Revised laws to improve business conditions
The Minister of Planning and Investment, Bui Quang Vinh, spoke to reporters about changes made to the amended Law on Enterprise and Law on Investment, both recently approved at the eighth session of the 13th National Assembly.
What noteworthy changes were made to the Law on Investment?
The two amended laws on enterprise and investment were regulations essential for the creation and improvement of business and finance conditions, and to specifically improve the country’s investment climate. They aim to make good shortcomings revealed during the 12 or so years they have been in force.
The biggest change to the Law on Investment is the creation of an “approaching method.” Previously, the law stated which fields were allowed to be invested in. The approaching method, instead, only clarifies sectors banned from investment.
This was done in the spirit of the new constitution, which aims to free citizens and firms to engage with, develop and grow businesses. Citizens and firms are therefore free to invest in sectors not prohibited by the law.
Regarding conditional business sectors, citizens and firms must meet requirements to conduct business. Investment certificates will no longer be required from Vietnamese firms, but they will now, for the first time, be required by foreign-invested projects.
The revised Law on Investment cut the number of prohibited sectors from 51 to six, yet there are 267 conditional business sectors. Do you think that the large number of conditional business sectors will cause difficulties?
There will naturally be more conditional business sectors in a more developed country since the conditions are made to ensure that businesses better serve human development goals, such as health, security and environment.
For some of the 267 conditional business sectors, licences for conditional businesses will be required. However this requirement will be kept to a minimum.
For example, there currently are no conditions for opening a restaurant in Viet Nam, just like in countries at a similar development level. However, in developed countries, requirements for opening a restaurant are numerous. For example, owners and waiters must not have an infectious disease and the requirements for food hygiene and safety are very strict.
Tightening business requirements can also benefit residents. Requiring businesses to meet certain standards is not too much of a barrier that it bars companies from doing well.
The revised Law on Enterprise now allows firms to independently control their company seal. Does lack of supervision mean seals don’t matter any more?
In most of the world, the use of company seals has mostly ended. In many countries, signatures are more important. However, in Viet Nam and several other countries, corporate seals are still seen as equal to or more important than signatures in assessing legal validity.
This needs to change. Besides, the use of a corporate seal is costly and causes problems if the seal gets lost or stolen. The Government aims to gradually abolish corporate seals, however their use cannot be banned immediately.
In the revised law, firms are allowed to decide the contents and design of their seals. At the same time, the use of electronic signatures will be enhanced and fostered so as to gradually push out the practice of using seals.
As a warning, companies must request detailed information of their partners’ seals before signing contracts to avoid the use of illegal or fake seals.
Do you think the revisions to the investment and enterprise laws will encourage a wave of new business?
The revisions are expected to stimulate both citizens and firms to invest and build. A wave of newly founded firms is expected since procedures for establishing businesses will be less costly and more transparent.
This will encourage people to invest in business rather than deposit money into interest portfolios or buying gold and US dollars. I believe this will generate higher profits and create jobs in the Vietnamese economy. — VNS