Open institutions help private economy develop

The private enterprise's booth attracted the attention of many people at the National Achievement Exhibition "80 Years of Journey of Independence - Freedom - Happiness".

To achieve that breakthrough goal, it is necessary to review and perfect the institutions and legal system not only to serve state management but also to create development for economic sectors.

Correctly identify institutional obstacles

In recent seminars and discussions organized by the Ministry of Justice , many bottlenecks in law-making were identified by representatives of management agencies and businesses, namely that legal documents have not really thoroughly overcome the mindset of "if you can't manage, then ban" and "request-grant mechanism".

The reduction of administrative procedures has not really created a breakthrough. Although there is no shortage of support policies, they are not clear, especially there is no specific mechanism for businesses to have full access. Many regulations are not suitable for practice, causing different interpretations.

Meanwhile, from the perspective of law enforcement, innovation in thinking is still slow, especially in the innovation of thinking from management to serving and creating for development; the mentality of fear of responsibility and risk, so choosing the safe direction of "not understanding" and "not clear" still exists.

By the end of 2024, Vietnam will have nearly one million enterprises, 98% of which are small and medium-sized enterprises (SMEs) characterized by small capital, low legal awareness and market information, poor competitiveness, and difficulty in accessing resources.

One of the most obvious evidence is that these businesses have difficulty accessing bank capital, accounting for less than 20% of the total outstanding credit balance of the banking system. Meanwhile, outstanding credit balance of the private sector accounts for 93%.

Mr. Tran Van Hien, Vietnam Association of Small and Medium Enterprises, said that for small-scale manufacturing enterprises, there are not many mortgaged assets, even though the business is still profitable and the orders are stable, but without enough collateral, the loan application is easily rejected or approved with a low amount, not enough to expand production. In addition, banks often require many documents and records proving financial capacity and feasible business projects, but to complete all those procedures takes a lot of time and costs - something that small businesses find difficult to meet, many businesses are struggling not knowing what to do properly.

To reduce administrative procedures for businesses, Resolution No. 68 has set a target of cutting at least 30% of legal compliance costs. Mr. Phan Duc Hieu, a full-time delegate at the National Assembly 's Economic and Financial Committee, said that this is necessary for the development of the private economy. If a legal regulation is of poor quality, there will be five risks that will be disadvantageous for businesses, which are increasing costs, increasing risks, limiting creativity and business ideas, limiting competition, and creating negative impacts on small and medium-sized enterprises. In fact, there are up to five costs arising from the implementation of a legal regulation. In addition to the traditional official costs of time and finance for procedures, there are other costs such as fees and charges calculated by value, investment costs, opportunity costs, and finally, unofficial costs.

Regarding the risk of restricting competition, Mr. Hieu said that we often issue very rigid, mechanical, and complicated legal regulations on market entry conditions and business conditions, and sometimes that is the institutional "protection button" for monopolistic enterprises, causing difficulties for small and micro enterprises. Large enterprises often propose to increase business conditions to be as difficult and strict as possible because they have entered the market but small enterprises cannot follow because the costs are too much.

To reduce administrative procedure hassles for businesses, Resolution No. 68 has set a target of cutting at least 30% of legal compliance costs.

According to Mr. Le Hoang, Chairman of the Board of Directors of Thang Long Plastic Joint Stock Company, the issue of governance is the weakest link for small and medium enterprises today, besides the capital factor. Particularly with technology transfer, if the State does not have a binding policy in legal regulations for foreign-invested enterprises (FDI) to be forced to localize for local enterprises instead of encouraging as at present, it will be very difficult for private enterprises.

Building laws to serve the people

Dr. Do Ngoc Thinh, Chairman of the Vietnam Bar Federation, said that when identifying obstacles from legal policies, it is necessary to explain why the lifespan of legal policies is short, administrative procedures "sprout like mushrooms" after legal regulations are issued; why administrative procedures are reduced but procedures are increasing; why laws are issued in accordance with correct procedures but when put into practice, there are "problems"? The problem lies in the limited thinking in law-making in recent times.

We are currently trying to support private enterprises, most of which are small and micro enterprises, with large laws, with very "massive" subjects and scopes of regulation. It is worth noting that institutions and policies do not have maximum differentiation, which invisibly puts pressure on small and medium enterprises. "The important issue is to build laws with small, narrow subjects and scopes... to suit them, to activate them so that they can implement them correctly. We must change our awareness and thinking about building laws in the direction of serving the people, not strengthening management," Mr. Thinh suggested.

According to National Assembly delegate Phan Duc Hieu, it is necessary to soon develop a set of criteria to review and identify policy and legal shortcomings so that ministries and branches can base on them to make amendments and avoid arbitrary application. In the coming time, it is necessary to establish an independent agency to monitor and support sustainable institutional reform and contribute institutional expertise to create a legal corridor for the development of the private economy.

Source: https://baothainguyen.vn/kinh-te/202509/the-che-mo-duong-giup-kinh-te-tu-nhan-phat-trien-1361c0a/