Completing the business registration work in vietnam up to 2020

Information about enterprises in the national business registration system is not accurate and complete: the capacit of the business registration officers are limited; aUitude towards pe

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UPPSALA UNIVERSITET &

UNIVERSITY OF ECO.NOMICS & BUSINESS, VNIH

IN VIET NAM UP TO 2020

Author: Nguyen Thi Viet Anh Swedish supenisor: Prof Lars-Torsten Eriksson PhD Vietnamese supervisor: Dr Nguyen Thuy \nh

Class: MPPM - INTAKE 6, Group 24

Hanoi, May 2013

I would like to thank the International Training Centre of University of Economics and Business and Uppsala coordinator for guiding me throughout the learning process as well as to implement thesis project

I also would like to thank my fellow students for ihcir encouragement by sharing, and supporting me throughout the learning process, which plays an important role for the success of this thesis

Finally, I would like to send sincere thanks to my colleagues for supporting mc

in preparing, collecting data and contribute useful consultation tor this thesis

ABSTRACT THESIS THESIS TITLE: Completing the business registration work in Vietnam up to 2020 Author: Nguyen Thi Viet Anh

MPPM Program - Intake 6, Group 24

Level: Final assignment for Master Program in Public Management

Supervisors:

1 Swedish supervisor: Pro Lars-Torsten Eriksson

2 Vietnamese supervisor: Dr Nguyen ThuyAnh

1 Rationale

Business registration procedure is one of the administrative procedures which have improved dramatically in recent years The time for market entr> has reduced from 22 days (in 2005) to 5 days (in 2()07-now) According to Dr Edmund Malesky (Duke University, USA), who leads the investigation about competitiveness index (PCI) in 2012: "Through the PCI, the biggest improvement o\er time is in business registration, in order to finish business registration procedure, enterprises usually takes just seven days on average and onl\- about 2°o of enterprises has to wait more than three months to finish this procedure" Market entr> index in PCI report 2012 continues to increase and lead 9 groups of component index (8.91 points in 2012 compared with 8.59 points in 2011) (PCI 2012 report)

However, during the implementation, there are still some challenges, problems existing which must be completed and adjusted, such as issues of macro-economic policies of state agencies: legal documents are overlapping, unsuitable with the changes in practice, lacking of good coordination benveen the agencies in enterprise management Information about enterprises in the national business registration system

is not accurate and complete: the capacit) of the business registration officers are limited; aUitude towards people and enterprises are not good; online business registration is not widely used in the enterprise community

In the past, there were several reports on business registration such as report of

Ms Leny Van Oyen-UNIDO international expert on business registration reform

to (1) Enhance the national and intemafional vision on business registration reform in Vietnam (2) Summarizing and sharing latest major achievements in supportina deployment

They were developed based on qualitative analysis Proposed solutions were drawn from summar>' report, programs, and projects but yet to analvze strengths, weaknesses, opportunities and challenges of business registration based on quantitative analysis

Besides, business registration is a specialized sector under the management function of Ministr\' of Planning and Investment I am an official with 10 year working experience in this sector I would like to contribute mv research results on challenges, opportunities of business registration in Vietnam as well as propose solutions, recommendation for challenges of business registration in Vietnam to be more integrated with nations in the region and in the world

2 Research purpose

- Analyze the current situation of business registration

- Evaluate the practical situation of business registration; Find out weaknesses and their reasons in business registration Identify strengths, weaknesses, opportunities and threats of business registration

- Propose solution for the completion of business registration in the coming time

3 Research methodology

The author used two main research methodologies: qualitative and quantitative research methodologies The SWOT analysis helps find out the current status, strengths, weaknesses, chances and threats of business registration

The research methodologv is based on primarv data source and secondar} data

to provide general assessment on the situation of the business registration

4 Conclusion

Following are some conclusions drawn based on the findings of this thesis:

In recenr \ears, business registration sector in X'ietnam has achieved significant results, however, there still are some national problems need to be solved On the base

of SWOT analysing, the author has acknowledged that (i) business registration is facing significant chanllenges but still have opportunities to develop, (ii) comparina between strength and weakness we can see that the relationship is quite balanced, (iii) propose 8 solutions to improve business registration until 2020 including S-O S-T W-T, W-0 strategies, (iv) beside these solutions, business registration management organization can use other ones to reach their targets

5.3 There remain some shortcomings in this dissertation

Firstly, investigated objects are in various groups One is in private sector, the

other is in state sector People in priv ate and state may hav e diffirent opinions in terms

of opportunities, challenges, strengths and weaknesses Secondly, the sumpposition on

opportunities, challenges, strengths and weaknesses is limited because of the lack of

opinions of experienced business registration officials If possible, there should be discussions to improv e quality for other research

Secondly, the foundation assumption about opportunities, threads, strengths and

experienced business registration officials This shortcomings should be solved in further research

Thirdly^ the sample of this research is quite small, i.e only 190 people, which

also impacts the credibility of the findings As a result, some outcomes are not as expected and contradict with the available evidence Therefore, should carrv' out another paper, using larger sample is highly recommended Also, there should be a comparison between interview results from state-owned and private sectorsso that solutions can be proposed more appropriately

Suggestion for the next research orientation: The topic will continue opening next research orientation: solution to complete organizational structure of business

registration agencies at all level towards an independent svstem from central to provincial level in order to establish an independent, self-financing business registration system and unified in administration in order toensureexpenditures for effective business registration activities

6 Key word

Business registration: Business; Business proceduce: The National Business Registration System; Business registration office: Refonn; Completing the Business registration work: strengths, weaknesses, opportunities and threats of business registration

