued a joint circular No. 02/2007/TTLT/BKH-BTC-BCA on their collaboration mechanism, addressing three procedures concerning businesses, taxes and seal registrations.
The mechanism helped remove unreasonable and unnecessary procedures and paperwork, and systemised these procedures in accordance with a “single window” mechanism, and minimised time and costs for enterprises.
The three ministries then on July 29, 2008 issued another joint circular, No. 05/2008/TTLT/BKH-BTC-BCA, replacing Circular 02 and giving stronger collaboration to further cut time and costs for business registration.
Circular 05 was devised under a new governmental instruction, defined in Decree 59/2007/NQ-CP enacted on November 30, 2007, to cut business registration times to five working days and to unify business and tax code registration into a single set of documents to be registered by enterprises at planning and investment departments in their localities.
Current requirements for business registration reform
According to the MPI, these reforms had created a breakthrough in administrative reform and enterprise’s entry costs, which was greatly appreciated by the business community.
“However, the business registration system is still underdeveloped compared with many other advanced systems in the world, which has caused many difficulties for business registration across the country,” said MPI deputy minister Nguyen Van Trung.
The government considered that the business registration system must continue to be reformed to improve the effectiveness of the system and to provide much better market entrance conditions for businesses.
It defined the most necessary works, including an effective cooperation and information sharing mechanism among state agencies at the central level, the establishment of a national database on business registration for all 63 cities and provinces and the sharing of information among state agencies managing business registration works and between them and state agencies in other areas. The MPI has also built a business registration reform programme in 2008-2011 in order to realise the government’s targets.
Under the programme, the MPI has defined two major contents, including the improvement of the business registration legal framework and the establishment of the NBRS.
The legal framework has been strengthened with the issuance of Decree 43/2010/ND-CP on April 15, 2010 on business registration, which has legalised the joint efforts of concerned state agencies in a “single window” mechanism to deal with business and tax registrations of enterprises.
The decree became effective on June 1, 2010, also providing a legal base for the computerisation of business registration country-wide.
The establishment of the NBRS meanwhile has promised profound changes, advancing business registration procedures and strengthening the state’s management towards enterprises’ activities.
The system enables enterprises to receive more effective and high-quality services related to market-entry procedures, reduce costs for the completion of registration, extend abilities to access legally valid enterprise data at the national level and give one more option for online business registration.
Statistics from planning and investment departments in cities and provinces showed that some 470,000 enterprises had registered for establishment so far. Tax departments nationwide meanwhile have reportedly had about 360,000-370,000 enterprises registered in their systems.
“This means the remaining 100,000 enterprises were a “thorny issue” for the authorities since they did not know exactly about their existence and operation,” said EDA deputy general director Le Quang Manh.
“Via the NBRS, the authorities will be able to make clear assessments of their situation, hence strengthening their management capabilities over the operation of businesses after licencing them,” Manh said.