Business Registration in Vietnam: Burden or Opportunity?

Introduction
In May 2004 an expert panel of
economists met in Copenhagen to consider the
priorities for action in respect of some of the
biggest challenges facing the modern world1
. From
a list of 32 areas covering economy, environment,
governance, health and population, they identified
those, which appeared to offer particular potential
and invited specialists in these areas to prepare
papers. The panel then ranked the various
proposals on the basis of economic costs and
benefits. Just one ‘governance’ proposal was
David Walke, a former Deputy Registrar of Companies in England and Wales, is an international adviser on business
registration and currently an adviser to Vietnam Private Sector Support Programme funded by the European Union.
The Programme is implemented by the Agency for SME Development (ASMED) under the Ministry of Planning and
Investment. Part of the strategy employed is the creation of an enabling environment conducive to the development
of small and medium enterprises, in particular at the provincial level. This has included providing support to the
development of one-stop shops for business registration established by the People’s Committees in Da Nang and Hai
Phong, bringing together functions exercised by provincial Departments of Planning and Investment, Taxation and
Public Security. This work will shortly be extended to include Hue, Hoa Binh, Long An and Can Tho.
included in the final list, at number 9, after such
items as control of HIV/AIDS and improving
water supplies. This was ‘lowering the cost of
starting a new business’.
Over recent years, the World Bank has
conducted regular reviews of the time and cost of
doing business in countries around the world.
Their reports aim to provide objective measures of
business regulations and their enforcement. The
cost of starting a business is just one of ten topics
covered, but it is one that regularly attracts a high
degree of media interest.
ABSTRACT
Experience from other countries demonstrates that, while business registration and
related start-up procedures can be a burden for both officials and business people, this need
not be the case. Many countries have seized the opportunity to establish laws, procedures and
computer systems, which simplify the process. Often this has led to the establishment of a onestop shop, bringing together functions previously exercised by different departments. This is a
model, which is now being adopted in several Vietnamese provinces, with both short- and
medium-term benefits.
Key words: business registration, one-stop shop.
Business Registration in Vietnam:
Burden or Opportunity?
David Walke
Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW 3
ECONOMIC POLICY DEBATE

Why is this so? Obtaining credit or enforcing
contracts may be important to an established
business, but they mean little if bureaucratic
requirements deter the potential entrepreneur from
even starting in business. A person who does not
know how to get around the rules may well
abandon a good business proposition while the
more determined may be tempted by the perceived
benefits of the grey economy. To the economists in
Copenhagen, what mattered was not simply that
there was a serious problem, but that it was a
problem, which could be solved and that the
investment involved would be well rewarded.
This paper considers business registration in
Vietnam against the background of developments
in other countries. It reviews the type of
organizational structure, which is considered
appropriate and in particular the development of
one-stop shops. It looks at the process of
registration, with its implications in terms of
documentation, use of seals and methods of
publication, all of which have a bearing on cost
and potential for corruption. It sets out the standard
approach advocated in a recent inter-ministerial
circular and notes the need to exploit the registered
information as an information resource for the
business community as well as for government.
It recognizes developments currently in train
at national level and the need for provincial
administrations to develop and promote the
services to achieve short-term benefits and to
contribute towards the integrated system, which
will eventually operate throughout the country.
1. Background
The key provisions relating to business
registration in Vietnam are contained in
the Enterprise Law 2005 with more detailed
provisions in the Decree on Business Registration2
.
The right of an individual or organization to
establish an enterprise is enshrined in legislation3
,
as is the right of the enterprise to conduct any
business activity not prohibited by law4
.
While the requirements relating to
registration are defined in the law, the
organization of business registration in each of the
64 provinces is the responsibility of the provincial
People’s Committee5
. Enterprises register at
provincial Business Registration Offices, while
household businesses and cooperatives register at
district level. Ho Chi Minh City operates a
standalone computer system, ten other provinces
contribute to a common database at the Ministry of
Planning and Investment, and the remaining 51
provinces rely on paper records and local
databases or spreadsheets6
.
To date, some 250,000 new private
enterprises have been registered in Vietnam,
contributing to increased private investment in
socio-economic development7
. The private sector
has an important role in the development of a
market economy with socialist orientation.
Registration, particularly as regards
businesses established as separate legal entities,
can be seen as a deal between the businessman and
the state. While in some jurisdictions individuals
can, usually with the assistance of a notary, create
a legal entity, the widely-accepted view elsewhere
is that creation of such an entity is the preserve of
the state. Where this is so, the act of registration
actually brings the legal entity into existence.
The benefits of registration are thus the
ability to operate a lawful business, if
appropriate with corporate status, perpetual
succession and limited liability for
shareholders. The price of registration can be said
to include not only an administrative fee to cover
the costs involved but also the provision of
information about the business and its activities. It
can also involve a great deal of time and effort, but
this need not be the case if the law and procedures
are designed to meet the real needs of the situation.
