Bureaucrats jump one step ahead of reforming Assembly

PUBLISHED : Thursday, 16 September, 1999, 12:00am
UPDATED : Thursday, 16 September, 1999, 12:00am

It has been a case of one step forward, one step back in Vietnam's war on bureaucracy. National Assembly have passed an Enterprise Law to radically simplify setting up local private enterprises in the communist state, only to find the Ministry of Trade has thrown up new hurdles.

The trade ministry's decree will require all locally owned trading and tourism firms to acquire registration certificates for every single branch or representative office they establish in the country.

'This is contradictory to the new law,' deputy chairman of the Vietnam Chamber of Commerce and Industry, Pham Chi Lan, said. 'I just cannot understand it.' The chamber has protested loudly to Prime Minister Phan Van Khai, who has since admitted signing the decree without having first read it, having relied on his ministry's advice.

No doubt he too is overwhelmed with paperwork.

Under the system now, Vietnamese wanting to set up a private business must get approval stamps from about 30 different government offices before they can operate.

The process should take a maximum of 30 days, but often drags on for several months, posing a nasty disincentive to private enterprise.

A small 'donation' is typically made to officials for each stamp.

Under the new Enterprise Law, effective on January 1, a company need only register with the local planning and investment department.

In other words, they will require just one stamp.

Until August, once having registered a business, enterprises had been free to expand operations throughout the country without requiring subsequent consent.

Now that is not so simple.

Decree 48, issued with immediate effect by the trade ministry on August 8, has required 50,000 branches and 50,000 representative offices involved in trading and tourism nationwide to apply for separate registration certificates from local authorities.

Businessmen fear this to be a revitalisation of the so-called 'apply-permit' regime, where enterprises were once required to ask official approval for just about anything they did.

Furthermore, local authorities have the right to reject applications for branch and representative offices under the new decree.

However, the decree fails to state on what grounds, leaving a grey area open for potential exploitation by corrupt officials to interpret at their whim.

Vu Quoc Tuan, senior researcher in the Prime Minister's Office, says the decree is not intended to vet branches or representatives' offices, just to record new business.

'The government does not have the right to interfere in legitimate [business] operations,' the Labour Newspaper quoted Mr Tuan.

Another senior government official said: 'If an enterprise wants to open rep offices or branches, all they should have to do is inform the local government.' Nevertheless, the private sector is both suspicious and confused. The trade ministry has pledged to issue a circular clarifying the rules.

In the meantime, the chamber of commerce is continuing its campaign to have Decree 48 overruled.

Ms Lan is hopeful the Enterprise Law will overrule Decree 48 when the law comes into effect next year.

Even when the law is operational, there will still not be a single central registrar of firms for the whole country.

A single companies registry is one of business campaigners' next aims, along with further privatisation of state-owned enterprises (SOEs).

There are already more private firms than SOEs in Vietnam despite the wall of bureaucracy.

However, a handful of inefficient, giant SOEs still dominate trade.

The Enterprise Law is the second phase in the government's push to promote private local enterprise.

It announced a first batch of measures to simplify regulation and offer tax incentives last May.