TABLE OF CONTENT

Page Chapter 1 General Introduction H

1.1 Rationale \\

1.2 Research purpose 12

1.3 Research questions 12

1.4 Research scope 12

Chapter 2 Theoretical model 13

2.1 The model employed 13

2.2 Benefits and Limitation of SWOT analysis 15

Chapter 3 Research methodology 17

3.1 Research procedure 17

3.2 Data sources Ig 3.2.1 Identify and listing data 18

4.1.2 Business registration 22

4.1.3 National Business Registration System 23

4.1.4 Business environment 23

4.2 Business registration tasks ^^

4.2.1 Business registration tasks -"^

4.2.2 Reform procedure of business registration 24

4.2.3 Achievements - '

4.3 Application of SWOT analysis for business registration w ork 30

Chapter 5 Data analysis ^^

5.1 Data collection 34

5.2 Analysis of collected data ^^

Appendix 1: Questionnaire sur\ey 58

Appendix 2: Inter\iew question 63

8

LIST OF FIGURES

FIGURE2.1: NUMBER OF NEW REGISTRATION ENTERPRISES IN

FIGURE2.2:STRUCTURE OF SURVEY RESPONDENTS ACCORDING TO THEIR POSITIONS

FIGURE 4.1: GENDER STRUCTURE OF SURVEY RESPONDENTS

FIGURE 4.2: STRUCTURE OF WORKING AREAS OF SURVEY RESPONDENTS FIGURE 4.3: WORKING TENURE OF SURVEY RESPONDENTS

FIGURE 4.4: ANSWER RATE OF OPPORTUNITIES

FIGURE 4.5: RESULT OF THREATS

FIGURE 4.6.1: ANSWER RATE OF STRENGTHS

FIGURE 4.6.2:ANSWER RATE OF WEAKNESSES

FIGURE 4.7: ORGANIZATION STRUCTURE OF ABR

FIGURE 5.1: WORKING POSITION

FIGURE 5.2: GENDER

FIGURE 5.3: WORKING AREA

FIGURE 5.4: YEAR OF WORKING EXPERIENCE

FIGURE 5.5: PROPORTION OF ANSWERED OPPORTUNITIES

FIGURE 5.6: PROPORTION OF ANSWERED HAR2ARDS

FIGURE 5.7: PROPORTION OF ANSWERED STRENGTHS

FIGURE 5.8: PROPORTION OF ANSWERED WEAKNESSES

ABBREVIATION

NBRS: National Business Registration Svstem

BR: Business registration

BRO: Business registration office

MPI: Ministrv' of Planning and Investment

ABR: Agency for Business Registration

DPI: Department of Planning and Investment

UNIDO: United Nations Industrial Development Organization NORAD: Nonvegian Agency for Development of Cooperation SECO: Swiss State Secretariat for Economic Affairs

VCCI: Vietnam's Chamber of Commerce and Industrv'

GDT: General Department of Taxation

GSO: General Statistics Office

MPS: Ministrv' of Public Security

CIEM: Central Institute for Economic Management

HCMc:HoChiMinhCity

OSS: One stop shop

WTO: World Trade Organization

WB: World Bank

10

CHAPTER 1: GENERAL INTRODUCTION 1.1 Rationale

The world is witnessing the trend of strong globalization and trade liberalization: thereby, a change and integration is taking place in everv countrv Being along with the alteration of the world's economy Vietnam has harvested some achievements in social - economic development, especially in terms of growth speed and social welfare practice When accounting the contributions to this achievement

we cannot deny the great dedication of administration reform According to the Deputy Prime Minister Nguyen XuanPhuc: ^The Government of Vietnam has always placed a top priority for administrative reform, in order to build an effective public administration, which considers people and enterprises as centre, as well as performs international commitments on transparencv enhancing the access to infonnation on government regulations by people and enterprise." (www.thutuchanhchinh.vn)

Business registration procedure is one of the administrative procedures which have improved dramatically in recent vears The time for market enirv has reduced from 22 days (in 2005) to 5 days (in 2007-novv) According to Dr Edmund Maleskv (Duke University, USA), who leads the investigation about competitiveness index (PCI) in 2012: "Through the PCI the biggest improvement over time is in business registration, in order to finish business registration procedure, enterprises usuallv takes just seven days on average and only about 2% of enterprises has to wait more than three months to finish this procedure" Market entrv index in PCI repon 2012 continues to increase and lead 9 groups of component index (8.91 points in 2012 compared with 8.59 points in 2011) (PCI 2012 report)

However, during the implementation, there are still some challenges, problems existing which must be completed and adjusted, such as issues of macro-economic policies of state agencies: legal documents are overlapping, unsuitable with the changes in practice, lacking of good coordination between the agencies in enterprise management Infonnation about enterprises in the national business registration system

is not accurate and complete: the capacity of the business registration officers are

limited: attitude towards

people and enterprises are not good: online business registration is not widely used in the enterprise community

In the past, there were several reports on business registration such as report of

Ms Leny Van Oyen-UNIDO international expert on business registration refonn situation in Vietnam and support of UNIDO in this sector The purpose of this report is

to (1) Enhance the national and international vision on business registration reform in Vietnam (2) Summarizing and sharing latest major achievements in supporting deployment

They were developed based on qualitative analysis Proposed solutions were drawn from summar>' report, programs, and projects but yet to analyze qualitatively strengths, weaknesses, opportunities and challenges of business registration based on the use of SWOT model

Besides, business registration is a specialized sector under the management function of Ministr>' of Planning and Investment 1 am an official with 10 year working experience in this sector, I would like to contribute my research results on challenges, opportunities of business registration in Vietnam as well as propose solutions,

recommendation for challenges of business registration in Vietnam to be more

integrated with nations in the region and in the world

1.2 Research purpose

- Analyze the current situation of business registration

- Evaluate the practical situation of business registration: Find out weaknesses and their reasons in business registration Identifv' strengths, w eaknesses opportunities and threats of business registration

- Propose solutions for the completion of business registration in tlie coming time

1.3 Research questions

I hereby, research questions of the thesis are:

I What is the current situation of business registration? What are the achievements and outstanding issues?