Prior permission to conduct business is a
feature of many but not all jurisdictions. For
instance, in the United Kingdom, individual
entrepreneurs and general partnerships, which do
not have corporate status or limited liability, are
not included in the register: anyone may start a
business without formality, though they will need
to deal with the tax office and observe any laws
relating to their type of business.
In Vietnam, the Enterprise Law 1999
subsumed the previously separate requirement for
an ‘establishment license’ into a single business
4 Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…

registration provision8
, though various sectoral
licenses and other permissions may still be
required9
. The business registration certificate
specifies the lines of business which the enterprise
will conduct.
In countries throughout the world, making
business registration simpler has been shown to
result in an increase in the number of legitimate
enterprises with consequential benefits for tax
revenues, employment and the economy as a
whole, while minimizing the scope for corruption.
2. Organizational structures and
one-stop shops
Organizational structures are varied and
influenced by history. Countries with a French or
German legal tradition tend to rely on court
procedures. Italy and the Netherlands use
chambers of commerce to maintain the registers. In
countries of the former Soviet Union, registration
was in most cases a local government
responsibility, though there have been changes,
with several countries developing more centralized
systems. The Russian Federation took the unusual
step of transferring responsibility to the Federal
Tax Administration. Countries with a tradition of
English law generally use administrative offices
and are more likely than others to have centralized
systems.
Most countries when seeking to reform
business registration have not set up entirely new
structures for the purpose. There is a trend towards
allowing a high degree of autonomy to registry
managers, allowing them to develop services to
meet demand, and many registries are
self-financing, funding their operations from fee
income. This has often resulted in the registry
being redesignated as an ‘executive agency’ and
‘trading fund’, but in most cases retaining links to a
parent department. The model developed in the
United Kingdom has been followed and
adapted in several countries, including Hong
Kong, Singapore and Malaysia.
In most cases where the courts have had
responsibility for business registration, the link has
proved difficult to break. France introduced major
reforms in 2003 but court registration is still part of
the process. While in Italy registration is handled
by chambers of commerce, this is technically still
the responsibility of a judge. A few countries have
however made the change. Serbia established a
new registration agency, which assumed
responsibilities for functions previously exercised
by the courts and a similar approach, is being
adopted in Bulgaria. Rwanda also plans a new
Registration Services Agency, which will take over
responsibility for registration from the courts.
One of the key reasons for the state to require
businesses to register is to ensure an effective
system for the collection of tax revenue to fund
government expenditure. Separate registration for
general administrative purposes and for tax
actually inhibits efficiency in this area. Countries,
which have separate registration procedures,
generally have problems in maintaining a
comprehensive tax register. The trend
internationally has been towards integrating these
functions.
This makes sense in terms of efficiency of
revenue collection. It is also relevant where
governments are seeking to simplify the
interaction between citizens and official bodies. In
keeping with the basic principle of ‘joined-up
government’, which implies that it should not be
necessary for any citizen to provide the same
information to more than one government body,
there is a common trend towards greater
integration between government agencies at all
levels. This is possible through the application of
information and communications technology.
While there is a constant search for greater
efficiency and cost-effectiveness in the public
sector, the key feature of recent developments is
their focus on the needs of the user, that is, the
customer or citizen.
As an example of the progress made in
sharing information, in 2005, 22 out of 36
European registries surveyed already had
arrangements in place to automatically update the
relevant tax authority database10
. This excludes
those where there were other arrangements to
transfer information.
Currently, Nigeria11
, Kenya12
, Lesotho13 and
Rwanda14 are all in the process of merging
Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW 5
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…

While registration in Australia and Canada
will take considerably longer than indicated if it is
conducted on paper20
, the expectation is that most
corporate and tax registration into a seamless
process. In each case the aim is, so far as is
possible, to establish a one-stop shop.
In keeping with the policy of economic
renovation (doi moi) adopted by the Communist
Party and Government in 1986, one-stop shops
have been a key feature of Public Administration
Reform in Vietnam since 199415 and form part of
the Public Administration Reform Master Plan
2001-201016
. The reform policies were reflected in
the Law on Government Organization 2001 and a
Decision issued in 200317 promotes the one-stop
shop as a mechanism for state management
agencies within their authority to process
administrative activities18
.
This is consistent with developments in other
parts of the world. There is however no single
universally accepted definition of a ‘one-stop
shop’. The term is variously used to refer to:
· A ‘single door’, involving co-location of
officials from different ministries or
departments, thus saving the customer the
time and effort involved in visiting several
different offices and in clarifying the steps
associated with a business start-up;
· A ‘single window’, where the customer
deals with a single official and that office
liaises with all other offices involved; and
· A ‘single portal’, allowing the customer to
submit an application electronically via a
web site.
