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Institutional Reform for Business Development

Project Number VIE/01/025
Location: Ha Noi
Start Date: Apr-2002
Duration: 4 years (started April 2002, phase 1 from 19972001)
Funding: US$1,983,000 from UNDP (further cost sharing anticipated, US$165,600 (in kind) from the Government of Viet Nam
Executing Agency: Central Institute for Economic Management (CIEM)
Implementing Agency: CIEM, steering group on Enterprise Law implementation (Ministry for Planning and Investment)
Objectives:
  • To improve the capacity of business -government partnership to address business constraints.
  • To have uniform and consistent policies and regulations governing business entities. Particularly, support to the drafting process of Unified Enterprise Law and the Common Investment Law
  • To strengthen State capacity to effectively implement business policies and regulations.
  • To strengthen the regulatory framework for small enterprise restructuring.
  • To identify and address institutional constraints to factor market development.
Key Results:
  • Annual report on the implementation of the Enterprise Law including recommendations for further improvement of the implementation of the Law.
  • Support to the high-level Steering Group on the Enterprise Law resulting in, among other improvements in business environment, 170 business licences being abolished.
  • Training for government officials and enterprise managers for improved capacity in implementing the Enterprise Law.
  • Studies and workshops on SOE reform and drafting of the SOE Law, the Cooperatives Law, the Law on Foreign Investment and the Law on Domestic Investment Promotion in disadvantaged locations and on improving competitiveness of ‘Made in Viet  Nam’.
  • Four  Domestic Business Meetings where domestic businesses engaged in dialogue with policy-makers on improving legal and institutional framework for business development.
  • Setting up of the National Business Information Network in 10 provinces.
Status: Closed
Profile:

Legislation and regulations currently governing business in Viet Nam have been drafted at different times by different agencies on an ad hoc basis. This has resulted in many different forms of legal business entities operating under quite different regulatory environments.

UNDP has been assisting the Government of Viet Nam for almost 10 years to improve the regulatory environment for business. Major reforms have been introduced and have contributed to generating stable economic growth, reducing poverty and increasing new technology, skills and capital. This project follows up on the great strides made in recent years, and in particular, the area of private sector promotion and development governed by the Enterprise Law, enacted in 2000.

This project aims to support the development of a policy and regulatory environment conducive to increased investment. It will contribute to increasing income and employment levels, and to increased roles of small enterprises, rural businesses, and enterprises headed by groups with less access to the bureaucracy, such as ethnic minorities and women. Regulatory constraints to business will be identified and publicised. Amendments will be made to key legislation including SOE Law and Cooperatives Law. And proposals will be made to remove constraints in business development, such as access to land, capital and technology. National capacity to analyse policy and assess regulatory constraints to business development will be strengthened, and dialogue between domestic business sector and policy-makers promoted. Since the end of 2003, UNDP, upon the request of the Government, has committed to support the Government effort in drafting of the Unified Enterprise Law and the Common Investment Law. The two new laws are planned to submit to the National Assembly for approval at the same time in 2006.

The effective implementation of these reforms requires efforts to mobilize public support. There is a need to work closely with all stakeholders to compile, analyse and widely disseminate information on business development issues and constraints. The quality of public debate and awareness about business potential and constraints will increase. Previous experience has demonstrated that broad support for reforms can be mobilized when there are substantial benefits expected in terms of increased income and employment.

As economic growth (driven most recently by advances in the private sector) has been crucial for poverty alleviation, this project is clearly working towards ensuring “good governance for poverty reduction” – one of Viet Nam’s development goals.

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