Institutional bottlenecks from the perspective of businesses

Mr. Đậu Anh Tuấn, Vice Secretary General of VCCI, said that in response to the Ministry of Justice’s request for proposals to improve institutions and laws to achieve double-digit growth, VCCI has compiled feedback from the business community, industry associations, and practical production and business activities.

VCCI highly appreciates the Ministry of Justice’s proactive approach in consulting businesses. This is considered the right approach, as businesses are the entities that directly generate growth. From business practice, VCCI emphasized that the biggest current barrier is not the lack of laws, but the quality of regulations, overlaps among laws, and especially the implementation stage.

According to economic experts, businesses do not need more new laws, but rather clear, stable regulations that are consistently implemented and predictable. This is a prerequisite for unlocking growth drivers.

Solutions are needed to remove institutional bottlenecks and promote internal business capacity. Photo: An Thư

VCCI also pointed out that businesses must comply with multiple laws simultaneously. The issue does not lie in individual laws, but at the “intersections” between them, where conflicts, overlaps, and high compliance costs arise.

For example, to implement an investment project, businesses must follow procedures under the Law on Investment, the Land Law, the Construction Law, and the Law on Environmental Protection. These procedures often require one another as prerequisites, forming a “procedural loop” that leaves businesses uncertain about where to begin, while also increasing costs.

Speaking with reporters, Associate Professor Dr. Nguyễn Thường Lạng, Senior Lecturer at the Institute of Trade and International Economics, National Economics University (NEU), commented that current institutional bottlenecks lie not only in the number of regulations but also in the way the legal system is designed with a “fragmented mindset.” “Each law addresses a specific area but lacks overall connectivity. Meanwhile, businesses operate in chains, so when laws do not ‘communicate’ with each other, compliance costs increase significantly,” he explained.

In response, VCCI recommends shifting from reviewing individual laws to reviewing the entire business activity chain, from establishment, investment, construction, and production to import-export and dissolution. In addition, the stability and predictability of laws are key factors. With frequent regulatory changes and insufficient transition periods, businesses find it difficult to develop long-term plans.

According to Mr. Đậu Anh Tuấn, this particularly affects large-scale investment projects. “If businesses cannot predict policies in the next one to two years, they tend to delay or scale down investment. This is a direct constraint on growth,” he said.

Substantive reforms to unlock growth potential

From identifying these bottlenecks, VCCI proposes a series of systemic reform solutions, emphasizing the need to shift from a “management” mindset to a “facilitation” mindset, placing businesses at the center.

One key measure is transitioning from pre-inspection to post-inspection. Although this policy has been discussed for years, in practice many forms of “sub-licenses” still exist under different names, meaning the “ask–give” mechanism has not been fully eliminated.

Institutional reform must be substantive

The message from VCCI is that to achieve double-digit growth, institutional reform must be substantive, focusing on the quality and effectiveness of the legal system’s operation. When the legal environment becomes transparent, stable, and predictable, it will create a solid foundation for unlocking resources and promoting sustainable growth.

According to Associate Professor Dr. Nguyễn Thường Lạng, this remains a major barrier to the business environment. Without changing the management approach, breakthroughs will be difficult. “Names may change, but if businesses still need prior approval for most activities, the nature of the business environment does not change and compliance costs will not decrease,” he noted.

Therefore, VCCI recommends a comprehensive review of all business conditions, assessing their necessity and compliance costs, and decisively cutting those that are no longer appropriate.

Another bottleneck lies in the mechanism for resolving commercial disputes. Currently, resolution time remains lengthy, while the bankruptcy mechanism is not effectively functioning, causing resources to be “trapped” in inefficient enterprises.

For an economy to grow rapidly, it must have an efficient mechanism for reallocating resources. If businesses cannot exit the market in an orderly manner, capital cannot be “released,” reducing overall economic efficiency and hindering growth.

In addition, inconsistent law enforcement across localities is creating significant costs for businesses. The same regulation may be interpreted differently, forcing businesses to adapt to multiple standards, increasing risks and reducing investment efficiency.

VCCI proposes adding the principle of a “unified national market” to limit local authorities from issuing regulations that hinder the movement of goods, services, and capital.

From a long-term perspective, experts believe institutional reform must be linked with quantifying compliance costs. Each policy should clearly answer how much time and cost businesses will need to comply, thereby improving transparency and effectiveness.

Accordingly, VCCI reiterates the need to incorporate the principle of a unified national market to prevent local regulations from obstructing the flow of goods, services, labor, and capital.

In the long term, VCCI emphasizes that institutional reform must be associated with the requirement to quantify compliance costs. Each new policy must clearly specify the time and cost required for businesses to comply. This is an important metric to assess the real effectiveness of reforms. Priority should be given to removing institutional bottlenecks such as overlapping and conflicting laws, and inconsistent enforcement across localities.