Several countries have introduced ‘single
door’ facilities to assist major investors to establish
new businesses. This has often involved bringing
a single representative from each of several
departments into one office in order to provide a
personalized service. Organizations typically
involved would include the company registry, the
tax administration, social security fund, customs,
immigration and a range of licensing bodies.
However, an official in such an office often has to
refer back to the main office of the Ministry or
other body concerned in order to secure the
necessary action or approval. It can also be the
case that action with the first official has to be
completed before moving on to the second. A
complex issue, such as the issue of a specific
sector license, may necessitate the applicant
dealing with specialist personnel in Ministry
offices as well as officials in the one-stop shop.
There have been criticisms that many such
initiatives to support investors have amounted to
‘one more stop’19
.
Even so, the basic one-stop concept remains
valid and, while it may be appropriate for
particular assistance to be given to major investors,
there is a growing realization of the need to apply
the one-stop shop principles for the benefit of
anyone setting up a business. The emphasis has
however shifted from bringing different officials
together physically to sharing information
electronically between organizations.
Many of the best one-stop shops would
probably not even use this term (see Table 1). To
find the ‘best’ one should really look at performance rather than titles. Australia, Canada and New
Zealand require only two formal steps to establish
a new company, in each case business registration
and tax
registration, though both can be completed on-line.
These three leaders have yet to make the final
step with the merger of business and tax
registration. Denmark and Finland have done this
but have additional requirements in terms of
paying capital into a bank. Sweden has similar
requirements.
6 Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…
Table 1: Leading One-Stop Shops
Australia
Canada
New Zealand
Afghanistan
Denmark
Finland
Sweden
Processes
2
2
2
3
3
3
3
Days
2
3
12
8
5
14
16
Source: World Bank, Doing Business database.

Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW 7
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…
applications will be submitted electronically. This
is consistent with some of the highest levels of
internet penetration in the world, 70.2% and 67.8
per cent respectively21
, and e-government policies
requiring services to be delivered
electronically as the most effective means of
servicing the needs of the population22,23
.
In Denmark, with 69.2% internet
penetration, electronic filing is mandatory, though
conducted through registered users. On-line
registration is also mandatory in Singapore
(66.3%), where start-up is said to involve six
processes, though any Singapore citizen or
permanent resident can incorporate a company
using his Singpass, a common password used to
transact with Government online services.
An unexpected addition to the Table 1
is Afghanistan, where the Afghanistan Investment
Support Agency (AISA) was established in 2003
specifically as a “One-Stop Shop for Investors”24
.
AISA has been charged with the responsibilities of
registration, licensing and promotion of all new
investments in Afghanistan.
There is another territory, which may lay a
claim to be a true one-stop shop, even though it
is not covered by Doing Business. The
Kosovo Business Registration Agency25 registers
companies on a same-day basis and passes
information directly to the Tax Administration,
Statistics Office and Customs26
. The entrepreneur
does not need to deal with these bodies directly. As
soon as he or she has a certificate, the company can
start business.
While there is a constant search for greater
efficiency and cost-effectiveness of the public
sector, a key feature of recent developments,
whether specifically in the context of one-stop
shops or otherwise manifested in the form of
‘joined-up government’ or executive agencies, is
their focus on the needs of the user, that is, the
customer or citizen. It has been found that even
referring to people as ‘customers’ denotes a
significant cultural change27
.
While an official may currently see it as his or
her function to ensure the legal veracity of
documents submitted to a public body, to keep
records or to collect revenue, the customer’s
perception is likely to be quite different. To the
extent that officials see themselves as running a
shop, they will probably ‘sell’ a registration
certificate or a seal. Yet this is not what their
customer is buying. The entrepreneur is buying the
right to conduct legitimate business, in some cases
with the added benefits of separate corporate status
and limited liability. The certificate and the seal are
simply the trappings of officialdom, which in the
past have been essential but are likely to have less
relevance in years to come.
2.1. Cost of registration
The cost of registration bears a close
Table 2: Incorporations-low-cost jurisdictions
Denmark
New Zealand
Ireland
United States
Sweden
United Kingdom
Singapore
2
2
2
3
3
3
3
2
3
12
8
5
14
16
2
3
12
8
5
14
16
Registration
fee
Total start-up costs
USD USD
% GNI
per capita

relationship to the number of activities to be
performed by applicants and officials. The cost is
least in Denmark, where there is no charge for
registration, with all applications being submitted
electronically by registered users of the Danish
Commerce and Companies Agency’s ‘Webreg’
system. Other countries where the cost is low in
relation to the per capita gross national income
(GNI) are shown in Table 2.
