Regulations on contingent business units need to be reviewed as they have created major barriers for businesses.
Nguyen Thi Bich Huong, president of the Petroleum Association under the Vietnam Association of Small and Medium Enterprises (SMEs), claimed that many regulations on contingent business units have created compliance problems for petroleum companies, Vietnam News Agency reported.
As an example, she took a number of specific regulations for the purchase of petrol. One such regulation requires gas stations and retailers to buy fuel from a single seller to ensure fuel quality.
Huong said the regulation is not necessary as gas stations and retailers are subject to fuel standards set by the Ministry of Science and Technology. That means they are required by law to distribute up-to-standard fuels, regardless of the number of vendors they purchase the fuels from.
###: Here’s how to set up a foreign invested company in Vietnam
Other impractical rules, according to the chairman, include those prohibiting petrol retailers from selling wholesale, rules requiring approved environmental protection schemes drawn up by petrol retailers, and rules requiring a distance of at least 50 meters between petrol stations and the intersections in their vicinity .
Nguyen Anh Duong, director of the General Economic Issues and Integration Studies Department of the Central Institute of Economic Management (CIEM), noted that some of the rules for contingent business units have caused significant costs for companies.
One of those regulations stipulates that petrol exporters, importers and dealers must set up their own laboratory where the fuel quality can be tested within one year from the date of licensing.
“The regulation has added to standing accounts. They would have saved a lot of money by hiring laboratories from others,” says Duong.
The director also pointed out a number of impractical regulations in the food industry, including the regulation requiring the separation of sales areas and other areas within a business facility and the regulation prohibiting direct connections between toilets and food storage areas.
He also called for the removal of the criteria that apply to rice exporters’ warehouses, as the criteria impose a high compliance burden on exporters.
Aedan Puleston, Second Secretary of the Australian Embassy in Vietnam, believed that deregulation of contingent business lines would improve the business environment, reduce corruption and attract quality foreign investment.
CIEM recently published a report on contingent business units in industry and trade. The report found that most of the existing regulations are consistent and practical.
However, some contain so much technical detail that they impose large compliance burdens on businesses, highlighting the need for review.
“Some specific criteria that apply to facilities, such as fuel tanks and warehouses, would increase companies’ compliance costs,” Duong said.
Economics expert Le Dang Doanh believed regulation for contingent business lines should be less detail-oriented and more consumer-focused, said Vietnamese news agency.