Reduction of conditional business lines: Greater emphasis should be placed on quality and effectiveness rather than quantity

For many years, reforming investment and business conditions has always been considered one of the important focuses of the process of reforming economic institutions in Vietnam. From major reviews in the spirit of Government Resolutions[1] to recent administrative procedure reduction programs, the goal throughout is to reduce compliance costs, create a more favorable business investment environment for businesses, and promote economic growth.

 

Behind the impressive "cut" figures, what is more important is how far the quality of reform has actually been achieved. Source: Government Newspaper

 

Recently, the Ministry of Finance has submitted to the Government a Draft Resolution on reducing conditional business lines under the special mechanism allowed by the National Assembly in Resolution No. 206/2025/QH15[2]. According to this draft, up to 60 conditional business lines are proposed to be abolished and 14 other industries and trades are amended, narrowed or adjusted in scope of management. This is one of the largest-scale reviews in recent years.

According to the report of the Ministry of Finance, if the draft is approved, the number of conditional business lines in Appendix IV of the Law on Investment 2025 will be reduced from 143 to 83. At the same time, the Government aims to complete the review and abolition of 100% of unnecessary business conditions by 2026 and cut at least 30% of the time for processing administrative procedures and 30% of legal compliance costs for businesses.

This is clearly a positive signal for the business investment environment. However, behind the impressive "cut" figures, what is more important is how far the quality of reform has actually been achieved. If not carefully designed, the reduction of conditional business investment lines may only be "technical", changing the form of management but unlikely to significantly reduce the legal burden on enterprises.

From "pre-inspection" to "post-inspection": reform thinking in the right direction

The notable point in this draft is that many proposals are built on the mindset of shifting strongly from "pre-inspection" to "post-inspection". This is an orientation in line with the policy of institutional reform and international practice.

In the explanation, many ministries and sectors said that it is not necessary to maintain the business licensing mechanism for fields where risks can be controlled through technical standards, professional regulations, specialized inspections or post-operation sanctions.

For example, the Ministry of Justice proposes to abolish professions such as practicing property auction, practicing bailiffs or practicing asset management and liquidation in the process of bankruptcy settlement on the grounds that they can switch to a management mechanism according to professional standards combined with post-inspection. The Ministry of Education and Training also proposed to abolish the "Education Quality Accreditation" profession, arguing that this activity is actually an independent assessment professional activity, not a normal business activity.

Similarly, the Ministry of Culture, Sports and Tourism proposes to abolish a series of industries such as karaoke business, discotheques, accommodation, museums or video games with prizes for foreigners with the argument that it is possible to gradually switch to a management mechanism according to specialized standards and strengthen post-inspection instead of maintaining the current business conditions.

In terms of management thinking, this is a positive move. In a modern market economy, the State should not interfere too deeply with the freedom to do business with the "begging – giving" mechanism if the risk can be controlled by other management tools that are less costly for businesses.

Maintaining too many licenses, certificates or conditions for market entry sometimes does not increase the quality of service but creates large compliance costs, prolongs market entry time and raises the risk of administrative corruption.

But cutting the number does not necessarily reduce the real burden

However, it is necessary to realistically recognize that the abolition of a conditional business investment line does not mean that the enterprise will be "liberated" from legal requirements.

In many cases, business conditions are not lost but are only transformed into other forms of management.

For example, with the proposal to abolish the "Accounting service business", the Ministry of Finance still emphasizes that the management of accounting activities will continue to be implemented through accountant standards, professional regulations and post-audit mechanisms. This means that enterprises still have to meet a series of requirements for practice certificates, professional responsibilities and professional standards, even though the industry is no longer in the conditional business investment portfolio.

Similarly, for the fields of education, health or occupational safety, many of the proposed conditions are transferred to technical regulations, specialized standards or specialized inspection mechanisms instead of being maintained as business investment conditions.

This raises an important problem: if only the industry is abolished in name but the enterprise still has to meet almost all the same requirements through other specialized documents, the actual reform effect may not be as great as expected.

In fact, this has been a limitation point in many previous reforms of business conditions in Vietnam. There are many cases where business conditions are "reduced" at the decree level but reappear in the form of technical standards, specialized regulations, internal processes or other administrative procedures.

As a result, although businesses have heard of "sharp cuts", the actual compliance costs have not decreased significantly.

Some areas still need strict management

Another notable point is that not all sectors are suitable for drastic cutting of business conditions.

In the Draft, a number of industries such as casino business, betting, transportation of dangerous goods, biocidal chemicals for medical use or activities related to drones still cause a lot of debate among ministries and sectors about the appropriateness of cutting business conditions.

This reflects the fact that there are areas directly related to national defense, security, public health, finance, or social ethics where strict regulation is necessary.

 

Deputy Minister of Justice Nguyen Thanh Tinh speaks at the session. Source: Government Newspaper

 

If the reform is in the direction of "cutting at all costs", the risk of a management gap is completely possible.

For example, in the field of transporting dangerous goods, if the post-inspection mechanism is not strong enough, the relaxation of business conditions can increase the risk of environmental safety or public safety. Similarly, in the chemical, medical or education sectors, reducing market entry conditions but not at the same time improving inspection and supervision capacity can lead to the risk of deterioration in service quality.

Therefore, business condition reform should not be seen merely as a "quantity race". The reduction of how many industries is not as important as whether the reduction is really reasonable, whether it reduces compliance costs and still ensures the efficiency of State management.

What businesses need most is stability and transparency

From a business perspective, what they need is not only fewer licenses, but also a more transparent, stable, and predictable legal environment.

One of the major difficulties today is that the system of regulating business conditions is still scattered at many different levels of documents. There are cases where enterprises not only have to meet the conditions in the Law on Investment but also have to comply with a series of requirements in specialized laws, decrees, circulars, technical standards or even internal guidance of management agencies.

This causes the cost of legal compliance of businesses to increase significantly, especially for small and medium-sized enterprises or foreign investors who have just entered the Vietnamese market.

Therefore, the reform of business conditions needs to go beyond "removing the name" of the industry from the list. It is important to simultaneously review the entire system of relevant regulations to avoid conditions being "pushed" to other documents under other names.

In addition, if the State shifts sharply to post-inspection, the State also needs to invest significantly in inspection, supervision and digitalization of management capacity. An effective post-inspection mechanism requires transparent data, a coordination mechanism between agencies and a qualified management team. Otherwise, the reduction of pre-inspection may inadvertently increase regulatory risks or create unfair competition in the market.

Institutional reform needs to go into depth

This draft Resolution shows the Government's strong determination to reform in the context that Vietnam needs to promote economic growth and improve the investment environment.

However, reforming business conditions is a systematic issue and has a far-reaching impact on many fields. Therefore, the evaluation of the effectiveness of the reform should not only be based on the number of industries that have been reduced, but should look at more substantive criteria such as: whether enterprises really reduce compliance costs, whether the time to enter the market is shortened, etc.  whether the level of transparency of the legal environment has been improved and whether the efficiency of state management has been maintained.

In other words, it is not "how much to cut", but "how to cut".

If implemented in the right direction, this could be a major step forward in economic institutional reform in Vietnam. But if it only stops at adjusting the form of management without substantially changing the way the state is managed, enterprises may continue to face a "forest of conditions" in another form.

Institutional reform therefore requires not only determination, but also consistency, synchronization and especially modern management thinking, taking efficiency and quality as the center instead of just chasing formal cuts.

Lawyer Nguyen Van Phuc

HM&P Law Firm