By comparison, the cost of establishing a
business in Vietnam amounts to 44.5% of GNI per
capita.
It is evident that in some countries the
registration fee constitutes the entire cost of
business start-up. In others, it is only a small part.
If notaries or other intermediaries are to be
involved in the process, this will obviously add to
the cost.
European law has established clear principles
for the basis of charging for registration services.
These are binding on the 27 Member States of the
European Union but also offer a useful reference
standard for other countries. Essentially, fees
should be set at a level to recover the cost of
providing the service. Apart from capital duty,
which is the subject of separate provisions, the
Capital Taxes Directive28 prohibits the charging of
any taxes on the incorporation of companies or
registration of an increase in capital. Fees are
potentially taxes in this context.
The First Company Law Directive also
provides that the price of obtaining a copy of the
whole or any part of the documents or particulars
required to be filed at a companies registry,
whether by paper means or by electronic means,
must not exceed the administrative cost involved29
.
2.2. Provincial registers, national
registers, international registers
With the introduction of computerized
systems, there has been a move towards
centralizing business registration. EU Member
States are in fact obliged to operate ‘a central
register, commercial register or companies
register’. This does not necessarily mean that all
functions must be centralized, but there does need
to be a single register30
. Countries in which
8 Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…
registration has traditionally been dealt with at
a local level have had to develop means of
consolidating information. For instance, the
courts in Germany now provide information to
unified Länderrregisters and a federal
unternehmensregister.
Unlike the United States, where, apart from
listed companies, registration takes place at State
level and there is reliance on the
private sector to collect and disseminate
information about companies, in Europe national
registers have an essential role in
providing access to company information.
Anybody doing business with a European
company is entitled to see its constitutional
documents and to have access to details of its
capital and the individuals authorized to represent
it. They are also entitled to see its financial
statements31
. The national registries have a key
role in making this information available.
The developments are however not
constrained to national level. Ukraine recently
became the seventeenth country to become a
member of the European Business Register, a
network of national registers, each providing
information in a standard format, enabling on-line
access in any of the languages used by EBR
members32
.
There is also active consultation between
countries. The Corporate Registers Forum33
,
founded in 2003 with members from Asia and the
Pacific, met in Malaysia and Singapore in April
2007 to discuss ‘Evolution of the Corporate
Registers: Challenges and Opportunities’. For the
first time, Vietnam was represented at the conference. The International Association of Commercial
Administrators34
, with membership principally
from North America, met in May 2007 in Seattle to
discuss ‘Navigating the Tides of Change’ and the
European Commerce Registers Forum35 will hold
its tenth annual conference in Riga, Latvia in June
2007. The theme for the Riga conference is
‘Registries Work Electronically’.
2.3. Documentation
The Asian Development Bank (2005) has
pointed out that, while legislation and specific

guidelines issued by the centre in the forms of
circulars are clearly intended to minimize the
scope for discretion by provincial officials, in
practice, the complexity of these instructions
frequently has the opposite effect36
. Something is
wrong when, as recently found in one province,
70% of applications for business registration are
rejected on the basis of technical shortcomings in
the documentation. Either the requirements are
unclear or the officials are being over-zealous in
their interpretation.
The Enterprise Law sets out the
requirements for each type of enterprise, which
invariably involve an application form, details of
all individuals involved together with identity
documents, any necessary prior permissions and
confirmation of capital37
. A partnership or company
will need a charter. There are also forms for tax
registration38 and for application for permission to
have a seal.
Much of the information required for the
application for business registration is also needed
for the purposes of tax registration. There is
therefore a considerable amount of detail which
appears on both forms. The tax application uses
most of the information on the business
registration form plus some additional items. It is
clear that some of the fields on the tax form, such
as details of the as yet unopened bank account or
existing employees, will invariably be left blank at
the registration stage. As mentioned above, the
trend internationally is to integrate business and
tax registration: a single form, geared to the
situation of a new enterprise, would be a useful
first step.
The new system recently implemented in
Hung Yen39 allows for completion of relevant
information via a web site. In doing so, it observes
the constraints imposed by the statutory forms. It
does however not require the same information to
be provided more than once as the data field will
automatically be pre-populated where the
infor-mation has already been provided. This is
progress but it does not really excuse asking for the
same information twice in the first place. It is to be
hoped that a single form will in due course
overcome this obstacle.
The charter presents rather different
problems. The sixteen categories of information to
be included in a company charter are defined by
statute40
, but the precise wording is a matter for the
promoters of the company or their advisers. The
Departments of Planning and Investment in both
Hanoi and Ho Chi Minh City have provided
specimens on their web sites. The IFC Mekong
Private Sector Development Facility (MPDF) has
plans for templates of the forms and a
reference copy of the charter requirements to be
made available on CD.