2 What can the (iovernment Ministrv of Planning and Investment and related agencies do to complete business registration procedure in upcoming time?

1.4 Research scope

This topic is to propose policv solutions for business registration from now to

2020 Because each policy has its implementation period, state agencies will evaluate implementation results and continue to develop policies for next period Therefore, research result of the topic is to complete business registration policies to 2020

12

CHAPTER2 REFERENCE FRAME 2.1 The model employed

Figure 2.1: SWOT model (source: http:/ timnguvenmarketing.com)

Based on the aggregation of ^\AVAv.wikipedia.org vvww.n- 'MenlucK.com, the

evaluation on Strengths and Weaknesses or called internal evaluation in the aspect of

awareness, reputation, fame, finance, technology, relationships, culture of the organization

This evaluation only has relative properties in comparison with the general ground

Evaluation on Opportunities and Threat or called external analysis because

those factors have relation with external environment Factors related to threats and

opportunities may come from tluctuations of the economy (growth or decline),

changes of State policies (favourable or unfavourable for the operation of enterprise,

organization) changes of competitive balance (appear or disappear of a competitor)

From SWOT analysis, SWOT matrix can be formed in order to draw out strategic

solutions

SWOT analysis is the subjective evaluation of data arranged by SWOT format

according to a logical order which is easy to understand, present, discuss and decide,

and can be used for all decision procedure SWOT templates encourage thinking rather

than basing on habitual or instinctive reactions SWOT analysis templates are

presented by a two column and two row matrix, divided into 4 parts: Strengths,

Weaknesses, Opportunities and Threats (source: ' Miiarkctinu.com)

Factors of SWOT matrix can suggest strategic solutions to promote opportunities in order to make use of opportunities by researching, analyzing SaOb; prevent threats by researching, analyzing SaTb; understand weaknesses to mitigate them by analyzing WaOb and creating dilTiculties in being against threats by WaTbanalysis

SWOT model otkn gives 4 basic strategies

14

(source: hUp://timnguvenmarketino.com):

(i) Strategy S-0(Strengths - Opportunitiesjis the strategv that using the

internal strengths of the organization to take advantage of external opportunities

(ii) Strategy W-0{Weaknesses - Opportunities)^ the strategv that improves

internal weaknesses by taking advantage of external opportunities Sometimes, big external opportunities are existing but the organization has internal weaknesses that prevent the organization from making use of those opportunities

(iii) Strategy S-T (Strengths - Threats) is the strategv that uses the

organization's strengths to avoid or minimise the impact of external threats This strategy does not mean that a strongorganization alwavs copes with external threats

(vi) Strategy W-T (Weaknesses - Threats) is the defence strategies to mitigate

internal weaknesses and avoid external threat An organization coping with many external threats and internal weaknesses may make it fall into unsafe situation

Effective strategies are strategies using external opportunities and internal strengths as well as disabling external threats and limiting or overcoming v\eaknesses

of the organization

2.2 Benefits and Limitation of SWOT analysis

Benefits of SWOT analysis

(Extracted from http://wv\AV.business.qld.gov.au)

The main advantages of conducting a SWOT analvsis is that it has little or no cost -If managemant who understands Organization then can perform a S\\'OT analysis And can also use a SWOT analysis when Organization doesn't have much time to address a complex situation This means that managemantcan take steps towards improving your business without the expense of an external consultant or business adv iser

Another advantage of a SWOT analysis is that it concentrates on the most important factors affecting Organization I'sing a SWOT Organizationcan:

UnderstandOrganization better

Address weaknesses

Deter threats

Capitalise on opportunities

Take advantage of strengths

Develop business goals and strategies for achieving them

Limitations of SWOT analysis

(Extracted from http://www.business.qld.gov.au)

When Organization are conducting a SWOT analysis, should keep in mind that

it is only one stage of the business planning process For complex issues, will usually need to conduct more in-depth research and analvsis to make decisions

Keep in mind that a SWOT analysis only covers issues that can definitely be considered a strength, weakness, opportunity or threat Because of this, it's difficult to address uncertain or two-sided factors, such as factors that could either be a strength or

a weakness or both, with a SWOT analysis (e.g might have a prominent location, but the lease may be expensive)

A SWOT analysis may be limited because it:

Doesn't prioritise issues

Doesn't provide solutions or offer alternative decisions

Can generate too many ideas but not help choose which one is best

Can produce a lot of infonnation but not all of it is useful

16

CHAPTER 3 RESEARCH METHODOLOGY The author used two main research methodologies: qualitative and quantitative

- Collection of SWOT documents

- Collection of documents on issue, target tree diagrams

Study documents References,

magazines, internet

Secondary source

Surveys of ABR-MIP's officials Primary source Via emailDirect Deputy Minister of Ministry of Planning and Investment

Deputy Director General of Agency for Business Registration

Deputy Director of Legal Department Deputy Chief of Central Institute for Economic Management (CIEM)

Deputy Director General of General Department of Taxation - Ministry of Finance

Acting Director of Legal Department of Vietnam Chamber of Commerce and Industry (VCCI)

