According to the ministry, the sectors should be removed from the list of conditional business lines as they do not meet requirements of Clause 1, Article 7 of the Investment Law. It means that they do not affect national defense and security, social order, social morality, health of the community.
In a report to assess impacts of this proposal, the ministry said that the removal will create favorable conditions for the management as unfeasible business conditions in the sectors will be abolished.
Logistic service is now among 21 business condition sectors.
Besides, the cut of unnecessary State management activities will help streamline the State management system and reduce budget expenditures.
In particular, the proposal, if being approved, will reduce administrative procedures, reduce the cost of compliance with administrative procedures and create favorable conditions for investment and business of people and firms.
The proposal is in a draft to amend and supplement a number of articles of the Law on Investment and the Law on Enterprises, which are being compiled by the Ministry of Planning and Investment.
Currently, the list of conditional business sectors of the Law on Investment includes 243 sectors, reduced 33 sectors compared with the list issued in the 2014 Law Investment.
Previously, enterprises had also proposed to cut business conditions of the sectors.
Researches done by the Central Institute for Economic Management showed that there are at least six negative impacts that stem from the proliferation of business conditions.
First, they create an unreasonable barrier for investors and firms looking to enter the Vietnamese market, and keep the number of newly registered businesses down. Eventually, they drive away potential investors who cannot meet the initial requirements of infrastructure, machinery and human resources.
Second, market competitiveness is restricted because there are fewer firms in the field, and large firms are able to exert monopolistic control of the market.
Third, business creativity is suppressed under the strict requirements of business permits, as they regulate the exact kind of business that should be run, the technology it should use and the production method it should follow.
Fourth, excessive regulations reduce productivity, increase costs and decrease added value, which lower firms’ revenue and their ability to reinvest in the economy.
Fifth, some regulations create huge operational risks for businesses as they are oriented for short terms, not allowing firms to plan ahead. This causes firms to hesitate before committing large investments, fearing changes in government regulations.
Sixth, the ambiguity of some conditions precludes detailed regulations that can be applied universally across sectors, creating a general confusion for both firms and administrative officials in applying for and granting permits.