Other countries are attempting to simplify
documentation. In 2006, Portugal introduced
standard articles of association (equivalent to the
charter in Vietnamese law). The effect has been
that it is no longer necessary for the articles to be
prepared by a notary and that examination can be
completed far more quickly than before41
.
2.4. Names and seals
Countries have adopted various standards
regarding the naming of companies and other
businesses. These range from ensuring that a name
is not identical to an existing name through to
requiring the inclusion of specific information
about proposed activities within the name.
Consolidating provincial registers into a national
register obviously increases the scope for
confusion, and ultimately new applications should
be checked against the national register.
It is common practice internationally for a
company to have a corporate seal, but this is not
always essential. In the United Kingdom, a
corporate seal has been optional since 199042
.
Under the latest legislation, a document is validly
executed by a company if it is signed on its behalf
by two authorized signatories or by a director in
the presence of a witness who attests his signature.
A document executed in this way has the same
effect as if executed under the company’s common
seal.
Most countries either do not regulate the
Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW 9
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…

production of seals or allow the making of a seal
on production of a relevant business registration
certificate. Of the 175 countries surveyed by Doing
Business, 94 do not mention seals as a necessary
formality for the purposes of starting a business.
Notably, companies in the Russian Federation
frequently need to use seals in commercial
transactions and in dealings with government.
These need to conform to a state standard, but
there is no need for them to be registered. The City
of Moscow used to operate a system of registration
for seals, but this was abolished in 2005 as it was
no longer considered necessary43
. Vietnam appears
to be unique in requiring both prior permission
from the police for the making of a seal and
registration after it has been made.
While in Vietnam seals will almost inevitably
remain part of the culture for the foreseeable
future, there appears little justification for fears
that reducing the level of state supervision would
result in widespread fraud through the use of
forged seals.
2.5. Publication of notice of registration
It is normal practice for notice of
registrations to be published in an official Gazette
or newspaper, but, as systems and legislation are
updated, it has become increasingly common for
the information to be published on an official web
site instead. While European law requires that
specified documents and particulars shall be
published in a national gazette, there is specific
provision for the gazette appointed for the purpose
to be in electronic form44
.
The Enterprise Law states that enterprises are
required “to publish in the website of the business
registrar or in three consecutive issues of a
newspaper or electronic newspaper”45 specific
details relating to the registration. In most
provinces, enterprises are still obliged to arrange
and pay for publication in a newspaper, though in
some the Department of Planning and Investment
will place the information on a web site. This
approach can be expected to be more widely
adopted as the relevant computer systems become
available, with a saving not only of the financial
cost of publication, but of one step in the business
start-up process.
2.6. Corruption
It is impossible to ignore the fact that
corruption exists in Vietnam or that worldwide
stricter regulation of entry is associated with
sharply higher levels of corruption and a greater
relative size of the unofficial economy46
. In
particular, there is a high level of correlation
between the number of procedures involved in
starting a business and perceived corruption47
. A
third of Vietnamese civil servants in a recent
survey had recently witnessed others “receiving
money or presents to work in favour of the
bearers” or “people in positions of authority
intentionally causing difficulties to others in order
to cause them to give money”48
. The country again
scored only 2.6 in the 2006 Transparency
International Corruption Perceptions Index49
. This
compares with 9.6 for Finland, Iceland and New
Zealand, placing Vietnam at 111th position out of
the 163 countries surveyed.
Despite its poor rating, the extent of
corruption in Vietnam is considered to be
generally comparable to that in other countries at a
similar level of development50
, but the problem is
being taken seriously. In 2004, the government
endorsed the Anti-Corruption Plan for Asia and the
Pacific initiated by the Asian Development Bank
and OECD51
. The Law on Corruption Prevention
and Control came into force in July 2006 and the
Prime Minister has promulgated an action plan52
.
The expansion of the one-stop shop network
has been identified as one of the best tools in
restricting opportunities for corruption53
.
10 Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…

2.7. National guidance for provinces
A joint circular issued by the Ministry of
Planning and Investment, the Ministry of Finance
and the Ministry of Public Security54 provides
guidance on the establishment of a coordinated
mechanism for business registration, tax
registration and permission for the making of a
seal for enterprises established and operated under
the Enterprise Law. This envisages a procedure as
summarized in Figure 1.
The circular does not change the
underlying law and, while most provinces are
expected to implement this type of single-window
one-stop shop, there have been concerns that
aspects of the procedures set out in the circular are
inconsistent with existing legislation or
instructions. Such issues as the need for the
application form for tax registration to bear a seal
(meaning that registration cannot logically proceed
in parallel with action to obtain permission for a
seal and to have it made and registered) or that the
Security Department is obliged to deliver the
certificate of seal registration to the enterprise
(rather than the one-stop shop) need to be
addressed. It would be inconsistent with the aims
of the Enterprise Law to allow such petty obstacles
to stand in the way of providing an
efficient service to the business community.
