Economy Profile 2015 Doing Business 2015
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Doing Business 2015 Vietnam
Economy Profile 2015
Vietnam
Doing Business 2015 Vietnam 2
© 2014 The International Bank for Reconstruction and Development /
The World Bank
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ISBN (paper): 978-1-4648-0351-2
ISBN (electronic): 978-1-4648-0352-9
DOI: 10.1596/978-1-4648-0351-2
ISSN: 1729-2638
Cover design: Corporate Visions, Inc.Doing Business 2015 Vietnam 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 6 Starting a business ..................................................................................................................... 16 Dealing with construction permits ........................................................................................... 25 Getting electricity ....................................................................................................................... 33 Registering property .................................................................................................................. 39 Getting credit .............................................................................................................................. 45 Protecting minority investors ................................................................................................... 52 Paying taxes ................................................................................................................................ 63 Trading across borders .............................................................................................................. 68 Enforcing contracts .................................................................................................................... 73 Resolving insolvency .................................................................................................................. 79 Labor market regulation ........................................................................................................... 82 Distance to frontier and ease of doing business ranking ...................................................... 89 Resources on the Doing Business website .............................................................................. 92
Doing Business 2015 Vietnam 4
INTRODUCTION
Doing Business sheds light on how easy or difficult it is 1, 2014 (except for the paying taxes indicators, which
for a local entrepreneur to open and run a small to cover the period January–December 2013).
medium-size business when complying with relevant
The Doing Business methodology has limitations. Other
regulations. It measures and tracks changes in
areas important to business—such as an economy’s
regulations affecting 11 areas in the life cycle of a
proximity to large markets, the quality of its
business: starting a business, dealing with construction
infrastructure services (other than those related to
permits, getting electricity, registering property, getting
trading across borders and getting electricity), the
credit, protecting minority investors, paying taxes,
security of property from theft and looting, the
trading across borders, enforcing contracts, resolving
transparency of government procurement,
insolvency and labor market regulation.
macroeconomic conditions or the underlying strength of
In a series of annual reports Doing Business presents institutions—are not directly studied by Doing Business.
quantitative indicators on business regulations and the The indicators refer to a specific type of business,
protection of property rights that can be compared generally a local limited liability company operating in
across 189 economies, from Afghanistan to Zimbabwe, the largest business city. Because standard assumptions
over time. The data set covers 47 economies in Sub- are used in the data collection, comparisons and
Saharan Africa, 32 in Latin America and the Caribbean, 25 benchmarks are valid across economies. The data not
in East Asia and the Pacific, 26 in Eastern Europe and only highlight the extent of obstacles to doing business;
Central Asia, 20 in the Middle East and North Africa and they also help identify the source of those obstacles,
8 in South Asia, as well as 31 OECD high-income supporting policy makers in designing regulatory reform.
economies. The indicators are used to analyze economic
More information is available in the full report. Doing
outcomes and identify what reforms have worked, where
Business 2015 presents the indicators, analyzes their
and why.
relationship with economic outcomes and presents
This economy profile presents the Doing Business business regulatory reforms. The data, along with
indicators for Vietnam. To allow useful comparison, it information on ordering Doing Business 2015, are
also provides data for other selected economies available on the Doing Business website at
(comparator economies) for each indicator. The data in http://www.doingbusiness.org.
this report are current as of JuneDoing Business 2015 Vietnam 5
CHANGES IN DOING BUSINESS 2015
As part of a 2-year update in methodology, Doing Finally, the name of the employing workers indicator set
Business 2015 incorporates 7 important changes. First, has been changed to labor market regulation, and the
the ease of doing business ranking as well as all topic- scope of this indicator set has also been changed. The
level rankings are now computed on the basis of indicators now focus on labor market regulation
distance to frontier scores (see the chapter on the applying to the retail sector rather than the
distance to frontier and ease of doing business ranking). manufacturing sector, and their coverage has been
Second, for the 11 economies with a population of more expanded to include regulations on labor disputes and
than 100 million, data for a second city have been added on benefits provided to workers. The labor market
to the data set and the ranking calculation. These regulation indicators continue to be excluded from the
economies are Bangladesh, Brazil, China, India, aggregate distance to frontier score and ranking on the
Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian ease of doing business.