Direct Via phone

- Analyze practical situation of business registration works

- Analyze policies

- Analyze Leaders' orientations

- Analyze SWOT^s factors

-Microsoft Excel -MSPPS software vs 11.5

AutoCAD software

3.2 Data sources

3.2.1 Identify and listing data

In order to identify information which need collecting, first of all SWOT theoretical SWOT analysis, issue, target tree diagrams should be stronglv understood" thereby, collecting theoretical frame, information on business registration works in Vietnam

3.2.2 Data collection

Secondary data source:

- Conclusion reports, data reports, business plan on business registration of

Ministry of Planning and Investment (Agency of Business Registration):

- Articles, speeches, research reports of local and foreign experts and business registration experts

Primary data source:

Prepare questions to interv^iew several Leaders working in Ministrv of Planning and Investment Ministrv' of Finance and VCCI Interview methods: directly, via phone Use questionnaire to interview 140 local staffs and government officials working on business registration and 50 national enterprises

Questionaire:

Prepare questionaire for officals of the Agencv of Business Registration and staffs of business registration offices The questionaire is sent to targeted receivers and submited via email

20 officials of the Agency of Business Registration 120 staffs of business

registration offices - Planing and Investment Department of provinces^cities: Ho Chi Minh city (60 staffs) Da nang (15 staffs) Ca mau (3 statTs) Vung tau (5 staffs) Dong thap (5 staffs) Thai nguyen (5 staffs) The total number of interviewed people is 140

Gather information by questionaire at the same fime carrv- out in-depth interviews After processing information, opportunites threats, strengths and weaknesses will be analyzed in order to figure out solutions to prevent weaknesses, inspire strengths, take oppotunities in to advantage and solve the threats

Interviewed objectives are devided into two groups, including people working for state areas and for enterprises One builds and implements law the other one executes law; however, they have one thing in common which is the relevant to administrative procedure of enterprise On the other hand, nowadays, enterprise's understanding about law is higher Enterprises not only execute law but also superv ise and make contribution to law system establishment and operation of state agenciess Ministry of Planing and Investment has held a number of conferences with attendance

of enterprises to amend Enterprise Law Investment Law

Qualitative method

Qualitative method is usually used to estimate regular business registration operation results of Ministry of Planing and Investment (Agency of Business Registration) This method is also used by several experts to build business registration operation plan

Further more, being a 10-year-experienced business registration officials I have the foundation to ev aluate the current situation of this area This thesis is also the accumulated note during my working time in order to reflect the current situation of business registration area

This qualitative analysing method is applied together with analvsing method SWOT

In-depth inter\iew method

Target: on the basic of opinions of experts to work out acknoledgment and

solutions in order to complete the research

Quantity: 6 people

Objectives: Leaders of Ministry of Planing and Invesment Ministry of Finance,

several departments, agencies, and organizations related to business registration

Interview content: build questionaire for experts:

+ Whv need to complete business registration?

+ Strengtlis weaknesses, opportunities, challenges of business registration area? + Solutions to complete legal frame for business registration untill 2020?

+ Resources to complete legal frame for business registration?

Implementation: ask for experts" timetable then interview directly or via

phones on April 25-26 2014 Gather results on April 28 2013

Quantitative analysing method

Questionaire

Target: the quesfionaire sets target for the interv iew and investigate opinions

about business registration of different people with different experience, different areas

Number of questionaire: 190

Objective: 20 officials of Agency of Business Registration and 120 staffs of 10

business registration offices 50 enterprises in 3 provinces'cities

Questionaire content: the questionaire includes 53 questions, including:

- General infonnation about investigated objectives

- General infonnation about investigation content: questions concentrate on finding the answer for sthengths, weaknesses, oppotunities and challenges of business registration area

Implementation:

- Sending questionaire: April 25, 2013

- Gathering questionaire: April 27 2013

- Gathering data: April 29, 2013

Data showing method

- Data table

Oppotunities challenges, strength and weakness of state organizations are built

by gathering, analysing, estimating and choosing on the base of opinions and ackowledgement mentioned in referent reports, articles, pulished interviews, annual reports and operating direction of provincial Leaders Base on experience from a

number of vears working in this area, the author propose some oppotunities

challenges, strengths and weaknesses that have not been mentioned before Then detailed contents strengths, weaknesses, threats and opportunities are collected, analysed, e\ aluated and suggested

20

3.2.3 Gather information by questionaire

Questionaire is prepared and sent directly to officials of the Agency of Business registration, and sent to emails of 10 business registration officers For enterprises, questionaire will be sent to business registration offices and the staffs will sent to enterprises Everday enterprises have to go to business registration offices to complete administrative procedures so it is very convenient for the investigation Each day, business registration office of Ho Chi Minh city deals with about 600 enterprises Da Nang deals with about 200 enterprises Quang Ninh deals with about 50 enterprises The number of enterprise are different because of the discrepancies in growth speed of the locations

The purpose of the questionnaire is to verify the opportunities, threats, strengths and weaknesses Respondents gave their views on whether these components were correct or not Some studies use Likert scale, i.e having five levels with T* level is totally incorrect and 5^ level are totallv correct In this research, the respondents hav e three options: "Agree" with the statement "Disagree" and "Don't know" This format

is simpler than the Likert scale which might be difficult to the respondents The option '^Don't know" was provided in case the respondent did not have sufficient understanding about the issues

3.4 Data analysis

Author wanted to select the core issues to confinn that they are SWOT factors and then recommend the most concentrated strategies avoiding resources for implementation Therefore, only questions with more than 60% of "agree" answer are confinned to be SWOT factors Any questions with more than 20% of "don't know" answer will be rejected Any answers which is 10%< not agree<20% and "don't know" answer <20% will be rejected

