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Unified enterprise law coming soon

VNS - 18-03-2005

HA NOI — A final draft of a Unified Enterprise Law (UEL) is expected to be published next month following recommendations from the foreign and domestic business community.

However, member of the drafting committee Nguyen Dinh Cung said, at yesterday’s consultation workshop on the draft UEL in Ha Noi, there are still controversial issues remaining that the drafting committee hope will be solved by experts recommendations.

Many people are urging the UEL draft to include a deadline to be placed on the conversion of State-owned enterprises (SOEs) into liability limited or shareholding companies in an attempt to create real pressure for future SOEs to conform to guidelines stated in the UEL draft.

However, others have argued that the deadline should be stated in the decrees, which will be drafted later when the UEL is finalised, due to the fact that conversion is extremely complicated and a thorough and well-prepared study related to the issue has not been made so far.

The draft UEL currently requires foreign invested enterprises that wish to set up a business in Viet Nam to have assets of US$100,000 as a guarantee to minimise fraud. The European Chamber of Commerce’s representative, Peter Nelson from the law consulting firm My Hoai Anh, said that the stipulation is unnecessary and unfeasible.

Instead of the deposit, the drafting committee should require foreign businesses to provide more information to prove their financial capacity or ask the enterprises’ executives to have long-term residence in Viet Nam, suggested Peter.

Businesses also said that the drafting committee should not limit the size of investment capital contribution that one enterprise can invest in another one. The UEL draft has introduced a cap of 50 per cent on cross-business investment.

However, German Technical Co-operation (GTZ)’s chief technical adviser Corinna Kuesel said: "Having a good law is not sufficient - it is merely a good start. Much of the actual success will depend on the implementation of the law itself and of the guiding principles complementing the law."

Echoing Kuesel, Nicolas Audier from the law consulting firm Gide Loyrette Noyel also said the drafting committee should draft decrees and circulars to make the implementation of the new law uniform because the UEL is expected to be passed by late this year.

Cung said that the drafting committee is conducting further studies on several issues related to foreign investors to make sure the new law is successfully implemented. They include the negative list which is applicable only to foreign investors; list of industries and sectors in which investors need to obtain a licence before registration; procedures and conditions for granting licences; and authorities that are entitled to grant licences. A project to establish a capable and well-equipped organisation on consistent business registration aimed at implementing and supervising the implementation of the UEL is also under consideration to make the new law easier to implement, Cung added.

The workshop, which was attended by officials and experts from GTZ, Eurocham, Central Institute for Economic Management, and domestic and foreign businesses, was the third consultation workshop held to date to improve the draft UEL. — VNS