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1. The improvement of business environment for enterprises
The business environment is made up of interacting internal and external elements and conditions which are both objective and subjective， and can affect enterprises positively or negatively. Positive impacts can be a solid fulcrum for enterprises to develop. In a reverse direction， the business environment can also produce negative effects that retard businesses’ development. There are various types of determinants relevant to the business environment： economics， politics， culture， legality， science and technology， ... In this study， we shall discuss the legality factor in the business environment， with emphasis on law revision and refinement， aiming to reform the business and investment environment for Vietnamese enterprises.
The law is the way by which the State expresses its politic views on economic and social development and management objectives. As a management tool to be manipulated by the state， laws can affect the business environment in a formal and direct way. However， as laws are produced by idea， they have inherent limitations relevant to the objectivity and the ability to respond to the rapid transformation of changing economic practices. Being aware of this， countries， including Vietnam， are amending and revising the law in response to the reality. Vietnam still has generous room for business investment and development. According to the World Bank （WB）， the business environment in Vietnam has changed and improved. Doing Business of the WB does not consider all areas of the environment affecting business operations， but analyzes legal regulations that have direct effects on business operations. There are 10 such areas， listed as follows： （1） Starting a business; （2） Dealing with construction Permits; （3） Getting electricity; （4） Registering Property; （5） Getting credit; （6） Paying taxes; （7） Protecting Investors; （8） Trading Across Borders; （9） Enforcing Contracts; （10） Resolving Insolvency.
According to WB rating， Vietnam is ranked 98 out of 175 rated countries in 2005， 104/175 in 2006; 91/178 in 2007， 92/181 in 2008; 93/183 in 2009; 78/183 in 2010; 98/183 in 2011; and 99/183 in 2012. Also according to WB's judgment of the global business environment published on 29/10/2013， Vietnam stayed at 99/183 economies. However， since 2014 when the Investment Law and the Enterprise Law took effect， the investment environment in Vietnam has made rapid progress. In 2015， Vietnam's position was upgraded by 3 steps， from 93 to 90. Improved factors include： Starting a business （7 steps）; getting electricity （22 steps）; getting credit （8 steps）; paying taxes （4 steps）; resolving insolvency （2 steps）. By 2016 when some new legislations were issued， such as the Enterprise Law， Vietnam’s position was upgraded by 9 steps， with the score reaching 63.83/100 points， and the investment environment being ranked 82. By 2017， Vietnam got 67.93/100 points and was upgraded by 14 steps， rising to 68/190 rated economies. However， although Vietnam got 68.36/100 points in 2018， it dropped by 1 step to 69/190. In general， however， the investment environment in Vietnam has been improved remarkably since 2016. This results because the Vietnamese Government is determined to improve the legal system. Legal documents that act to change the business environment include the Investment Law （2014）， the Enterprise Law （2014）， the Competition Law （2017）， and Annual Resolutions No. 19 of the Government. To improve the investment environment and to enhance national competitiveness， since 2014， the Vietnamese Government has issued many Resolutions No. 19 / NQ-CP on this matter. Remarkably， during this period， the Prime Minister personally receives businesses and talks with them to listen to their voice to untangle problems relevant to control and inspection. On 17/5/2017， he issued Directive No. 20/CT-TTg to rectify control and inspection activities over enterprises， which is a problem that has discouraged businesses for many years. 2. Some weakness to be overcome for the business environment in Vietnam to be improved
Despite all those achievements， the business environment in Vietnam is said by domestic economic experts to fall short of the Government's goals. Besides， if compared to other countries in ASEAN， Vietnam ranks behind Singapore， Malaysia， Brunei and Thailand.
Comparing against the 10 WB’s indicators， Vietnam has only 4 that are upgraded： Getting electricity， starting a business， registering property， and enforcing contract. Other indicators get worse： Resolving insolvency index drops by 4 steps to 133/190 economies. Paying tax index drops by 45 steps to 131. Investor protection index drops by 8 steps to 89. The trade across border index drops by 6 steps to 100. The getting credit index drops by 3 steps to 32. Dealing with construction permit drops by 1 steps to 21. The investment environment in those areas is retarted by various factors， including legal regulations. Resolving insolvency encounters many impediments because of the inconsistency between the Bankruptcy Law and related laws. In another area relevant to asset revaluation， the Bankruptcy Law （2014） is in conflict with the Law on Civil Judgment Execution.