While this model is an advance on
existing arrangements in many provinces in that it
would no longer be necessary for the customer to
visit the tax office and the number of visits to the
Security Department would be reduced, it does not
meet the ideal of allowing the customer to
conclude the whole process at one office, dealing
with one person.
There is the potential for this if, when
visiting the one-stop shop, the customer is able to
choose a seal by reference to samples and price
lists and to make a single payment for all services.
Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW 11
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…
Figure 1: Joint circular – procedure for business registration in Vietnam
Department of Planning
and Investment
One-Stop Shop
Security
Department Tax Office
CUSTOMER
Permission for sealmaking sent to One-Stop
Shop within 5 working days
4 Tax registration
certificate sen to DPI
within 5 working days
5
Customer collects
business registration certificate, tax
registration and
permission for making
seal
6
Copy of business
registration certificate
sent to Tax Office,
also within 10 working
days
3
Copy of business registration certificate sent to
Security Dept Within 10
working days
2
Customer visits One-Stop Shop to
deliver applications
for business and tax
registration, pays business
registration fee and obtain
receipt
1

Security Department personnel could then obtain
and register the seal (as they currently do in some
cases by special arrangement) and return this with
the registration certificate to the one-stop shop. As
soon as arrangements are in place, it would also be
appropriate for the one-stop shop to publicize the
registration on an official web site. Figure 2
outlines the impact of these modifications.
The circular sets new standards in terms of
performance times. Failure to meet prescribed
standards means that the enterprise founders
are entitled to lodge a formal complaint55
.
Computerization offers the opportunity for
objective monitoring and publication of
performance data, but in some countries there may
be other implications of failure to meet standards.
Several have adopted a policy of ‘silence is
consent’, first introduced in Italy. In Georgia,
following amendments to the Law on
Entrepreneurship in 2003, if the court fails to either
register or formally reject an application within 5
days, the business is considered registered and the
court must issue a business registration certificate
immediately upon request56
. It is not entirely clear
what the full legal ramifications may be of a legal
entity being in existence without being on the
official register. Jamaica has a simpler solution: the
Registrar of Companies offers a money-back
guarantee57
.
12 Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…
Figure 2: Enhanced procedure for business registration in Vietnam
CUSTOMER
Department of Planning
and Investment
One-Stop Shop
Security
Department
Tax
Office
Security Department registers
seal and returns seal and
certificate to DPI
7
Security
Department
passes order
for seal
to seal-maker
Seal
makers
4
Seal maker delivers
seal to Security
Department
5
Tax registration
certificate sen to DPI
5
Customer collects
business registration
certificate, tax
registration and
registered seal
9
One-Stop Shop
publishes details of
registration on web site
10
Copy of business
registration certificate
sent to Tax Office.
3
Copy of business
sent to Security Dept
registration certificate
2
Customer visits One-Stop Shop to
deliver applications
for business and tax
registration,choose seal –
maker and seal, pay all fees and
charges and obtain receipt
1
1
2
3
4
OSS web site

2.8. Using the information
The information collected as part of the
business registration process is of value to other
government offices and to the business
community. Indications are that in many provinces
little use is made of the information because it is
incomplete or inaccurate or because there is
simply not the perceived demand. By law, any
organization or individual is entitled to access the
information58 and there is scope for developing
this service, particularly with the development of
web-based facilities. Government offices should
not be asking enterprises for information, which is
already on the business register. In Denmark and
Estonia it is strictly forbidden to do so59,60
.
The potential value of the information held by
business registration offices should not be
underestimated. In the past year, there were 44.7
million accesses of the free information available
about individual companies in England, Wales and
Scotland via the web site of Companies House, the
official registration agency. Customers bought 3.7
million electronic copies of specific documents61
.
Enterprises should be encouraged to make
more use of the information in the interests of
better-informed business decisions.
2.9. Developments at national level in
Vietnam
A project to introduce a consolidated national
registration system was started in 2004 under the
auspices of UNIDO. Subject to donor funding, it is
anticipated that there will be a new Decree on
Registration by early 2008. It is intended that, as
part of the changes, there will be a single
registration form covering the requirements of all
departments. Information collected by Business
Registration Offices in provincial Departments
of Planning and Investment will be passed
to the central database, from where it will be
automatically distributed to the General
Department of Tax, the General Statistics Office
and the Ministry of Public Security.
3. Conclusions
Experience from other countries demonstrates that business registration can operate
efficiently and effectively in the interests of both
the business community and the government.
