Vietnam to Pursue Draft Amendments to Business Laws
By Dezan Shira & Associates
Posted: 5th June 2014 08:30
HANOI – Vietnam’s government is seeking to issue draft amendments to a number of laws in order to help streamline business activities and make existing regulations easier to understand. These laws include the Law on Enterprises, the Bankruptcy Law, and changes to regulations surrounding the Law on Social Insurance.
Law on Enterprises
The Minister of Investment and Planning, Bui Quang Vinh, has stated that the amendments to the Law on Enterprises are intended to create more favorable conditions in which to establish businesses in Vietnam.
The amendments add 57 articles to the law, revise or supplement 99, and delete six. The government has stated that the aim of these amendments is to:
- Protect the rights and interests of investors;
- Protect the rights of shareholders and business members;
- To improve management of foreign investment;
- Achieve significant reductions in the cost of administrative procedures, business management, re-organisation and dissolution;
- Reduce commercial and legal risks; and
- Help businesses develop.
As a result of these actions, the Ministry has predicted that the country will rise by around 50 points on the World Bank’s market activeness index, putting Vietnam at position 60 out of 189 countries. Additionally, the country’s investor protection index is forecast to increase by 30 points, reaching position 120. These improvements should help to attract more foreign business to the country.
Draft amendments were also considered to the Bankruptcy Law. These are intended to remedy the insolvency of businesses and co-operatives. Items discussed included how to identify businesses or co-operatives at risk of losing their payment abilities.
Many of the existing regulations will be kept in place so that firms can continue to use bankruptcy procedures to recover their business activity. Therefore, businesses and co-operatives will be able to repay their debts and escape from bankruptcy.
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It was also agreed that since late payments between businesses occur regularly, it is necessary to set out clear criteria for businesses and co-operatives that are unable to repay their debts. It was also stressed that these criteria should be both quantitative and qualitative.
Draft amendments to the law also stipulated a 30 day limit within which to open bankruptcy proceedings from the date of handling a request – the existing law failed to do this.
Law on Social Insurance
Vietnam’s legislators feel that there is a strong need for the draft Law on Social Insurance to include policies which will encourage farmers and workers in non-official fields to participate in voluntary social insurance programs. The goal is to have 50 percent of the workforce contributing to social insurance by 2020.
Currently, only 20 percent of the total workforce participates in the social insurance program.
Additionally, the draft law is also intended to provide solutions to the delays in paying social insurance by many companies, especially private and foreign invested companies.
This article was first published onVietnam Briefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam, in addition to alliances in Indonesia, Malaysia, Philippines and Thailand, as well as liaison offices in Italy and the United States.
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