In the Report on Provincial Competitiveness Index (PCI) published by the Vietnam Chamber of Commerce and Industry in March 2019, 58% of the nearly 10,000 surveyed enterprises admit to paying informal fees to the state management agencies which are legal compliance costs.
These enterprises said they were willing to accept violations because if they complied, they had to pay costs for investment, human resources, time and opportunities. When it comes to effective business problems, it is more beneficial to violate the law and pay a fine. That is the consequence of the existence of so many regulations that make the compliance costs of enterprises increase unreasonably.
Pay attention to review the potential costs in the draft
(Lawyer Nguyen Hung Quang, NHQuang&Associates)
“From the experience of many world economies in cutting down legal compliance costs for enterprises, I recommend some issues that need attention, for example, raising the responsibilities of state agencies in implementing the Resolution No. 139/NQ-CP and Resolution No. 02/NQ-CP; regularly reviewing administrative procedures and business conditions to eliminate unnecessary procedures and conditions which cause difficulties for enterprises; improving the quality on developing impact assessment reports for policies on proposing legal regulations.
In order to do those works, the Government and the Ministry of Justice need to be more aggressive on requiring the drafting agencies to have ssential and qualitative impact assessments to help drafting, appraising and verifying draft legal regulations. In addition, reports of drafting on review, appraisal and verification need to pay attention to potential legal compliance costs in drafts such as administrative procedures compliance cost, taxes cost and other taxable expense, time cost, opportunity cost.
For example, according to the World Economic Forum (WEF), Tajikistan has the best level of legal compliance cost reform in the world. Tajikistan applies a mechanism for forecasting economic costs in legal drafts, publicizing online drafts and implementing a business consultation mechanism for legal drafts to simplify the administrative procedures and reduce legal compliance costs. Tajikistan also established a supervisory agency on assessing legal impacts to assess impact reports from the drafts.
Considering from 2007, Tajikistan had a lower starting point for compliance costs than Viet Nam, but they had surpassed Viet Nam in 2017 and even the general average of the world. During this time, Tajikistan continuously improved administrative costs, market access conditions by improving component indicators, from construction permits, tax reductions, finance accessment, customs procedure reform, business bankruptcy, etc”.
By Linh Dan, VnEconomy, updated on April 30, 2019