In addition to inadequacies relevant to corporate bankruptcy procedures， the Enterprise Law （2014） have not had well-defined provisions on internal governance or solid mechanisms to protect investors， especially disadvantaged minority shareholders.
The Investment Law （2014） and specifying documents also contain limitations. There still exist 267 conditionalities applied to businesses and each business line is governed by its own conditionality. These conditionalities not only impede individuals and organizations’ right to the business freedom but also make it difficult for state management agencies. For example， Decree No. 86/2014/ND-CP dated 10/9/2014 provides for compulsory conditionality on the number of vehicles taxi and cargo transportation businesses must have[1]. This Decree also stipulates for different life-cycles as applied to the same car operating in different regions[2]. Regulating this way， the Government may marginalize most of small and medium-sized businesses， inducing large enterprises to dominate the market to reduce customers choice. Moreover， it manifests discriminative and unfair treatment. Decree No. 105/2017/ND-CP dated 14/9/2017 provides for minimum warehouse area as applied to alcoholic distributors and wholesale alcoholic enterprises[3]. Similarly， Circular No. 14/2013/TT/BNNPTNT 25/2/2013 provides for minimum shop area as applied to pesticide distributors[4] while online distributors do not need shop area. Decree No. 96/2016/ND-CP dated 1/7/2016 set out conditionality on the personnel size as applied to security services company[5]， which is irrational and discouraging for start-ups with limited financial capability. In general， there still exist many regulations that impede enterprises. This is against the policy of promoting the investment environment and building an enabling， integrity government. Therefore， in the coming time， the Vietnamese Government needs to enforce solutions to amend and improve the above-mentioned legal provisions. The main solutions focus on：
- Amending provisions of the Bankruptcy Law as to reduce and simplify procedures， and eliminating contradictions and overlaps between authorities that deal with corporate bankruptcy procedures;
- Amending the Enterprise Law （2014） and the Investment Law （2014）， and eradicating sub-regulations forged by sectors and localities that conflict with the spirit of facilitating enterprises development.
annotation
[1] Paragraph a， Clause 2， article 13， Decree No. 86/2014/N?-CP dated September 10th 2014
[1] Clause 3， article 17， Decree No. 86/2014/N?-CP dated September 10th 2014
[1] Articles 11 and 12， Decree No. 105/2017/N?-CP dated September 14th 2017
[1] Article 11， Circular No. 14/2013/BNNPTNT dated February 25th 2013
[1] Clause 3， article 12， Decree No. 96/2016/N?-CP dated July 1st 2018
REFERENCES
1. Decree No. 105/2017/N?-CP dated 14/9/2017
2. Decree No. 105/2017/N?-CP dated 14/9/2017
3. Decree No. 14/2013/BNNPTNT dated 25/12/ 2013
4. Resolution No. 19/NQ-CP dated 18/3/2014 by the Government
5. Resolution No. 19/NQ-CP dated 12/3/2015 by the Government
6. Decree No. 96/2016/N?-CP dated 01/7/2018
7. Circular No. 42/2017/TT-BGTVT dated 15/11/2017
8.Decree No. 87/2016/N?-CP dated 01/7/2016
9.Enterprise Law No. 68/2014/QH13 dated 26/11/2014
10. Investment Law No. 67/2014/QH13 dated 26/11/2014
11. The Law No. 71/2014/QH13 dated 26/11/2014 revising some articles of taxation laws.
12. Customs Law No. 54/2014/QH13 dated 23/6/2014
13. Public Investment Law No. 49/2014/QH13 dated 18/6/2014
14. Law No. 69/2014/QH13 dated 26/11/2014 on the Management and Disbursement of state funds for production and business
15. Housing Law No. 65/2014/QH13 dated 25/11/2014
16. Construction Law No. 50/2014/QH13 dated 18/6/2014
17. Law on real estate trading No. 66/2014/QH13 dated 25/11/2014
18. Bankruptcy Law No. 51/2014/QH13 dated 19/6/2014
19. www.world bank.org/vi/country/vietnam/research
* Doctor， principal lecturer at the Faculty of State Management of Economic matters and Public Finance – National Academy of Public Administration， Vietnam
The business environment is made up of interacting internal and external elements and conditions which are both objective and subjective， and can affect enterprises positively or negatively. Positive impacts can be a solid fulcrum for enterprises to develop. In a reverse direction， the business environment can also produce negative effects that retard businesses’ development. There are various types of determinants relevant to the business environment： economics， politics， culture， legality， science and technology， ... In this study， we shall discuss the legality factor in the business environment， with emphasis on law revision and refinement， aiming to reform the business and investment environment for Vietnamese enterprises.