The factors which are confinned to be correct will be used in SWOT matrix (figure 2.2) to develop strategic recommendations

Based on data collected from questionnaires and interview will be analysedto find out opinions, comparisons, reference and will be the basis for explanation of results and findings

Percentage of the different answers of the respondents is calculated bv SPSS software

CHAPTER 4 BUSINESS REGISTRATION WORK OVERVIEW

4.1 Concepts

4.1.1 Administrative procedure

Administrative procedure is the order, implementation method, dossier and

requirements, conditions regulated by state agencies, authorities to process a specific task relating to an individual, organization

For example: Procedure for the issuance of Business registration certificate for

a limited liability company with two members

->isan administrative procedure

Purpose: To certify the birth and existence of an economic legal person on the

market: thereby, state agencies can have infonnation to manage enterprise

Issuance procedure:

- Step 1: Applicant prepares 01 dossier

- Step 2: Submit at Business registration agency

- Step 3: Come to get the result after 5 days after the date of submission

Dossier: (1) Letter of request: (2) Copy of personal identification paper of legal

representative; (3) Company charter; (4) List of capital contribution of members

Issuance conditions:

- Dossier is fullv submitted

- Having contact address of applicant

- Fees are fullv paid

Submit at: prov incial business registration olTice

4.1.2 Business registration

Business registration includes business registration and tax registration for

enterprises registered under Enterprise Law

Pursuant to the regulations of Enterprise I aw 2005 registration for issuance

business registration certificate is the first procedure to do business as an enterprise In

order to establish one of the four enterprise ivpe including LCC shareholding

company, private enterprise or partnership enterprise, applicant must perform the

22

procedure of issuance of Business registration certificate at provincial business registration office where enterprise's head office is located

4.1.3 National Business Registration System

Notional business registration system is a specialized system on business

registration chaired by Ministry of Planning and Investment, cooperating with related agencies to build and operate in order to send, receive, store, display or perform other process for data of business registration Nafional business registration includes National business registration portal and National business registration database

External environment: laws, policies, customers, competitors, partners

Business environment reform is the action of state management agencies to

adjust, amend legal regulations on sectors in order to ensure the smooth, transparency, simple, ease of application of policies for enterprises in the economy

Figure LI: Model of central and provincial

business registration agencies

4.2 Business registration tasks

4.2.1 Business registration tasks

Tasks of business registration agencies are:

- Central level:

Ministry of Planning and Investment (Agency for Business Registration) is the agency assigned to perform the state management on business registration, having the following responsibilities:

Making policies, legal provisions on dossier, order, procedure on business registration

Establishing National business registration system

Cooperating with Ministr>' of Finance General Statistics Office Ministrv of Public Security and other relating agencies in the connection, enterprise infonnation sharing

- Provincial level

Provincial people 's committee (Department of Planning and Investment-DPIi is the state management agency on business registration at local level with the following responsibilities:

Issuing Business registration certificate

Updating enterprise data on national business registration system

Cooperating with Department of Finance Department of Public Security and other agencies in the connection and enterprise infonnation sharing

Inspecting the business condition compliance of enterprises

4.2.2 Reform procedure of business registration

TTierc are four main periods of business registration:

Period I (1986-1990): This is the first time when economic development in

individual, private sector were promoted in the central planning economv with the premise decrees for the regulations of business registration regime

Period II (1991-1999):Change from "pre-check'^ to "post-check"

By simplifv ing the procedures for setting up businesses, abolishing hundreds of inappropriate licenses and regulations on business conditions and establishing a new legal document system guiding implementation of the Enterprise Law 1999 and the

24

implementation of this Law has contributed significantly to the establishment of a legal framework for equality and non-discrimination for all types of enterprises, transition of state management mode for business from "pre-check "to" post-check", transition of business registration mode from " approval and allocation" to mainly serving, supporting and guidancing

Since strong reforms on business establishment procedures of the Enterprise Law 1999, the number of registered enterprises nation-wide has significantly increased, in this period there were approximately 45,000 enterprises bom

Period III (2000- 2007): "Connection" of three procedures

Before 2006, enterprises had to step by step performed procedures for business registration, tax registration and seal engraving at three different agencies with duplicated papers, procedures The minimum time to complete all three procedures were 32 days as prescribed by law

Coordination of three agencies reduces time for processing a dossier The introduction of "one stop shop" mechanism for business registration has created a legal basis for provinces to implement at the same time professional tasks of three agencies: business registration, tax registration and seal registration; thereby eliminating unnecessary procedures, shortening the processing time of three procedures from 32 days to 15 days

Figure 4.2.1: Cooperation model between Ministry of Planning and Investment and General Statistics Office, Ministry of Finance/General Department of

Taxation and Ministry of Public Security Period IV (2007-now): "Consolidation of market entry procedures"

This period can be seen as the turning point of business registration management, expressed most clearly in the strong development of private economic force Especially after the introduction of Enterprise Law 2005 (replacing Enterprise Law 1999) and Decree No 43/2010/ND-CP dated 15/4/2010 of the Government on business registration, market entry procedures have been simplified towards consolidation of business registration and tax registration procedures into a single procedure called "business registration procedure" creating maximum favorable conditions for enterprise founders as well as for the monitoring of the business registration management agencies The powerful improvements and breakthroughs in market entry procedure have created great attractions for the business environment of Vietnam in the eyes of investors