In seeking to improve facilities, most
countries have concluded that it is better to build
on existing institutions, though often reforming
and enhancing them. One-stop shops have proved
an effective mechanism for the delivery of this
type of service. As enterprises extend their
business with suppliers and customers further from
their home base, national systems have become
increasingly important, but this does not exclude
the need for service delivery at local level. In
Vietnam, an effective national register can in any
case only be compiled from complete and accurate
information collected by provincial offices.
The business register is an important resource
for government and it makes sense for all
government offices requiring basic information on
an enterprise to refer to the register rather than
approaching the enterprise directly. This is a
particular consideration when developing
computer systems. The register is also an essential
source of information for the business community,
who should be encouraged to make use of it.
A business registry can often be funded by
income and fees should not be excessive if they are
set on the basis of simply recovering costs. Best
practice indicates that registries should not be
seeking to make a profit for the government.
Reforming business registration in Vietnam
provides an opportunity to improve performance
Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW 13
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…

across several departments through better
provision of information while lifting the burden
currently imposed on promoters of new enterprises
through having to deal separately with each office.
A simpler, streamlined system will provide a faster,
cheaper and more relevant service and promote a
business environment consistent with present-day
needs. r
Notes:
1 Copenhagen Consensus 2004, reported in Lomborg,
B. (ed.) (2004).
2 Decree 88/2006/ND-CP of 29 August 2006.
3 Article 13(1), Enterprise Law 2005.
4 Article 7(1), Enterprise Law 2005.
5 Article 162(3)(b), Enterprise Law 2005.
6 Le Quang Manh (2006).
7 Dinh Van An (2006), page 15.
8 Le Quang Manh et al. (2006), 7.
9 Pham Duy Nghia (2006), 12.
10 European Commission /ECRF (2005).
11 World Bank: Nigeria – Micro, Small and Medium
Enterprise Project, Business Registration –
Integration and Computerization.
12 FIRST Initiative: Kenya – Reform of the legal and
institutional framework for asset financing.
13 World Bank: Lesotho – Private Sector
Competitiveness Project, Reform and Development
of the Company Registry.
14 Investment Climate Facility for Africa: Commercial
Justice, Business & Land Reform Programme.
15 Resolution No. 38/CP of 4 May 1994.
16 Decision No. 136/2001/Q?-TTg of 17 September 2001.
17 Decision No. 181/2003/ Q?-TTg of 9 January 2003.
18 Tran Kim Hao (2007).
19 Sader, F. (2000).
20 Le Quang Manh et al. (2006), 10.
21 www.internetworldstats.com, 31 May 2007.
22 Australian Government Information Management
Office (2006).
23 Government of Canada (2006).
24 www.aisa.org.af.
25 www.arbk.org.
26 de Sa, L. (2005).
27 Needham, C. (2004).
28 Directive 69/335/EEC.
29 Article 3(3), Directive 68/151/EEC as amended by
Directive 2003/58/EC.
30 Article 3(1), First Council Directive 68/151/EEC of
9 March 1968.
31 Article 2, First Council Directive 68/151/EEC of 9
March 1968.
32 www.ebr.org.
33 www.corporateregistersforum.org.
34 www.iaca.org.
35 www.ecrforum.org.
36 Asian Development Bank (2005), 37.
37 Articles 16-20, Enterprise Law 2005.
38 Circular 10/2006/TT-BTC of 14 February 2006
implementing Decision no. 75/1998/QD of 4 April
1998 regarding the tax code for enterprises.
39 Le Duy Binh (2006). The same software package is
being used in Dak Lak, Quang Nam, An Giang, Nam
Dinh and Quang Binh. There are also plans to use it
in Hai Phong.
40 Article 22, Enterprise Law 2005.
41 World Bank (2006).
42 s. 36A, Companies Act 1985 as inserted by s. 130,
Companies Act 1989; shortly to be replaced by s. 44,
Companies Act 2006.
43 Government of Moscow Decree of 8 February 2005
on Liquidation of Moscow Registration Chamber.
44 Article 4, First Directive as amended.
45 Article 28, Enterprise Law 2005.
46 Djankov et al. (2002), 4.
47 World Bank (2006), 12.
48 Communist Party of Vietnam (2005).
49 Transparency International (2006, 1).
50 Transparency International (2006, 2).
51 Tran Quoc Truong (2004).
52 International Monetary Fund (2006).
53 Vietnam Business Forecast Report, 2007 2nd
Quarter, 40.
14 Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…

54 Inter-Ministerial Circular No. 02/2007/TTLT/BKHBTC-BCA.
55 Article 20(2), Decree on Business Registration.
56 FIAS (2004), 23.
57 Mikhnev (2005).
58 Article 27(2), Enterprise Law 2005.
59 Article 541, Commercial Code (Denmark).
60 Article 541, Commercial Code (Estonia).
61 Companies House (2007), data for financial year
ending March 2007.
