Pham Chi Lan, a member of the Prime Ministerial Research Committee.

VietNamNet – Pham Chi Lan, a member of the Prime Ministerial Research Committee speaks with VietNamNet about the Investment Law.

 Foreign investors complain the draft Investment Law is a set-back. What is your opinion? 

Not only foreign investors but also domestic enterprises consider it a set-back because the current Investment Law doesn’t require registration for all projects, but conditional ones only. As Nguyen Si Dung, Deputy Chairman of the National Assembly Office said, “Investors will vote by foot, not by hand,” meaning they will go. 

What are the most disadvantageous factors for local enterprises threatened by the new bill? 

The additional requirements and rules associated with investment registration. Although they are called something different, they are still licences, still ask-give mechanisms, which cause accompanied inconveniences. Many think that registration is easy but it is really a very heavy task that current business registration agencies are incapable of. Business registration agencies should consider the legitimacy of documentation; however they are incapable of this, with insufficient time and authority to assess other factors of projects. 

Currently, there is huge management machinery with land, environment, technology, labour, and trade agencies to inspect every aspect of enterprises. Now there is a business registration body which wants to do everything. How can it, and how can it take responsibility for all? 

During the compilation process, law makers consulted business’ opinion. Why didn’t they clearly voice their requirements? 

No bill before the Enterprise Law and the common Investment Law has ever implemented such wide consultation of enterprise opinion during the compilation process. Immediately after the Prime Minister issued guidance on this, the Prime Ministerial Research Committee widely sought enterprise opinion for the law’s major ideas. 

In July 2004, the Prime Minister approved the major idea of the bill and assigned the compilation committee to design specific clauses. All the first drafts were presented to enterprises, and both local businesses and foreign investors devoted great efforts to research and compare the bill to other laws, including foreign laws, raising specific petitions under enterprises’ views. 

Regrettably, after acquiring such opinions, the new drafts were not much amended. The last draft submitted to the National Assembly on September 20 still didn’t meet enterprise requirements for key points, and as a consequence, some organizations petitioned the National Assembly. The Prime Ministerial Research Committee has sent a document to the Prime Minister, requesting the compilation committee to reconsider the bill. 

The compilation committee didn’t acquire opinions did they? 

They did, but in this way: the initial draft required projects of less than VND5bil to register, a figure which was then increased to less than VND10bil; however, as businesses still complained the figure was raised to VND15bil. They only loosened the level for projects that require registration, instead of removing registration for small projects as a requirement. For enterprises, registration without a certificate doesn’t prove anything to competent bodies when they inspect. Registration without any documentation, allows investors to dodge the law and not register, thus becoming law violators. 

Why do enterprises have to register for their proposals? If investors change the scale, capital, and number of labourers, then perhaps that is reasonable, but it doesn’t make sense if at any given time they make small changes to adapt and then have to register again? 

A project can require from several months to three or four years from the first stage to implementation, with continuous changes, even change of investors. Another risk is that proposals are creative ideas and investors need to keep secrets to suddenly bring their products to the market without imitation. Registration can’t ensure that secret will be kept. According to this regulation, the state can ‘grasp’ only proposals, not the real things that investors do. If the state uses that uncertain information to manage or give warnings to other investors it will be incorrect. 

Why do such problems develop? 

There is thinking regarding “opening only to a level that the state can manage”. Not opening because of fear that the state cannot control is wrong thinking. Rights for citizens to freely do business are defined in the 1992 Constitution, and laws must be below the Constitution.  That thinking is based on the limited capability of state bodies, but they think that the whole society is also in limited capability and don’t believe in others. 

However, the compilation committee says that the regulations on investment registration and assessment are to control ‘devil’ projects and enterprises, what is your opinion? 

The use of the word ‘devil’, is a word that is used by the press, by law makers it is not serious. The state doesn’t have the right to call citizens, an entity that has registered for business, as the ‘devil’. If they have registered for business, then they have legal status. If they do the wrong thing, the state can punish them by law. When state management bodies can’t find them and can’t punish them, then they call them the ‘devil’. Sometimes enterprises only change their address and when state management bodies can’t contact them, they call them the ‘devil’, that is wrong. 

The most accurate and most simple foundation for knowing real businesses is the tax that the state budget collects from them. The taxation sector collects taxes from over 78% of enterprises, meaning that 78% of those enterprises exist. The state has a large system from central to grassroots level, but it can’t properly fulfill its post-inspection task. It criticizes enterprises and doesn’t realize that it is performing poorly and doesn’t fulfill its responsibility to society. 

The draft Investment Law causes a lot of overlapping. It has unspecific regulations on conditional investment fields while there are specified and detailed regulations within specialized laws. The Investment Law should point out several fields that are banned and leave fields that need management to specialized laws. Thus, when specialized laws change, we will not have to change the Investment Law. This is a problem of process and the mistake of the compilers who are concerned about not wanting to assume many responsibilities themselves.  

There are concerns that if the National Assembly doesn’t approve the bill this time, it must wait until the next National Assembly session in June 2006 to be passed. Meanwhile Vietnam is urgently amending its laws for WTO accession. What are your thoughts? 

Such problems in law making can raise doubts among negotiation partners for Vietnam’s WTO accession because we have committed to amending our laws to adapt to WTO rules. WTO commitments don’t include specific standards, but partners only ask for equal treatment between domestic and foreign investors. It should be no problem if domestic and foreign investors play on the same difficult playing field. On the other hand, we have committed to consult businesses’ opinion in case of changing laws, but they see that we have widely consulted businesses’ opinions but don’t acquire them, so what will ensure that in the future the state will listen to enterprises’ opinions in amending other laws? That can cause hesitation. 

If the Investment Law is immediately amended for approval at this National Assembly session, will it be in time? 

The best way, in my opinion, is amendment for approval this session. The most important thing is a change in thinking. If we don’t change our thinking now, what will ensure that we will change it in the next six months? It is useless to extend the time if we don’t change our thinking. 

Rational things should be accepted and amended for immediate approval. More time will create negative feelings on investors. National Assembly Chairman Nguyen Van An stated that the Investment Law is made for investors, so we should listen to and receive their opinions. We don’t have to amend a lot. For the compilers, they may need only five minutes because enterprises have made very careful analysis over the past year. 

Viet Lam – Khanh Linh