At the “Business Development Forum: Removing Difficulties to Create a New Enterprise Development Space” on July 19, Mr. Phan Duc Hieu – Permanent Member of the Economic Committee of the National Assembly said: “Institutional reforms are not only aimed at reduction and simplification of administrative processes.” , but also with the aim of reducing the compliance effort due to legal regulations.

According to experts and companies, Vietnam’s economic situation remains unfavorable in the first 6 months of the year from the end of 2022. GDP increased by only 3.72% in the first 6 months of 2023, which is a small increase compared to GDP. same period over the last 10 years (only higher than the 1.74% growth rate of the same period in 2020 – due to the strong impact of Covid-19 at that time).

Also in the first six months of the year, Vietnam posted a trade surplus of $12.25 billion, but export and import sales fell sharply over the same period on demand, falling 12.1% and 18.2%, respectively . From Vietnam’s main markets such as the US, ASEAN, EU and some East Asian countries all declined.

It is predicted that the manufacturing and business situation will continue to face many difficulties in the coming period, which will require immediate and long-term solutions to help businesses “weather the storm”.

Mr. Phan Duc Hieu shared at the forum that the General Statistics Office’s survey of processing and manufacturing enterprises showed that enterprises face many difficulties in terms of market, finance, capital and competition.

However, the hardest part for businesses today is funding and the cost of covering and maintaining production and business. Institutional reform is therefore very important.

Illustrating that a company is burdened with the provisions of the law, Mr. Hieu pointed out that the law is necessary, but its downside is an undesirable effect that creates not only administrative procedures but also administrative procedures. both financial burden and create enormous compliance costs.

A legal regulation can result in 5 types of costs: administrative costs; fees and charges; investment costs; Opportunity costs; unofficial fees.

“As a result, institutional reforms are becoming increasingly important in the current difficult business environment. The aim of the institutional reform is not only to reduce and simplify administrative processes, but also to reduce compliance costs that result from legal regulations for companies,” emphasized Hieu.

Nonetheless, institutional reform and reducing compliance costs face four major challenges.

The first, must be cut out of existing regulations.

Monday, fears that the draft will result in new costs being waived, e.g. B. Fs recycling fee norms, expansion of VAT payers…

Tuesday, A number of global measures increase costs for companies, such as the EU’s carbon tax on imports.

Wednesday, Institutional reforms must also be placed in the international context. Countries in the region compete fiercely to improve the investment environment for business. When a country has a good investment environment for business, compliance costs are low.

“Institutional reforms are becoming increasingly important, even less so than short-term fiscal and monetary policy measures,” stressed Hieu.

The Prime Minister has just issued Official Letter 644 to rectify, strengthen responsibilities and improve efficiency of administrative procedure reform to promptly remove obstacles and difficulties for people and businesses.

It highlights three points: not only reforming procedures, but also reducing compliance costs; Review and remove administrative process barriers, reduce compliance costs by 20%; Promptly deal with complaints from individuals and companies.

However, to implement Message 644 effectively, Mr. Phan Duc Hieu said it was necessary to focus on controlling new regulations that increase costs. At the same time, Mr. Hieu suggested not to issue new regulations unless it was urgent. When there is a need for regulation, a proper application roadmap is required to give organizations time to stabilize their health and create a compliance plan. When immediate issuance and enforcement is required, it is necessary to directly fund companies to comply with these regulations such as fire safety, carbon counting, etc.

In the current difficult environment, there is a need to restructure and sell corporate assets. However, the regulations in force sometimes hamper this activity and make it impossible for companies to restructure. Therefore, Mr. Hieu proposed to study and test the relaxed institutional framework for a limited period and to deal with helping companies to restructure their production and business activities.

“Institutional reforms are long-term, so there must be a mechanism to promote them regularly and sustainably. “If the reform is only a single starting point, from time to time by the agency promulgating the institution, it will be very difficult and the effectiveness is not high,” Mr. Hieu said.

For example, countries around the world (e.g. Canada, the United Kingdom and the United States) often have independent agencies tasked with overseeing and promoting institutional reform. This is a sustainable mechanism of institutional reform. This mechanism is under the authority of the government or the prime minister.