References:
n Asian Development Bank (2005). Strategy and
Program Assessment – Vie: Private Sector
Assessment.
n Australian Government Information
Management Office (2006). Responsive
Government: A New Service Agenda, 2006
e-Government Strategy.
n Communist Party of Vietnam, Committee for
Internal Affairs (2005). “Draft Report on the
Results of Corruption Survey”, November,
cited in Fritzen (2006).
n Companies House Executive Agency (United
Kingdom), Management Information Unit
(2007), Management statistics for 2006-2007.
n De Sa, L. (2005). Business Registration
Start-up: A Concept Note, IFC/World Bank.
n Dinh Van An (2006). “Building Institutions for
a Market Economy with Socialist Orientation in
Vietnam”, Vietnam Economic Management
Review, No. 1, Winter 2006, 10-19.
n Djankov, S., La Porta, R., Lopez-de-Silanes, F.,
Shleifer, A. (2002). “The Regulation of Entry”,
Quarterly Journal of Economics, Vol. CXIII,
Issue 1, February 2002.
n Do Dinh Luong, Nguyen Thi Thanh Hang,
Stefan Nijwening, Ramon Hagad, (2002)
Evaluation of One-Stop Shops in Vietnam:
Final Report, Hanoi, Government Committee
on Organisation and Personnel and Swiss
Agency for Development and Cooperation.
n European Commission (TACIS)/ European
Commerce Registers Forum (2005). European
Business Registration Survey 2005:
www.ecrforum.org/previous/dublin2005/
documentation.htm
n Foreign Investment Advisory Service (FIAS)
(2004). Assessment of Administrative
Procedures for Doing Business in Georgia,
June 2004.
n Fritzen, S. (2006). “Beyond “Political Will”:
How Institutional Context Shapes the
Implementation of Anti-Corruption Policies”,
Policy & Society, Vol. 24, No. 3.
n Government of Canada (2006). “Government
On-Line 2006”, www.gol-ged.gc.ca.
n International Monetary Fund (2006). Vietnam:
Poverty Reduction Strategy Paper Annual
Progress Report-Joint Staff Advisory Note:
2006, IMF Country Report No. 06/337,
Washington DC, International Monetary Fund.
n Lomborg, B. (ed.) (2004). “Global Crises,
Global Solutions”, Cambridge UK, Cambridge
University Press.
n Le Duy Binh (2006). “Sub-national Business
Environment Reform: Business Information
System and Modernisation of Public Services
to Business in Hung Yen Province”, Hanoi,
MPI-GTZ SME Development Programme.
n Le Quang Manh, Bui Anh Tuan, Nilgun F. Tas
(2006). Lessons Learned in Sustaining Business
Registration Reform in Vietnam, paper presented
at Asia Consultative Conference on Creating
Better Business Environments for Enterprise
Development, Bangkok, November.
n Mikhnev , A.(2005). Building the Capacity for
Business Registration Reform, paper presented
at Conference on Reforming the Business
Environment: From assessing problems to
measuring results, Cairo, November 2005.
n Needham, C. (2004). ‘Customer-Focused
Government’, Soundings, No. 26, March 2004.
n Pham Duy Nghia et al. (2006). Business
Licensing: Current Status and Ways Forward,
Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW 15
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…

Hanoi. Prime Minister’s Research Commission,
GTZ and ADB.
n Sader, F. (2000). Do “One-stop Shops” work?,
2000, FIAS.
n Tran Kim Hao (2007). One Stop Shop Model in
Processing Administrative Procedures for
Enterprises in Viet Nam, paper presented at
National Workshop ‘OSS – A Model for
Simplification of Administrative Procedures’,
Hanoi, March 2007.
n Tran Quoc Truong, Permanent Deputy State
Inspector General of SR Vietnam (2004).
Statement on behalf of the Socialist Republic of
Vietnam for the ADB-OECD 5th Steering
Group meeting of the Anti-Corruption
Initiative, Manila, Philippines, July 5-7, 2004,
www.oecd.org/dataoecd/50/10/ 35113150.pdf.
n Transparency International (2006, 1). Global
Corruption Report 2006, London, Pluto Press.
n Transparency International (2006, 2). National
Integrity System Country Study: Vietnam 2006,
Berlin.
n Vietnam Business Forecast Report, 2007 2nd
Quarter.
n World Bank (2006). Doing Business in 2007:
How to reform, Washington D.C., World
Bank/International Finance Corporation.
16 Number 2 Spring 2007 VIETNAM ECONOMIC MANAGEMENT REVIEW
VEMR ECONOMIC POLICY DEBATE Business Registration in Vietnam…