Major reforms as regulated in Enterprise Law 1999 from which Enterprise Law

2005 inherited has opened a new way for the impressive growth on quality of new registration enterprises During 10 years since 2000 to 2010, there are about 505,000 new registration enterprises which are 11 times higher compared to the total number of new enterprises during the past decade

Number of new registration enterprise in

Source: Agency for Business Registration MPI

Average capital scale/enterprise increased from 962 million dong/'enterprise (in 2000) increasing by 3.14 billion dong/enterprise (in 2006) increasing by 3.2 times

In general, in the period 2000-2009 average registration capital scale of an enterprise increased by 9 times

26

The strong development of business communitv' in Vietnam, especially the private sector, shows that the improvement of legal and business environment in Vietnam in the recent years has taken effect

Through each stage of development, the management of business registration were towards the overarching goal which is creating a fav orable legal env ironment for businesses to enter the market, and gradually making business registration procedure a united professional task nationw ide

4.2,3 Achievements

First New legal framework on business registration was established which

consolidated administrative procedures for the market entrv of an enterprise, called

"business registration" Decree No 43/20 lO/TMD-CP dated 15 4 2010 of the Government on business registration has consolidated dossier, business registration and tax registration procedures into a standardized business registration procedure applied synchronously across the nation in order to provide a single enterprise code which is the tax code of enterprise during it life circle

GOT

<?

1 Require enterprise code

2 Issue enterpnse code

3 Business reigstration data

<?

NBRS

GDT (fat clients)

65 BROs (thin clients)

Figure 4.2.3: Procedure for issuance of enterprise code which is tax code

(Source: ABR)

Reduce time for enterprise registration from 22 da> s to 5 working days

Time for completion of enterprise registration

32 days

Figure 4.2«4: Time for issuance of Business registration certificate

Second, computerization of business registration professional task based on the

standardization of professional tasks, maximumthe application of information technology in process of business registration professional task in order to improve capacity, and automate some procedures in order to minimize staffs intervention in professional procedures

National Business Registration System has been completely constructed

e-slgnature payment

7%i></,initially providing enterprises' information

Business I n f o r m a t i o n Portal Architecture

Content Management

N e w s E-Tralnin<

I n p u t S e r v i c e *

O n l i n e T r a n e a c t l o n F— HifoT—aUeii

r a a O n r t

s

Figure 4.2.6: Flowchart of National business registration portal (Source: ABR)

Fourth, allowing online registration

Fifth, forming a focal fX)int for state management in business registration at the central

level

Aflsncy Office

Business Registration Supervision Division

Information and Database Division

Business Registration supporting Cent<

Figure 4,2.7: Chart of ABR organization structure

{Source: ABR)

Sixth, the market entry reform has made positive changes in the perception and

behaviour of staff working on business registration, identifying targets for development of a serving, professional and modem administration, recognized by people and international community

1 PCI index (market entry index) has

sharp increase each year (8.91% in 2012, ^ ^ |

highest among 9 component indexes)

2 Business environment ranking index

by WB increases each year In 2011, it

increased 14 steps compared to that of 2010

4.3 Application of SWOT analysis for business registration works

Based on confirmed research, SWOT model was applied widely and successfully in finding weaknesses of organization and selectingstrategies for effective acts for state agencies from 1950s, authoranalyzed data and selected factors which are strengths, weaknesses, opportunities, theats of business registration works

30

L' Analyze and select SW

factors SWOT Matrix

Investment of local authorities? i

- Enterprise information quality

- Popularity of information service

- Popularity of online information service

- Cooperation regime in enterprise management?

Opportunities

0 1 Globalization requires business

registration agencies to improve the

quality of operations

02 The dramatically development of

the business community requires

business registration agencies to improve

the effectiveness and efflciencv to satisfv

practical demands

0 3 Local authorities sufficiently invest

resources for business registration to be

active in their activities

04 Government concerns and promotes

administrative reforms

0 5 Because the quality of labour in the

market is higher, business registration

agencies can enrol high-qualified labours

06 The higher stale budget collection

(fees, charges) is, the better conditions

for investment of business registration

are

07 Society and enterprises highly

appreciate the elTorts of business

registration refonn

0 8 Technical assistance of international

donors such as UNDP UNIDO SECO

NORAD WB helps Ministr>' of

Planning and Investment to complete the

policies

Strength

SI Legal documents on business

registration are sufficient, clear and easy

to apply

Threats Tl: Business registration of countries in

the world is strongly reformed Countries are competing in business environment ranking index

T2: Expenditure for inxestment upgrading

of National business registration system is rather big compared to the limited domestic budget

T3: Job of business registration staff is overloaded compared to the assigned payroll High working pressure

T4: Pri\ate sector and non-go\'emmental sector are creating good job opportunities attracting experienced staff

T5: Corruption and authoritarianism are tarnishing the image of go\emment agencies and officers and ci\il ser\ants 16: Some groups of people are fear of changing, slow inno\ation thinking T7: Resistance of certain groups for fear of losing benefits

T8: Enterprises and people ask for qualified otTicers civil servants to perform public administrative ser\ ices

T9: Officers, civil senants are not happy with regimes, policies

TIO: Many officers, civil ser\ants are leaxing from state agencies to work for other sectors

52 Nafional business registration

system was constructed consolidatedly

with sufficient data on business

registration

53 Business registration agencies

always make great efforts in

administrative procedure reform

54 Business registration agencies have

unique competence to provide

information about business registration

55 Administrative procedures are clear

and transparent

56 Active, effective cooperation

between business registration agencies

and tax agencies in issuance of enterprise

code

57 Relating agencies cooperate closeh

with business registration agencies in

enterprise management

58 Having change to earn high income

from supplementation income beside

salary

59 Online business registration

procedures are con\ enient and eas> to

use

SIO Many young, qualified ofTicers are

dedicated to the job

SI 1 Officers have chances to be trained

and de\ eloped

insufficient, out-of date and incorrect W3 Enterprise information provision is not popular p