Federation and the United States. Third, for getting
Beyond these changes there are 3 other updates in
credit, the methodology has been revised for both the
methodology. For paying taxes, the financial statement
strength of legal rights index and the depth of credit
variables have been updated to be proportional to 2012
information index. The number of points has been
income per capita; previously they were proportional to
increased in both indices, from 10 to 12 for the strength
2005 income per capita. For enforcing contracts, the
of legal rights index and from 6 to 8 for the depth of
value of the claim is now set at twice the income per
credit information index. In addition, only credit bureaus
capita or $5,000, whichever is greater. For dealing with
and registries that cover at least 5% of the adult
construction permits, the cost of construction is now set
population can receive a score on the depth of credit
at 50 times income per capita (before, the cost was
information index.
assessed by the Doing Business respondents). In addition,
Fourth, the name of the protecting investors indicator set this indicator set no longer includes the procedures for
has been changed to protecting minority investors to obtaining a landline telephone connection.
better reflect its scope—and the scope of the indicator
For more details on the changes, see the “What is
set has been expanded to include shareholders’ rights in
changing in Doing Business?” chapter starting on page
corporate governance beyond related-party transactions.
24 of the Doing Business 2015 report. For more details
Fifth, the resolving insolvency indicator set has been
on the data and methodology, please see the “Data
expanded to include an index measuring the strength of
Notes” chapter starting on page 114 of the Doing
the legal framework for insolvency. Sixth, the calculation
Business 2015 report. For more details on the distance to
of the distance to frontier score for paying taxes has
frontier metric, please see the “Distance to frontier and
been changed. The total tax rate component now enters
ease of doing business ranking” chapter in this profile.
the score in a nonlinear fashion, in an approach different
from that used for all other indicators (see the chapter
on the distance to frontier and ease of doing business
ranking).Doing Business 2015 Vietnam 6
THE BUSINESS ENVIRONMENT
For policy makers trying to improve their economy’s
regulatory environment for business, a good place to start ECONOMY OVERVIEW
is to find out how it compares with the regulatory
environment in other economies. Doing Business provides
an aggregate ranking on the ease of doing business
Region: East Asia & Pacific
based on indicator sets that measure and benchmark
regulations applying to domestic small to medium-size Income category: Lower middle income
businesses through their life cycle. Economies are ranked
from 1 to 189 by the ease of doing business ranking. This Population: 89,708,900
year's report presents results for 2 aggregate measures:
the distance to frontier score and the ease of doing GNI per capita (US$): 1,730
business ranking. The ranking of economies is determined
by sorting the aggregate distance to frontier (DTF) scores. DB2015 rank: 78
The distance to frontier score benchmarks economies
with respect to regulatory practice, showing the absolute DB2014 rank: 72*
distance to the best performance in each Doing Business
Change in rank: -6
indicator. An economy’s distance to frontier score is
indicated on a scale from 0 to 100, where 0 represents the
DB 2015 DTF: 64.42
worst performance and 100 the frontier. (See the chapter
on the distance to frontier and ease of doing business). DB 2014 DTF: 64.11
The 10 topics included in the ranking in Doing Business
2015: starting a business, dealing with construction Change in DTF: 0.31
permits, getting electricity, registering property, getting
credit, protecting minority investors, paying taxes, trading * DB2014 ranking shown is not last year’s published
across borders, enforcing contracts and resolving ranking but a comparable ranking for DB2014 that
insolvency. The labor market regulation indicators captures the effects of such factors as data
(formerly employing workers) are not included in this corrections and the changes in methodology. See
year’s aggregate ease of doing business ranking, but the the data notes starting on page 114 of the Doing
data are presented in this year’s economy profile. Business 2015 report for sources and definitions.
The aggregate ranking on the ease of doing business
benchmarks each economy’s performance on the
indicators against that of all other economies in the Doing
Business sample (figure 1.1). While this ranking tells much
about the business environment in an economy, it does
not tell the whole story. The ranking on the ease of doing
business, and the underlying indicators, do not measure all
aspects of the business environment that matter to firms
and investors or that affect the competitiveness of the
economy. Still, a high ranking does mean that the
government has created a regulatory environment
conducive to operating a business.Doing Business 2015 Vietnam
THE BUSINESS ENVIRONMENT
Figure 1.1 Where economies stand in the global ranking on the ease of doing business
Source: Doing Business database.Doing Business 2015 Vietnam THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy regional average (figure 1.2). The economy’s rankings stands in the aggregate ranking on the ease of doing (figure 1.3) and distance to frontier scores (figure 1.4) business is useful. Also useful is to know how it ranks on the topics included in the ease of doing business relative to comparator economies and relative to the ranking provide another perspective. Figure 1.2 How Vietnam and comparator economies rank on the ease of doing business Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database.
