Prime Minister Pham Minh Chinh has signed a decree to urge ministries and provinces/cities to boost administrative reforms and improve the investment environment to support local enterprises.

Electronics production at Katolec Vietnam in Quang Minh Industrial Park, Hanoi. Photo: Pham Hung/The Hanoi Times

"A conducive investment environment is a fundamental platform helping businesses operate smoothly and drive growth. This, in turn, promotes job creation and contributes to overall socio-economic development," said the decree.

Vietnam has been trying to cut administrative regulations and compliance costs as part of its national digital transformation effort. As of May 2023, the country's total number of administrative procedures was 6,422, 376 fewer than the same period in 2020.

This is expected to improve the quality of public service delivery to people and businesses.

According to the Economist Intelligence Unit (EIU) latest study, Vietnam, Thailand, and India are the Asian country making the most progress in business development.

The country's rise of 12 places positions it as the most dynamic country in the world, followed by Thailand’s moving up of 10 places and India’s rise of six places.

Professor Pham Hong Chuong, Rector of the National University of Economics, suggested that reforming administrative procedures and improving the business environment are crucial to creating favorable conditions for attracting more foreign direct investment (FDI).

"This is even more important in the face of intensifying competition to attract FDI, especially as tax incentives are reduced due to compliance with global minimum tax rules," Chuong said.

"The most competitive advantage lies in creating a favorable investment environment free of legal barriers, as this is seen as a key tool for attracting foreign investment," he added.

Chuong's view echoed the results of a recent survey conducted by the European Chamber of Commerce in Vietnam. When asked to identify key areas for improving Vietnam's investment attractiveness, an overwhelming 70% of respondents cited the need to improve administrative procedures as the top priority. This response surpassed other factors, such as infrastructure development and tax incentives.

Drastic efforts from the Government required

Vietnam's 10-year Socio-economic Development Strategy for 2021-2030 sets a target for the country to be among the top 30 countries in the world in terms of business environment by 2030.

The strategy also aims to build a digital government, positioning Vietnam among the top 50 countries in the world and third in ASEAN regarding e-government and digital economy.

However, recent discussions among National Assembly deputies on the socio-economic situation and feedback received from people and businesses have shown that administrative procedures in certain areas still hinder production, business, and people's daily lives.

In particular, the review and reduction of internal administrative procedures have been neglected, resulting in delays and bottlenecks in their implementation. Meanwhile, the process of dealing with administrative procedures involves several intermediary levels, which further exacerbates the delays.

Transparency and public awareness of administrative procedures are also limited, as is the provision of high-quality online public services. In some regions, the organization and implementation of administrative procedures are not strictly enforced, resulting in harassment, non-compliance, longer processing times, increased social costs, and reduced administrative efficiency.

The delay in issuing legal documents, directly and indirectly, impacts the organization and implementation of state policies, affecting the delivery of services to individuals and businesses. It is essential to promptly enact regulations assigning legal responsibilities to relevant agencies and organizations in cases of backlogs and delays in issuing guidance documents.

In its April survey, the Private Economic Development Research Board (Board IV) highlighted the urgency of several measures to support businesses. These include conducting comprehensive research and promoting the standardization and transparency of policies and administrative procedures nationwide while ensuring compliance with relevant laws on administrative procedures.

In light of these challenges, Prime Minister Pham Minh Chinh called on the State apparatus and localities to prioritize reviewing, reducing, and simplifying regulations and administrative procedures affecting investment, production activities, business operations, and people's daily lives.

The goal is to reduce regulations by at least 20%, simplify internal procedures by at least 20%, and cut costs by at least 20%, in line with the government's directives, Chinh said.

Chinh noted the significance of eliminating unnecessary procedures and intermediate steps and addressing overlapping and unquantifiable business conditions while emphasizing transparency in assessment, evaluation, and approval processes.

He said that the issuance of new administrative procedures should be considered only when necessary to manage and regulate emerging social relations.

The Prime Minister also stressed the urgency of conducting comprehensive statistical analysis, reviewing and promulgating legal regulations on time to avoid backlogs and delays in drafting detailed guidelines for implementing laws and regulations. These measures aim to improve the effectiveness and efficiency of the state's administrative apparatus.