Significant step in the implementation of Resolution 98/2023/QH15

On June 24, 2023, the National Assembly promulgated Resolution 98/2023/QH15 ("Resolution 98") to pilot several specific mechanisms and policies for the development of Ho Chi Minh City. The Resolution will provide Ho Chi Minh City with management autonomy in several areas to facilitate proactive and timely resolution of matters arising in the City. In order to implement Resolution 98 in practice, the decentralization of management among the Government, ministries, and the municipal government (including the Ho Chi Minh City People's Committee and People's Council) must be clearly defined to avoid overlapping responsibilities. At present, the Government is preparing a Decree on Decentralization of Management in some sectors for the City Government ("Draft Decree"). The Draft Decree is designed to implement Resolution 98 and to replace Decree 93/2001/ND-CP, which the Government previously issued to address a similar issue.

In this article, we will highlight some notable contents of the Draft Decree, as follow:

1. The Purpose of the Draft Decree

The National Assembly officially passed Resolution at the 5th session, XVth National Assembly (Source: Electronic Portal of the National Assembly of Vietnam).

The Government’s promulgation of the Draft Decree has the following purposes:

Firstly, it aims to implement Resolution 98 to pilot several specific mechanisms and policies for the development of Ho Chi Minh City.

Secondly, it gives the City Government the autonomy to implement or decide the tasks in sectors currently under the competence of the Government or other ministries, in order to facilitate proactivity and timely resolution of issues arising in the City.

Thirdly, it will replace Decree 93/2001/ND-CP on the decentralization of the management of several sectors to Ho Chi Minh City.

2. Regarding the scope of management decentralization

According to Article 1 of the Draft Decree, the City Government is decentralized to manage the following 09 sectors:

• Management in investment;
• Management in economy, finance, and State budget;
• Management in planning, construction, and natural resources – environment;
• Management in transport;
• Management in (public) health;
• Management in education;
• Management in labor;

Management in science and technology;

• Management in internal affairs.

It can be seen that the scope of management stipulated in the Draft Decree is broader and more specific than the scope stipulated in Decree 93/2001/ND-CP. At the same time, the scope is consistent with the sectors that Ho Chi Minh City is eligible to pilot, or special policies in Resolution 98[1].

3. Some notable decentralized sectors

3.1. Decentralized of investment management

Regarding the provisions on the decentralization of Investment management, Article 4 of the Draft Decree provides that the Ho Chi Minh City People’s Committee (“the City Committee”) has the right to decide the following investment policies:

• The City Committee has the right to update the list of industries, or geographical areas entitled to investment incentives based on the trend of technological development of the world and the reality of the socio-economic development of Ho Chi Minh City.

• Based on the ability to balance the budget and detailed regulations on investment support forms, the City Committee shall submit to the Ho Chi Minh City People's Council ("the City Council") for promulgation support policies for hi-tech enterprises, science and technology enterprises, scientific and technological organizations, enterprises investing in agriculture, rural areas, education, law dissemination, and other objects.
• The decision to adjust and extend the operation term of operation of investment projects for the construction and use of infrastructure of export processing zones and industrial parks in accordance with Clause 3 Article 27 of Decree 31/2021/ND-CP. The term of operation of the investment project after the extension may not exceed 20 years.

The City Government is entitled to decide several policies that are currently under the competence of the Government as stipulated in Decree 31/2020/ND-CP. However, these policies must meet certain criteria. For example, the City Committee may only update the list of new industries or geographical areas eligible for investment incentives based on the world's technological development trend and the reality of the City's socio-economic development; or the investment incentive policy decided by the City Government is only available to certain subjects.

3.2. Decentralization of management in the sectors under the competence of the Ministry of Industry and Trade (within the content of the state management in the field of economy, finance and state budget)

According to Clause 2 Article 5 of the Draft Decree, the City Committee is entitled to receive and process the application of several administrative procedures under the jurisdiction of the Ministry of Industry and Trade as below:

• The notification or the registration of e-commerce website/app of enterprises located in the City;
• The tasks of the Ministry of Trade and Industry under Point a Clause 7 Article 16 of Decree 113/2017/ND-CP such as the receipt and processing of applications for issuance, re-issuance, revision of the license to produce and trade restricted industrial chemicals. The Ministry of Industry and Trade shall issue, re-issue, revise, and stipulate the duration of the license to produce and trade restricted industrial chemicals; carry out periodic inspection or ad hoc inspection (when necessary) of the production and trade in restricted industrial chemicals”.
• The issuance and revision of the license for the establishment of retail outlet without the opinion of the Ministry of Trade and Industry in the following circumstances:

• The license for the establishment of a retail outlet (including the first outlet and outlets other than the first outlet that are not convenience stores or mini-supermarkets) located in a shopping mall with an area of less than 500 m2.
• The license for the establishment of a retail outlet, other than the first one (which is not a convenience store or mini supermarket), with an excess area of less than 100 m2, located outside the shopping mall and approved for licensing by the City's Economic Needs Test Council; the adjustment to increase the area of the first retail outlet, other than the first one, having satisfied 02 of the above criteria .    
• The license for the establishment of the first retail outlet (other than a convenience store or mini supermarket) with an excessive area of less than 500 m2 and the adjustment to increase the area to less than 500 m2 for the first retail establishment (other than a convenience store or mini supermarket) located outside the shopping center .

Several subjects engaged in e-commerce, chemical or retail business as mentioned above are required to undergo the procedures or apply for a license before starting to operate. Such procedures or licenses are currently handled by the Ministry of Industry and Trade. Decentralizing the management of the above-mentioned procedures to the municipal committee will strengthen the initiative and autonomy of the city to decide issues itself and reduce the dependence on the opinions of the Ministry of Industry and Trade, from where it is possible to shorten the time for processing the procedures (for procedures that require obtaining opinions of the Ministry of Industry and Trade). However, this also poses many challenges to the Municipal Committee, as the above-mentioned sectors are highly complex and require the Municipal Committee to allocate qualified personnel to perform the tasks previously performed by the Ministry of Industry and Trade. In addition, the above areas are also interdisciplinary, requiring coordination among central government agencies and other localities[2].

3.3. Decentralization of management in science and technology

Under Article 11 of the Draft Decree, the City Committee has the right to carry out the following tasks:

• Annually inspect the reports of organizations and individuals engaged in hi-tech applications, hi-tech research and development, and hi-tech enterprises in the city; periodically inspect enterprises to meet prescribed criteria after they have been granted certificates.
• Issue and revoke the certificates of hi-tech incubators; examine the reports of organizations and individuals; periodically or irregularly inspect and supervise the operating conditions of hi-tech incubators.

The promotion of scientific and technological activities, innovation and hi-tech incubation is the policy of the city under Resolution 98. Therefore, the decentralization of management in such sectors to the City Committee is reasonable and helps facilitate the autonomy and development potential of the city.

Finally, the draft decree is one of the important bases for the city to implement Resolution 98. By expanding the scope of administrative decentralization, the city government has more autonomy to decide on important issues based on the potential and socio-economic development in its area. However, the implementation of the draft decree will be very challenging because the city will have to allocate qualified personnel to carry out tasks previously decided by specialized agencies of the central government. In addition, the management of some areas that require interdisciplinary coordination of many agencies and localities will also face difficulties if the city has to coordinate and rely on the opinions of relevant agencies.

Read more at: Chuyển biến quan trọng trong quá trình triển khai Nghị quyết 98/2023/QH15