Doing Business 2015 Vietnam 9 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Vietnam (Scale: Rank 189 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - Vietnam (Scale: Score 0 center, Score 100 outer edge) Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database.
Doing Business 2015 Vietnam 10
THE BUSINESS ENVIRONMENT
Just as the overall ranking on the ease of doing business tells Doing Business introduced the distance to frontier score. This
only part of the story, so do changes in that ranking. Yearly measure shows how far on average an economy is from the
movements in rankings can provide some indication of best performance achieved by any economy on each Doing
changes in an economy’s regulatory environment for firms, Business indicator.
but they are always relative.
Comparing the measure for an economy at 2 points in time
Moreover, year-to-year changes in the overall rankings do allows users to assess how much the economy’s regulatory
not reflect how the business regulatory environment in an environment as measured by Doing Business has changed
economy has changed over time—or how it has changed in over time—how far it has moved toward (or away from) the
different areas. To aid in assessing such changes, most efficient practices and strongest regulations in areas
covered by Doing Business (figure 1.5).
Figure 1.5 How far has Vietnam come in the areas measured by Doing Business?
Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on
each Doing Business indicator since 2010, except for getting credit, paying taxes, protecting minority investors and resolving insolvency
which had methodology changes in 2014 and thus are only comparable to 2013. The measure is normalized to range between 0 and 100,
with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing Business 2015 report for
more details on the distance to frontier score.
Source: Doing Business database.Doing Business 2015 Vietnam 11
THE BUSINESS ENVIRONMENT
The absolute values of the indicators tell another part of regulation—such as a regulatory process that can be
the story (table 1.1). The indicators, on their own or in completed with a small number of procedures in a few
comparison with the indicators of a good practice days and at a low cost. Comparison of the economy’s
economy or those of comparator economies in the indicators today with those in the previous year may
region, may reveal bottlenecks reflected in large numbers show where substantial bottlenecks persist—and where
of procedures, long delays or high costs. Or they may they are diminishing.
reveal unexpected strengths in an area of business
Table 1.1 Summary of Doing Business indicators for Vietnam
Best performer globally
Philippines DB2015
Indonesia DB2015
Malaysia DB2015
Thailand DB2015
Vietnam DB2015
Vietnam DB2014
Lao PDR DB2015
Indicator
China DB2015
DB2015
Starting a Business
125 120 128 155 154 13 161 75 New Zealand (1)
(rank)
Starting a Business (DTF
77.68 77.39 77.43 68.84 68.95 94.90 67.23 87.98 New Zealand (99.96)
Score)
Procedures (number) 10.0 10.0 11.0 10.0 6.0 3.0 16.0 4.0 New Zealand (1.0)*
Time (days) 34.0 34.0 31.4 52.5 92.0 5.5 34.0 27.5 New Zealand (0.5)
Cost (% of income per
5.3 7.7 0.9 21.1 5.7 7.2 16.6 6.6 Slovenia (0.0)
capita)
Paid-in min. capital (%
0.0 0.0 0.0 35.5 0.0 0.0 3.6 0.0 112 Economies (0.0)*
of income per capita)
