Central Institute for Economic Management

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Central Institute for Economic Management

• Implementation of the Enterprise Law New way of
  policy enforcement in Vietnam

By Nguyen Dinh Cung Director of Department for
Macroeconomic Policy 68 Phan Dinh Phung, Ha Noi,
Vietnam Tel [phone] Mobile (84)
0913571596 E-mail cung_at_netnam.org.vn
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1. Scope of Enterprise Law Application
The Legal framework for forms of business
organization 1. Law on foreign direct investment
in Vietnam 2. Cooperative law 3. Law on state
owned enterprises 4. Enterprises Law (1999)
stipulates 4 types of business organization -
Sole Proprietorship - Partnership - Limited
liability company - Join Stock Company
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2. Core changes of Enterprise Law
1. Introduction of automatic procedures for
incorporating private enterprises Under the
previous company laws - Complicated 20 steps
and 20 documents for getting permissions and
approvals from numerous state agencies -
Time-consuming it took from 6 to 12 months to
complete - High cost 10 to 20 VND millions
(700-1400 USD)
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2. Core changes of Enterprise Law
Investors
Communal People's Committee
Preparation of establishment file
Preparation of business registration
Establishment Certificate
District People's Committee
Certificate by Notary Office
Local Hospital
Certificate by Bank
Local Police Station
Required Professional License
Business registration is not approved
Bank
Establishment is not allowed
Office of Provincial People's Committee
Enterprise Statutes
Line Department
List of Board Members, Inspection, etc..
A completed establishment file
File submitted to Department of Planning
Investment or Office of Provincial People's
Committee or Line Department
Enterprise Owner founding Members' Identification
Certificate or Household registering Book
Department of Planning and Investment
Line Ministries
Provincial (city) People's Committee
Establishment is allowed
Business registration is approved
Issue Establishment License
Business Registration Certificate
The end
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2. Core changes of Enterprise Law
2. Abolishment of 150 business licenses (among
400 existing ones) 3. Abolishment of approval or
agreement letter of relevant state agencies for
any changes in enterprise activities, such as -
Entering into new industries - Setting up
branches or representative offices - Changes in
investment, shareholders, headquarters'
address...
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3. Responses of vested interest groups
1. From Government officials - Delay of
implementation reasoned by lack of
guidelines have not received official document
yet,... - Realization of regulations inconsistent
or contradict to the EL - Issue licenses which
had been already abolished - Criticized that the
implementation of EL resulted in loosing state
management or creating social disorders ghost
enterprise, tax evasion, transportation
accidents, social evils, ....
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3. Responses of vested interested group
2. From existing Registered enterprises Complaints
implementation of the EL leads to collapse of
cooperatives Unfair competition Unhealthy
enterprise, including inefficiency of resources
Lobby for recovering of barriers or licenses
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4. Impact of EL implementation
-- Number of newly registered enterprise
dramatically increased - Number of enterprises
expanded their activities, created branches,
representative offices, increased investment
capital, ... In 2000, over 9000 enterprises
expanded their scope of activities
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4. Impact of EL implementation
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4. Impact of EL implementation
Reasons 1. Content of the EL is clear,
consistent, especially market-oriented and
business - friendly no room for discretion by
officials. 2. Strong commitment of government
The special Task Force found by the P.M - 20
members experienced economic and legal experts
- headed by First Deputy Prime Minister
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4. Impact of EL implementation
- Duties Drafting regulations Supervising
implementation of the EL Regularly report to
the PM 3. Public support closed co-operation
between the Special task force and mass media
TV, Radio, Newspaper, ... Any barriers,
unwillingness of vested interest groups has been
quickly disclosed gt remedies therefore timely
and effectively introduced.
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• Thank you very much