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Businesses worry about return of “old barriers”

The draft revised Decree 107/2018/ND-CP on rice export has worried local rice exporters as business conditions that had been previously removed may return.

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Specifically, the draft, compiled by the Ministry of Industry and Trade, sets the minimum capacity of specialized warehouses for storing paddy and rice and the minimum capacity of mills and rice processing establishments. These business conditions were previously in Decree 109/2010/ND-CP on rice export, issued on 4/11/2010 and were removed in 2018.

The Ministry of Industry and Trade explained that it is necessary to have minimum standard for rice processing and trading establishments to ensure equality and fair competition. In addition, it is also necessary to standardize investment in infrastructure, in order to ensure synchronization of processing capacity of the industry.

According to the Vietnam Chamber of Commerce and Industry (VCCI), Decree 107/2018/ND-CP issued in 2018 is considered a step forward in reforming business conditions, creating a favorable business environment for rice traders. This is a huge change. Thanks to the simplification of business conditions, many enterprises have been allowed to participate in the rice export market, previously in the hands of state-owned enterprises. By November 2021, there were 205 traders granted certificates of eligibility for rice export by the Ministry of Industry and Trade.

 

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The Ministry of Industry and Trade proposed reviving these business conditions, but it did not give convincing arguments. Setting the minimum size and capacity for rice exporters' establishments will not ensure fairness for small and medium enterprises when they want to participate in this market.

Moreover, the State should not use the business conditions tool, to require all traders doing business in the market to have a large scale, while not convincingly demonstrating this policy is suitable. "Maybe this is a signal of a change in the business environment in Vietnam and the Industry and Trade industry in a negative direction," VCCI said.

Ministries and state agencies do not want to give up power.

The risk of the return of business conditions was warned by economic experts two years ago and so far this concern has been real. It can cause the business environment to become suffocated and regressive. Over the past month, VCCI has made recommendations related to administrative procedures and business conditions in the fields of investment, construction, tax and customs.

It is recommended that the State management agencies respect the competitive market and the business rights of enterprises. “The competitive market will be the best filter for capable businesses. We hope that the State management agencies set this goal clearly when developing and proposing business conditions," said Mr. Hoang Quang Phong, Vice Chairman of VCCI.

The report "Business environment reform program: business perspective 2020" published by VCCI on April 20, 2021 shows that the reform momentum is slowing down. One area with the most positive movement in recent times is the cutting of business conditions, which, according to VCCI, "peaked" in 2018, but since 2019, the enthusiasm of ministries and sectors has decreased significantly.

Worryingly, the percentage of enterprises that have to apply for a certificate of business eligibility is on the rise. In 2018, 48% of enterprises participating in the survey said they had to apply for a certificate of business eligibility. The figure was 52% in 2019 and 59% in 2020.

 

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Expert Nguyen Dinh Cung said that business conditions are a type of barrier that greatly affects market entry, restricts competition, limits creativity and adversely affects small and medium enterprises. Therefore, over the past time, the Government has asked ministries and agencies to review and propose cutting 50% of business conditions. After that, many ministries and management agencies announced that they had cut 50-60%, but in fact business conditions still exist and now they are coming back.

Mr. Phan Duc Hieu, of the Central Institute for Economic Management, said institutional reform is facing difficulties because the power of ministries and state management agencies is too great. Cutting off business conditions is cutting out privileges, which many don't want to do. Meanwhile, businesses want the economic institution to be more efficient and free, want to minimize the intervention of the State in simple activities. If this can be done, the economy will be better.

Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that there should be specific sanctions for poor quality documents that affect business investment activities.

Some lawyers said that in some countries businesses and people can sue the State if they are issued wrongly. In Vietnam, the agencies that issue documents that cause damage and loss to businesses and people are still protected.

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