The law is the way by which the State expresses its politic views on economic and social development and management objectives. As a management tool to be manipulated by the state， laws can affect the business environment in a formal and direct way. However， as laws are produced by idea， they have inherent limitations relevant to the objectivity and the ability to respond to the rapid transformation of changing economic practices. Being aware of this， countries， including Vietnam， are amending and revising the law in response to the reality. Vietnam still has generous room for business investment and development. According to the World Bank （WB）， the business environment in Vietnam has changed and improved. Doing Business of the WB does not consider all areas of the environment affecting business operations， but analyzes legal regulations that have direct effects on business operations. There are 10 such areas， listed as follows： （1） Starting a business; （2） Dealing with construction Permits; （3） Getting electricity; （4） Registering Property; （5） Getting credit; （6） Paying taxes; （7） Protecting Investors; （8） Trading Across Borders; （9） Enforcing Contracts; （10） Resolving Insolvency.
According to WB rating， Vietnam is ranked 98 out of 175 rated countries in 2005， 104/175 in 2006; 91/178 in 2007， 92/181 in 2008; 93/183 in 2009; 78/183 in 2010; 98/183 in 2011; and 99/183 in 2012. Also according to WB's judgment of the global business environment published on 29/10/2013， Vietnam stayed at 99/183 economies. However， since 2014 when the Investment Law and the Enterprise Law took effect， the investment environment in Vietnam has made rapid progress. In 2015， Vietnam's position was upgraded by 3 steps， from 93 to 90. Improved factors include： Starting a business （7 steps）; getting electricity （22 steps）; getting credit （8 steps）; paying taxes （4 steps）; resolving insolvency （2 steps）. By 2016 when some new legislations were issued， such as the Enterprise Law， Vietnam’s position was upgraded by 9 steps， with the score reaching 63.83/100 points， and the investment environment being ranked 82. By 2017， Vietnam got 67.93/100 points and was upgraded by 14 steps， rising to 68/190 rated economies. However， although Vietnam got 68.36/100 points in 2018， it dropped by 1 step to 69/190. In general， however， the investment environment in Vietnam has been improved remarkably since 2016. This results because the Vietnamese Government is determined to improve the legal system. Legal documents that act to change the business environment include the Investment Law （2014）， the Enterprise Law （2014）， the Competition Law （2017）， and Annual Resolutions No. 19 of the Government. To improve the investment environment and to enhance national competitiveness， since 2014， the Vietnamese Government has issued many Resolutions No. 19 / NQ-CP on this matter. Remarkably， during this period， the Prime Minister personally receives businesses and talks with them to listen to their voice to untangle problems relevant to control and inspection. On 17/5/2017， he issued Directive No. 20/CT-TTg to rectify control and inspection activities over enterprises， which is a problem that has discouraged businesses for many years. 2. Some weakness to be overcome for the business environment in Vietnam to be improved
Despite all those achievements， the business environment in Vietnam is said by domestic economic experts to fall short of the Government's goals. Besides， if compared to other countries in ASEAN， Vietnam ranks behind Singapore， Malaysia， Brunei and Thailand.
Comparing against the 10 WB’s indicators， Vietnam has only 4 that are upgraded： Getting electricity， starting a business， registering property， and enforcing contract. Other indicators get worse： Resolving insolvency index drops by 4 steps to 133/190 economies. Paying tax index drops by 45 steps to 131. Investor protection index drops by 8 steps to 89. The trade across border index drops by 6 steps to 100. The getting credit index drops by 3 steps to 32. Dealing with construction permit drops by 1 steps to 21. The investment environment in those areas is retarted by various factors， including legal regulations. Resolving insolvency encounters many impediments because of the inconsistency between the Bankruptcy Law and related laws. In another area relevant to asset revaluation， the Bankruptcy Law （2014） is in conflict with the Law on Civil Judgment Execution.
