Finding sustainable mechanisms for institutional reform

Businesses hope to continue to promote reforms in both thinking and implementation measures.

"New wind" of reforms

According to Mr. Phan Duc Hieu, the development process of Vietnamese enterprises is associated with important institutional reform milestones. The first phase began in 1988 and 1990, marking the first shift in economic management thinking. However, the real turning point came in 1999-2000 when the first Enterprise Law was promulgated, fundamentally changing the "ask - give" mechanism to business registration. These changes included simplifying procedures, shortening the time to establish a business from hundreds of days to a few dozen days, and abolishing 150-160 unnecessary business licenses.

The results of this reform were impressive. Mr. Hieu shared: "After only 5 years of implementing the Enterprise Law 2000 (2000-2005), the number of newly established enterprises increased many times compared to the previous 10 years. Notably, the number of enterprises established during this period accounted for 80% of the total number of enterprises established in the entire 15 years (1990-2005)". This success has created an important foundation for the development of the private enterprise sector, although there are still many limitations compared to expectations.

Entering the 2020 period, the new Enterprise Law continues to bring a stronger wind of innovation. With the philosophy of "enterprises are allowed to do what the law does not prohibit", along with the abolition of 161 licenses and shortening the time to establish a business to only 15-30 days, the business atmosphere has exploded strongly. In just 5 years (2020-2025), the number of newly established enterprises has increased 10 times compared to before, creating the large business force as it is today.

From these experiences, Mr. Hieu emphasized the need to continue to promote reforms in both thinking and implementation. The successes of the Enterprise Law 2000 and 2020 have clearly demonstrated that reducing legal barriers and simplifying administrative procedures are the key to promoting entrepreneurship and sustainable business development.

With these expectations, if the implementation of Resolution No. 68 is properly and fully implemented, Mr. Hieu hopes that Resolution 68 will become the third milestone with a qualitative change, helping to elevate the role of private enterprises in the modern market economy.

If the institution is not good, there is a risk of creating barriers that affect the efficiency of production and business activities of enterprises. In addition to administrative procedures that we still see are fees and charges; large compliance costs that are sometimes not recognized; opportunity costs and informal costs for enterprises. Therefore, institutional reform is not only about cutting administrative procedures but also cutting compliance costs, Mr. Phan Duc Hieu affirmed.

Create strong and sustainable reform breakthroughs

However, in the context of global and domestic economic changes, Mr. Phan Duc Hieu said that institutional reform is not only aimed at improving the investment and business environment but also needs to create strong breakthroughs. The opportunities and room for institutional reform are therefore huge and there are 3 things that need to be done immediately. That is to improve the quality of current regulations - an urgent and important requirement; improve the effectiveness of legal enforcement in accordance with the spirit of the codes and ensure the consistency and quality of newly issued legal regulations.

In the spirit of needing breakthrough reforms, Mr. Phan Duc Hieu made a number of important recommendations to improve the effectiveness of institutional reform. Accordingly, on the basis of reviewing legal regulations for institutional reform, instead of amending, priority should be given to abolishing inappropriate regulations, documents, and decrees; there should be a sustainable mechanism for institutional reform. In the world , there are 4 forms of institutional reform, of which Vietnam has gone through 3 forms: promulgating good institutions; single reform; implementing in a number of sectors and fields at the initiative of one or several agencies.

However, reform is very difficult if it only comes from law enforcement agencies. For that reason, there needs to be a sustainable mechanism to implement the fourth form of institutional reform, which is to turn institutional reform into a legislative and systematic culture, no longer dependent on any individual or organization. Citing experience from many countries in the world such as Korea, Australia, the UK, the US, etc., he said that these countries have established an agency to monitor and promote institutional reform (ROB). This agency in the UK has the right to reject policy proposals if they are not of good quality; in the US, it sends back policy proposals if they are not of good quality, along with requests for amendments and supplements.

In the coming time, the Government should establish a specialized agency to supervise and promote competent institutional reform. This agency has the main functions such as controlling the quality of the drafting process; identifying key areas to improve the quality of regulations; systematically improving the quality of regulations; acting as a focal point and coordinating in drafting and promulgating; building a set of tools, guidelines, support, training, and new practices, Mr. Phan Duc Hieu emphasized.

Source: https://thoibaonganhang.vn/tim-co-che-ben-vung-cho-cai-cach-the-che-164169.html