Target of 1 million operating businesses has not been achieved

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Many targets in Decree 35 have not yet been achieved. Photo: HoaiAnh.

Three of six targets have been reached

Resolution No.35/ND-CP, issued from the beginning of the current Government’s term 2016-2020, provides astrong innovation spirit and drastic action of the Government, considering businesses as the driving force of economic development. According to Deputy Minister of Planning and Investment Tran Duy Dong, thanks to the support policies for business development, including Resolution 35, the average growth rate of businesses for 2016-2019 was 14.4%, up about 80% compared with the average for 2011-2015.The capital of the non-State economic sector's contributed to the total social investment has increased from 36.7% in 2015 to 46% in 2019.

Assessing the results of five years ofimplementationResolution 35, Trinh ThiHuong, Head of Division of General Affairs and Policy, Enterprise Development Department under the Ministry of Planning and Investment said three of six targets of the resolution have been achieved 99% of total targeted and solutions assigned to ministries and sectors have been completed,100% of localities have developed action programmes to implement Resolutions No. 35, signed commitments with the Vietnam Chamber of Commerce and Industry (VCCI) on improving the business environment for businesses, while46% of provinces and cities have specific commitments on the number of local businesses by 2020.

Huong also said that in terms of ensuring the business right and the equal right to access capital sources and business opportunities at the central level and free business right in the Constitution which have been realised by the completed legal system on business (Investment Law, Enterprise Law 2014, 2020; Civil Code, Labour Code), from 2017 to 2019, nearly 40 Government documents have guided the reform of business conditions, cutting and simplifying 50% of business conditions; and the law on Investment has also abolished 21 business lines and amended 24 conditional business lines.

Tran Anh Tuan, Deputy Director of HCM City Department of Planning and Investment, said that in HCM City, the administrative procedures for establishing a business have beenreduced from ninedays to fourdays. In the past fiveyears, the number of newly established enterprises has doubled, 1,200 enterprises have been newly established per year, contributing to local economic development. Access to land has been publicised so businesses can capture information in 24 districts, from which they can access the best land for investment. Customs has also reformed and simplified administrative procedures, supported businessesand worked withtransparency to help businesses implement customs clearance more smoothly.

According to Nguyen Cuong, Deputy Director of BacGiang Department of Planning and Investment, after fiveyears of implementing the Resolution, administrative procedures have been reviewed and cut 25-30% of implementation time. BacGiang has implemented a public administration centre, which is appreciated by firms.

Despite achieving many good results, Deputy Minister Tran Duy Dong said:“It is necessary to frankly acknowledge that there is still a big gap between policy and implementation practice. Some business development targets for the 2016-2020, for example, the target of 1 million operating businesses by 2020 has not been achieved, stemming from subjective and objective reasons.”

The target of 1 million operating businesses has not been achieved

Trinh Thi Huong said that three of six targets of the resolution have not yet completed. First of all, the target by 2020, the country has at least 1 million operating businesses, including large-scale enterprises with strong capital sources. Currently, there are 795,000 operating businesses. According to Huong, to achieve this target, the increase in the number of operating businesses for 2016-2020 on average should be 17.7%, but in fact it only reaches 14.4%. The policy to encourage the conversion of business households to enterprises is not attractive enough, the conversion results are not as expected when building the goals of Resolution 35.

According to Tran Anh Tuan, currently, the number of enterprises in the province is 440,000, not reaching the target of 500,000. The conversion of business households to enterprises is also facing many difficulties despite being supported by management agencies.

Besides, Huong also said that according to Resolution 35, by 2020, the contribution of the private sector to GDP will be 48-49%.

"Although accounting for the majority in quantity, the contribution of the Vietnamese private sector for 2016 - 2019 only is about 43% of GDP.” The third unachievable target is the contribution of the Vietnamese private sector to total social investment. Specifically, according to the target by 2020, the Vietnamese private sector contributes about 49% of total social investment. Although the contribution rate has increased, there is currently a 3% shortage to achieve this target.

Regarding causes forfailing to achieve the target, Huong said the focal agencies and units have not yet been fully established; policies to encourage investment have not been unified; management mechanism areunder sector and location, leading to many different documents and enterprises facing difficulties in grasping and accessing. Incentive policies are not attractive enough andonly focus on promoting the establishment of many enterprises rather than improving the quality of the enterprises. Private enterprises, small and medium enterprises are still weak in accessing State capital resources.

According to Pham Thi Ngoc Thuy, Office of the Private Economic Development Research Board, regarding the reduction in business costs, the Government has requested ministries review, cut, and abolish unspecific business conditions, reform administrative procedures to reduce compliance costs, develop a flexible salary policy andcut fees related to the input costs of businesses. But in fact, businesses still have to pay high input costs, such as sudden adjustment of land cost, raw material and fuel costs, labour costs.

Proposing solutions to overcome this issue, Huong said it is necessary to continue to encourage the development of small and medium-sised private enterprises, including the development of large-scale enterprises plays a leading role in several sectors, creating new growth poles for economic development andbuilding strong brands of Vietnamese enterprises in the domestic and foreign markets. Renovate the State management thinking for private sector enterprises, in which the State considers enterprises both as customers to be served and as management objects. Create a fair business environment. Develop efficient and sustainable private sector firms.