Socialist Republic of Vietnam

Vietnam’s state-owned businesses need to be transformed to fall within the scope of the new Enterprise Bill, said experts at a Monday seminar in Ho Chi Minh City.
The new bill will only be applicable to four types of businesses: liability limited companies, joint-stock firms, partnerships and private enterprises, said Nguyen Dinh Cung, secretary of the bill’s drafting committee.

The seminar, hosted by the drafting committee in HCMC, was held to gather the suggestions from residents on the bill.

Once approved, the new bill will become the New Enterprise Law, also known as the Unified Enterprise Law - an amendment of the current Enterprise Law.

Disqualified

State-owned companies must undergo transformation in order for the new law to be applicable, Mr. Cung said at the seminar.

“State-run enterprises are neither liability limited firms nor joint-stock companies,” he said.

“They have only two qualities, which are limited liability of investors and independent legal person status, but the state-run companies lack ‘the ability to transfer shares or financial contributions’ and ‘concentrated and unified management’,” said Mr. Cung.

Currently, there is no official research or discussions about the transformation of state-run enterprises into liability limited firms or joint-stock companies, he said.

But, the transformation of state-owned companies, which will be a “bumpy road,” is an urgent requirement as Vietnam integrates into the world’s economy, added Mr. Cung.

The bill's feasibility might not be high, commented Mr. Doan Dinh Hoang of Masso Group, a consulting firm.

Removing obstacles for foreign businesses

Meanwhile, the new Enterprise Law will remove many obstacles that prevent foreign investors from entering the Vietnamese market, said Mr. Cung.

The law will abolish the 30-per cent cap on foreign ownership of a listed firm, he said.

Also, foreign investors will only need to register for business operations in Vietnam rather than applying for a license, Mr. Cung said.

They also have the right to increase investment or expand scope of operations without seeking permission, he added.

But, Mr. Cung said, this does not mean that the law will have more incentives for foreign businesses than domestic businesses.

He said several areas would still remain restricted to foreign investment, and the law would require foreign businesses to prove that the value of their assets was at least equivalent to 100,000 USD.

When the law takes effect, domestic and foreign businesses will have equal chances and challenges, he said.

Reported by Trung Binh – Translated by Hieu Trung.
Story from Thanh Nien News
Published: 11 April, 2005, 22:15:11 (GMT+7)
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