W4 A vertical system from central to local has not been fonned

W5 Online business registration is not

popular, not a convenient registration method

W6 There is no cooperation mechanism between agencies in enterprise management after registration

W7 National business registration system is only used for business registration of

enterprises under Enterprise Law It has not been integrated w ith other business entities such as foreign in\ested enterprise

enterprises established in economic zone processing zone, scientific and technological organizations, credit institutions and other business entities

W8 Legal document are slow to be innoxated

W9 Some staff still has negative acfions in processing administrative procedures

WIO Working en\ ironment is not aUractive

Wl L Some staff is lack of professional and specialized knowledge

W12 Business registration officers are not friendlx and enthusiastic

W13 StatTdoes not have good information technolog) skill

W14 Business registration agencies do not have allowances

CHAPTER 5 DATA ANALYSIS 5.1 Data collected

A total of] 90 questionnaires were collected However, 5 of them were rejected due

to be lacked of information Therefore, the total number of valid questionnaires is 180

• Working position: on the diagram we

can see that the number of leaders is 80

which equivalents to 43.24% The

number of staff/official is 105 which

equivalents to 57.75% We can see that

there is almost no difference between

official and leaders' answer

Figure 5.1 Job position

Job position

Leader Official/staff

• Gender: The number of male

questionnaires is 107 which

equivalentsto 57.83% and female ones is

78 which equivalents to 42T6% There

is no evidence of bias in the view of

male and female respondents regarding

the survey issues

Figure 5.2: Gender

Gender

Female Male

• Working area: Working positions of survey respondents are also collected In

details, they are categorized into 2 groups: central agencies and provincial agencies

Inhere are 20 people from central business registration agency which equivalents to 10.8% and 140 provincial business registration officials which accounts for 64.9% and 45 enterprises accounting for 24.3%

Figure 5.3: Working areas

• Working tenure: According to the figure, 75.7% of them are working for

state agencies and 24.3% are working for enterprises Although state agencies and enterprises have different working areas but they have to involve in business registration administrative procedure According to seniority, each person will have answers which are closer to the reality

Figure 5.4: Working tenure

According to the collected data, we can see that most of survey correspondents (80%) have the working experience from 5 years and more With this tenure, respondents are people who have time for working and social experience Respondents with experience of 5-10 years account for 36.22% and 10-20 years account for 29.73% Only 20% of respondent have less than 5 year working experience and most of them is working for state agencies

5.2 Analysis of collected data

5.2.1 Opportunities

Results of the opportunities are presented in Table 6 Among the 8 opportunities proposed, 05 were confirmed These are 0 1 0 2 0 4 0 7 and 0 8 General speaking, the results were as expected

According to summary reports of Ministry of Planning and Investment, achievements of business registration in the recent years have taken adxantages of opportunities mentioned above, particularly:

^ Ol Vietnam officially joined WTO which opens big opportunities for the economy and state agencies to integrate with the world In order to integrate with the world, business registration agencies must satisfy with the high internationalization

environment Globalization requires business registration agencies to improve operation

quality Requirements of change create pressure as well as initial opportunities for

business registration

5/6 interviewees have the same answer w iih the proposed O

^ 0 2 Within 10 years, from 2000 to 2010 on average, the number of new enterprises increases by 20% each year From the beginning of 2000 to the end of 2010, there are about 505,000 new^ enterprises which are 11 limes higher compared to that of

the previous decade Before 1991-1999 there were only 46,777 enterprises in the nation

Therefore jhe fast growth of business communit}' requires business registration agencies

to improve their effectiveness and efficiency in order to meet the practical demands

5/6 interviewees ha\ e the same answer with the proposed O

^ 0 4 As themessageofthe Prime Minister 'Wfobilizethe whole societ\'to participate inthe process ofcontrollingadministrative procedures in ordertoimplementtheobjectivesofadministrativereform, ensuring the regulation of only promulgotingand maintaining necessary, reasonable, legally valid and low-eost administrative procedures" The goxemment alsoissuedmanxguidance documents,

especiallythe Total Plan on State administrativercfonnfor2011-2020 Therefore.//?^

attentions and promotion of administrative reform of the Governmentis an opportunity

indexes Currently, lime for completing business registration procedure is not more than 5

working days Therefore, the high appreciation of enterprise and society on efforts of

business registration reform is an opportunit}- for business registration agencies to

continue trying

This opinion is similar to the opinion of Deputy Director of Legal Department

of MPI: "Success of business registration reform program of Vietnam in the recent vears

came from the dramatic changes of awareness of business community' and society From that, our achievements was muhiplied, pressures from enterprises ore motivation for the reform of state agencies Therefore, it is a must to make use of the supports of society, business registration agencies will continue completing themselves to meet the practical demands^

6/6 interx'iewees have the same answer w ith the proposed O

^ CHS The third factor having grate conlnbution to achievements of business

registration reform is the support of inlcmationalorganizations in each refonn period

Vietnamese Government has received important assistance of United Nations Industrial Development Organization (UNIDO) Nonvegian Agency for Development of Cooperation (NORAD) and Swiss State Secretariat for Economic Affairs(SECO) in not

only material supports but also the share of \ision and most advanced technologies The

support of international donors such as UNIDO, SECO, N0R.4D IVB etc have helped Ministry of Planning and Investment to more and more complete mechanism, policies

This is the chance for Vietnam to take advantage of the most advanced techniques in

management and development of policies

This factor is similar to the orientation of Vice Minister of Ministr> of Planning

and hnestment in an interx'iew: "Vietnam highly appreciates the ven' effective assistance

of international organizations especially UNIDO in the recent time Donors have been working closely with Ministry of Planning and Investment in programs, projects for improvement of capacit}', legal framework, and administrative reform In the next time

we need to promote the cooperation with international organizations in order to learn their reform experience and how to use official supporting resources (ODA) better."

