The urgent need for further reforms

Technicians at work at Star Engineers Việt Nam in Vĩnh Phúc Province. Legal procedures must be simple and concise to reduce time and cost for investors. VNA/VNS Photo Hoàng Hùng

It took Dubai just five years to build a 600-hectare city with 500 buildings worth US$20 billion, but in Việt Nam with a maze of regulations, it might take 1,500 years.

The remark was made by Minister of Planning and Investment Nguyễn Chí Dũng at the current session of the National Assembly, as deputies discussed amendments to four laws related to investment, including the Law on Planning, the Law on Investment, the Law on Public-Private Partnership (PPP), and the Law on Bidding.

Dũng said he told this vivid story so that every deputy could see the root of Việt Nam’s existing problems, asking them to make changes and hasten reforms for the country’s development in the new era.

“It becomes pressing for Việt Nam to look directly into the reality and remove bottlenecks in mechanisms and policies to improve the investment environment,” he said.

"One of the biggest barriers for foreign investors when investing in Việt Nam is the absence of consistent and favourable mechanisms and policies."

Dũng said that he had witnessed numerous foreign investors excitedly coming to Việt Nam to study investment opportunities, then leaving to invest elsewhere.

The difficulty was not only for foreign investors but also for domestic companies, especially in the context that a majority of domestic companies are of small and medium sizes.

“'The maze of regulations' is a huge obstacle for new enterprises to enter the market and for existing enterprise to grow rapidly," he said.

Such a business environment was undermining Việt Nam’s competitiveness through pushing up compliance cost and time, while increasing the risk to businesses.

“Countries around the world are constantly innovating. If we are slow in the race, foreign investors will leave,” Dũng said, adding that it was vital to create an environment in which investors could be confident to pour in the money.

Dũng said that in China it took only 11 months to build a billion-dollar automobile factory or just 68 days to build a hundred-million-dollar shopping mall. In Dubai, it took only five years to complete a $20-billion city without missing a single day.

Whereas in Việt Nam, it took up to three years to build a five-star hotel in Hà Nội.

According to Nguyễn Quốc Hiệp, president of Việt Nam Association of Construction Contractors, the real estate industry in Việt Nam is regulated by 15 different laws. In addition, these laws lack consistency, which causes difficulty in enforcement.

He also pointed out that several projects must undergo 177 steps and it could take years for a construction site to be cleared.

Phạm Thị Ngọc Thủy, director of the Private Economic Development Research Board’s Office, said bottlenecks in administrative procedures were among the top three challenges that businesses face. The Government had made significant efforts to hasten reforms but more drastic solutions for more thorough reforms were needed.

The general secretary of the ruling party, Tô Lâm, stressed the determination that law-making must be in the direction of stipulating principles, strengthening decentralisation of power and thoroughly removing bottlenecks in operation and development.

Minister Dũng said: “The world is developing rapidly, we cannot delay any longer.”

"The draft amendments which are on the agenda at the National Assembly’s meeting are expected to be a revolution to meet the requirements for the country’s development. The mindset of banning what it is difficult to manage, or the 'ask-give' mechanism of approval should be abolished."

The centralisation of power must also be tackled, he said, stressing the orientation of shifting from pre-inspection to post-inspection, stronger decentralisation and more substantial simplification of administrative procedures.

“Legal procedures must be simple and concise to reduce time and cost for investors and not to take away opportunities of investors,” he said.

"The line between State management and development facilitation is very fragile," he said, stressing law-making must ensure both efficient management and facilitating conditions for development.

Notably, the Ministry of Planning and Investment has proposed streamlined investment procedures for high-tech projects in the draft amendments to the Law on Investment.

Accordingly, special procedures will be applied for projects at industrial, processing and high-tech zones in the fields of innovation centres, research and development centres, semiconductor, integrated circuit, polyethylene and high-tech products.

“We want stronger reforms towards a 'one-stop shop' model to avoid a process that might take several years to complete causing businesses to miss out on all investment opportunities,” Dũng stressed.