Many difficulties and obstacles in production, business and investment activities stem from the management mindset, instead of the service mindset of many state management agencies. Everything will change when the service mindset becomes the mainstream.
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| Many legal regulations on construction still follow old management thinking, causing difficulties for contractors. Photo: DM |
Businesses suffer because of "gaps"
“We want to meet the Prime Minister to propose a mechanism for construction businesses,” said Mr. Nguyen Quoc Hiep, Chairman of the Vietnam Contractors Association.
Although asked to share about the legal problems that are making it difficult for businesses, Mr. Hiep wanted to talk about the legal gap that he said was "because policy-making agencies do not understand the specifics of the industry, so 85% of contractors are in debt for a long time".
“This outstanding debt is mainly about the last 20% of the bid package, after the contractor's work is completed, waiting for the procedures to be settled. Many people told us, why not apply the Civil Code. Yes, Delta Construction Group has sued to claim a debt of 67 billion VND since 2017, when implementing a project to build a luxury apartment building in Hanoi , but until now, in 2024, it has not been collected yet,” Mr. Hiep shared.
The legal gap that the Chairman of the Association of Construction Contractors mentioned is the equality mechanism between investors and construction contractors.
According to Mr. Hiep, the regulations related to contracts, procedures, payment settlement... of the construction law still follow the management thinking from the 90s of the last century, when construction investment projects almost exclusively used state capital, implemented by state agencies. As a result, even though construction contractors have to "pay in advance, pay later", meaning they have to borrow money, buy construction materials, pay workers' salaries... and then receive payment from the investor according to progress, the mechanisms are all aimed at protecting the investor, from regulations on bid bonds, contract performance bonds, advance guarantees and construction warranty bonds.
It must also be mentioned that this issue has been mentioned many times by construction contractors. Even in many meetings with state management agencies, the Vietnam Association of Construction Contractors has sent the message that contractors are in a situation of "the more they work, the more they lose, the more they owe". The concern that "there will be no more Vietnamese construction contractors" has also been sent by the Association to the head of the Government when the leading contractors in Vietnam are all in a state of arrears, with some enterprises having bad debts accounting for up to 25%...
Suffering from “too much” care
To be frank, over the past decade, institutional reform and business environment reform have been carried out vigorously. During this process, according to Ms. Nguyen Thi Dieu Hong, expert of the Legal Department (Vietnam Federation of Commerce and Industry - VCCI), changes in the drafting mindset of policy makers have been very clear.
With the current investor protection mechanisms, contractors must submit a lot of guarantees to get contracts, there is nowhere to run, but the situation where investors have no responsibility for their payment obligations cannot continue. 
- Mr. Nguyen Quoc Hiep, Chairman of Vietnam Contractors Association
Specifically, there have been positive changes, in which many reform ideas have been clearly expressed in important legal documents, having a profound impact on the business investment environment, such as a series of unreasonable business barriers have been abolished or simplified; administrative procedures have been simpler, more convenient, transparent and clearer.
“The state administrative system is indeed moving closer to the nature of a ‘service state’. However, reviewing current legal documents as well as policies and regulations being drafted, we see that there is still a heavy management mindset somewhere. There are even many unreasonable interventions from state management agencies,” Ms. Hong frankly said.
The controversy over whether it is appropriate for "an enterprise to have its route operation registration revoked when it can only perform 70% of the total number of trips with the registered note" in the Draft Decree amending Decree No. 10/2020/ND-CP on business and conditions for business of automobile transportation has been heated up again by VCCI. According to legal experts of VCCI, this is a form of unreasonable intervention in the business activities of enterprises. Because, depending on the market situation, enterprises cannot always be able to operate more than 70% of the total number of trips.
VCCI experts are even asking whether there is a mistake when listing the business conditions for performance organizers in Decree No. 144/2020/ND-CP on performing arts activities. This activity is identified as a conditional business line, but the conditions are specified for each activity. That is, the business entity does not have to meet any business conditions, only when organizing performing arts do they have to apply for a license for that business activity.
Mr. Nguyen Minh Duc, a legal expert of VCCI, also admitted that he did not understand whether the management objective was the subject of trading goods and services or the product of business activities as stipulated in Decree 144/2020/ND-CP.
“We agree to manage performance activities, but it must be clarified that each activity must be managed, not the conditional business lines. State management agencies must comply with the provisions of Article 7 of the Investment Law on conditional business lines. Accordingly, many business lines must be removed from the List of Conditional Business Lines...”, Mr. Duc analyzed.
Mindset Dissection
The 2023 Legal Flow Report (conducted by VCCI and just published at the end of April 2024) has a separate section listing cases of “heavy management thinking, rather than service thinking” from state management agencies. A series of inappropriate measures, unclear management objectives, or even excessive measures, causing a burden of costs on businesses are named.
For example, to export or import civil cryptographic products, businesses must have up to 3 types of licenses; or according to Circular No. 33/2023/TT-BTC on determining the origin of exported and imported goods, businesses will be subject to inspection by two agencies and organizations: the customs agency and the agency or organization issuing the certificate of origin of goods... The problem is that these procedures and processes have all been analyzed as being able to be shortened or modified. It is worth mentioning that many documents in draft form are also mentioned.
It is likely that in next year's VCCI Legal Flow Report, many legal problems will be mentioned again.
Source: https://baodautu.vn/nhung-rao-can-kinh-doanh-den-tu-tu-duy-quan-ly-d214594.html
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