6/6 inteniewees have the same answer with the proposed O

0 3 , 0 5 , 0 6 are rejected:

^ 0 3 "Local authorities should fully invest resources for provincial business registration to be active in their operation" has the number of "disagree" answer of

50.27% and the rate of answer ^^agree" is 43.24% This rate shows that many provinces received sufficient investments of staff, equipment, budget for business registration office

to deploy their tasks, but half of the questionnaires think that the authority's investment is insufficient for business registration office to be active in their operation

^ 0 5 ""Because the labour's quality in the market becomes higher, business registration agencies con enrol high-qualified labours'\ 62.16% of questionnaires think

that it is "agree'' but 23.24% thinks that it is incorrect This result means that if business registration agencies want to enhance business registration staff, they can enrol high-qualifiedlabours in the market However, this issue is not easy, because most of business registration agencies are not allowed to actively enrol their staff The enrolment is decided by Leader of Department of Planning and Investment

^ 0 6 ""The higher state budget collection (fees and charge) is, the better

conditions for investment of business registration are'\ 37.29% of questionnaires answer

''Agree", 56.21% answer "Disagree" In fact, the rate of fees and charges allocated for business registration agencies was increased but business registration agencies do not actively use this budget It is managed by provincial DPI Thus, business registration agencies do not actuallyactively use their revenues for deployment of business registration activities

None of interviewee has the same answer with three proposed Os

75.13%

Not correct Correct Unknown

Figure 5.5: Answer rate of opportunities

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higher than China for Market entr>' index Thus, ''the business registration of nations in

the world is being reformed dramatically Countries are competing for business environment index ranking'' is the threat of Vietnam

5/6 interviewees agree with the proposed T

^ T2 Since 2007 to now thanks for the assistance of international

organizations (UNIDO NORAD SECO) Vietnam was sponsored 13 million USD for infrastructure inveslmenL capacity building for business registration staff, construction of National business registration system These are huge expenditures to Vietnam

Therefore, investment expenditure is the threat of business registration This is also an

evaluation opinion of Deputy Director General of Agency for Business Registration:

"'MPI should upgrade National business registration system in order to reduce time for processing a dossier, develop friendly, easy-to-use procedure, sofnvare, and update most advanced application of the world However, fee for establishment and maintenance is a big investment This is a threat of business registration agencies "

5/6 inter\'iewees agree with the proposed T

^ T3 The number of business registration staff is \er\ short: there are about

600 provincial business registration officers in the nation Some equipment such as scanners, photocopiers, computers are insufficient Officers in Hanoi BRO and Ho Chi Minh BRO are overloaded Onl\ 60 officers must manage about 150.000 enterprises:

they have to work overtime to fulfil their tasks -Workload of business registration

officers is overloaded compared to their assigned payroll High working pressure" is the

threat of business registration

4/6 interxiewees agree with the proposed T

^ T4 As can be seen that private sector and non-governmental sector are puttino high pressures to state agencies because they have much higher salar> working conditions and allowance If business registration agencies do not change their method of

managmg and using staff they cannot keep their labours ''Private sector and

non-governmental sector are creating good ^orlcing opportunities ^/uch attract experienced labours '\

^ T6 Enterprise Law 2005 has changed the working measure of business

registration agencies Enterprises are changing from "asking for*" to -requesting f o f the issuance of "Business registration certificate" Administrative procedures becom^e clearer, more transparent, considerably reduced actions which cause difficulties for enterprises However, a few people are still worried that those changes ma> make them lose their benefits That their thinking is slow to innovate will become the barriers for the moving

forward of business registration agencies "A group of people are fear for changing That

their thinking is slow to innovate " is a threat for business registration agencN"

5/6 interviewees agree with the proposed T

^ T8 The improvement in awareness of people as well as the explosion of information has helped them know about new ser\ices and they ha\e higher demand for service quality Qualified staffs with good serxing attitude are requirements from people

This is a threat ol' state agencies when "Enterprise and people request for qualified

officers, civil servants who perform public administrative serxnces "

4/6 interviewees agree with the proposed T

T5, T7, T9and TIG are rejected;

^ T5 "Corruption and authoritarianism are tarnishing the image of

government agencies and officers and civil sen^ants" 34.05% answers "agree" and

40.54?o thinks "^disagree" In fact, this situation has decreased remarkably thanks for adxances in administratixe refonn of business registration offices Furthermore, online business registration procedure has been deployed which considerably limits corruptions

^ T7 "Resistance of certain groups for fear of losing benefits" 20% of

questionnaires chose "disagree", 74.05% chose "agree" Not many respondents considered this a threat probabl\ the resistance is not strong and organized In fact the resistance is not explicit and onl} in the form of not supporting change

y T9 ''''Civil serxwits are not happy with regimes and policies" has 20% of

respondents disagreed and 66.48% of them agreed ITiis means that majorit> of ci\il senants are happ\ with regimes, policies This needs further stud> because according to current evaluation, the salar> of officers and ci\il servants is rather low fhe Government has acknow lodged this problem but still could not raise salar} lex el because of the limited budget

40