In addition to inadequacies relevant to corporate bankruptcy procedures， the Enterprise Law （2014） have not had well-defined provisions on internal governance or solid mechanisms to protect investors， especially disadvantaged minority shareholders.
The Investment Law （2014） and specifying documents also contain limitations. There still exist 267 conditionalities applied to businesses and each business line is governed by its own conditionality. These conditionalities not only impede individuals and organizations’ right to the business freedom but also make it difficult for state management agencies. For example， Decree No. 86/2014/ND-CP dated 10/9/2014 provides for compulsory conditionality on the number of vehicles taxi and cargo transportation businesses must have[1]. This Decree also stipulates for different life-cycles as applied to the same car operating in different regions[2]. Regulating this way， the Government may marginalize most of small and medium-sized businesses， inducing large enterprises to dominate the market to reduce customers choice. Moreover， it manifests discriminative and unfair treatment. Decree No. 105/2017/ND-CP dated 14/9/2017 provides for minimum warehouse area as applied to alcoholic distributors and wholesale alcoholic enterprises[3]. Similarly， Circular No. 14/2013/TT/BNNPTNT 25/2/2013 provides for minimum shop area as applied to pesticide distributors[4] while online distributors do not need shop area. Decree No. 96/2016/ND-CP dated 1/7/2016 set out conditionality on the personnel size as applied to security services company[5]， which is irrational and discouraging for start-ups with limited financial capability. In general， there still exist many regulations that impede enterprises. This is against the policy of promoting the investment environment and building an enabling， integrity government. Therefore， in the coming time， the Vietnamese Government needs to enforce solutions to amend and improve the above-mentioned legal provisions. The main solutions focus on：
- Amending provisions of the Bankruptcy Law as to reduce and simplify procedures， and eliminating contradictions and overlaps between authorities that deal with corporate bankruptcy procedures;
- Amending the Enterprise Law （2014） and the Investment Law （2014）， and eradicating sub-regulations forged by sectors and localities that conflict with the spirit of facilitating enterprises development.
annotation
[1] Paragraph a， Clause 2， article 13， Decree No. 86/2014/N?-CP dated September 10th 2014
[1] Clause 3， article 17， Decree No. 86/2014/N?-CP dated September 10th 2014
[1] Articles 11 and 12， Decree No. 105/2017/N?-CP dated September 14th 2017
[1] Article 11， Circular No. 14/2013/BNNPTNT dated February 25th 2013
[1] Clause 3， article 12， Decree No. 96/2016/N?-CP dated July 1st 2018
REFERENCES
1. Decree No. 105/2017/N?-CP dated 14/9/2017
2. Decree No. 105/2017/N?-CP dated 14/9/2017
3. Decree No. 14/2013/BNNPTNT dated 25/12/ 2013
4. Resolution No. 19/NQ-CP dated 18/3/2014 by the Government
5. Resolution No. 19/NQ-CP dated 12/3/2015 by the Government
6. Decree No. 96/2016/N?-CP dated 01/7/2018
7. Circular No. 42/2017/TT-BGTVT dated 15/11/2017
8.Decree No. 87/2016/N?-CP dated 01/7/2016
9.Enterprise Law No. 68/2014/QH13 dated 26/11/2014
10. Investment Law No. 67/2014/QH13 dated 26/11/2014
11. The Law No. 71/2014/QH13 dated 26/11/2014 revising some articles of taxation laws.
12. Customs Law No. 54/2014/QH13 dated 23/6/2014
13. Public Investment Law No. 49/2014/QH13 dated 18/6/2014
14. Law No. 69/2014/QH13 dated 26/11/2014 on the Management and Disbursement of state funds for production and business
15. Housing Law No. 65/2014/QH13 dated 25/11/2014
16. Construction Law No. 50/2014/QH13 dated 18/6/2014
17. Law on real estate trading No. 66/2014/QH13 dated 25/11/2014
18. Bankruptcy Law No. 51/2014/QH13 dated 19/6/2014
19. www.world bank.org/vi/country/vietnam/research
* Doctor， principal lecturer at the Faculty of State Management of Economic matters and Public Finance – National Academy of Public Administration， Vietnam