Dealing with
Hong Kong SAR,
Construction Permits 22 23 179 153 107 28 124 6
China (1)
(rank)
Dealing with
Hong Kong SAR,
Construction Permits 83.66 83.58 43.75 59.03 68.50 82.49 66.08 88.77
China (95.53)
(DTF Score)Doing Business 2015 Vietnam 12
Best performer globally
Philippines DB2015
Indonesia DB2015
Malaysia DB2015
Thailand DB2015
Vietnam DB2015
Vietnam DB2014
Lao PDR DB2015
Indicator
China DB2015
DB2015
Hong Kong SAR,
Procedures (number) 10.0 10.0 22.0 17.0 22.0 13.0 24.0 7.0
China (5.0)
Time (days) 114.0 114.0 244.3 211.0 107.0 74.0 94.0 113.0 Singapore (26.0)
Cost (% of warehouse
0.7 0.8 7.6 4.3 0.6 1.3 1.2 0.1 Qatar (0.0)*
value)
Getting Electricity
135 135 124 78 128 27 16 12 Korea, Rep. (1)
(rank)
Getting Electricity (DTF
63.38 62.17 66.35 76.90 65.29 86.67 90.59 91.71 Korea, Rep. (99.83)
Score)
Procedures (number) 6.0 6.0 5.5 5.0 5.0 5.0 4.0 4.0 12 Economies (3.0)*
Time (days) 115.0 115.0 143.2 90.7 134.0 32.0 42.0 35.0 Korea, Rep. (18.0)*
Cost (% of income per
1,432.8 1,726.4 459.4 353.6 1,650.4 46.3 90.6 66.1 Japan (0.0)
capita)
Registering Property
33 34 37 117 77 75 108 28 Georgia (1)
(rank)
Registering Property
81.44 81.43 80.67 60.74 71.06 71.16 62.81 83.04 Georgia (99.88)
(DTF Score)
Procedures (number) 4.0 4.0 4.0 5.0 5.0 8.0 9.0 2.0 4 Economies (1.0)*
Time (days) 57.0 57.0 19.4 27.4 98.0 13.5 35.0 2.0 3 Economies (1.0)*
Cost (% of property
0.6 0.6 3.6 10.8 1.1 3.3 4.3 6.3 4 Economies (0.0)*
value)
Getting Credit (rank) 36 30 71 71 116 23 104 89 New Zealand (1)
Getting Credit (DTF
65.00 65.00 50.00 50.00 35.00 70.00 40.00 45.00 New Zealand (100)
Score)
Strength of legal rights
7 7 4 4 7 7 3 3 3 Economies (12)*
index (0-12)Doing Business 2015 Vietnam 13
Best performer globally
Philippines DB2015
Indonesia DB2015
Malaysia DB2015
Thailand DB2015
Vietnam DB2015
Vietnam DB2014
Lao PDR DB2015
Indicator
China DB2015
DB2015
Depth of credit
6 6 6 6 0 7 5 6 23 Economies (8)*
information index (0-8)
Credit registry coverage
41.8 39.1 33.2 46.4 3.5 56.2 0.0 0.0 Portugal (100.0)
(% of adults)
Credit bureau coverage
1.4 0.0 0.0 0.0 0.0 78.6 11.3 52.7 23 Economies (100.0)*
(% of adults)
Protecting Minority
117 115 132 43 178 5 154 25 New Zealand (1)
Investors (rank)
Protecting Minority
46.67 46.67 45.00 60.83 29.17 74.17 41.67 65.83 New Zealand (81.67)
Investors (DTF Score)
Extent of conflict of
interest regulation 3.7 3.7 5.0 6.0 3.3 8.7 4.0 7.7 Singapore (9.3)*
index (0-10)
Extent of shareholder
governance index (0- 5.7 5.7 4.0 6.2 2.5 6.2 4.3 5.5 France (7.8)*
10)
Strength of minority
investor protection 4.7 4.7 4.5 6.1 2.9 7.4 4.2 6.6 New Zealand (8.2)
index (0-10)
United Arab Emirates
Paying Taxes (rank) 173 171 120 160 129 32 127 62
(1)*
Paying Taxes (DTF United Arab Emirates
43.61 43.61 67.44 53.66 66.10 83.95 66.46 77.99
Score) (99.44)*
Payments (number per Hong Kong SAR,
32.0 32.0 7.0 65.0 35.0 13.0 36.0 22.0
year) China (3.0)*
Time (hours per year) 872.0 872.0 261.0 253.5 362.0 133.0 193.0 264.0 Luxembourg (55.0)
Trading Across Borders
75 74 98 62 156 11 65 36 Singapore (1)
(rank)
Trading Across Borders 75.56 75.37 71.68 77.46 52.96 89.94 77.23 83.57 Singapore (96.47)Doing Business 2015 Vietnam 14
Best performer globally
Philippines DB2015
Indonesia DB2015
Malaysia DB2015
Thailand DB2015
Vietnam DB2015
Vietnam DB2014
Lao PDR DB2015
Indicator
China DB2015
DB2015
(DTF Score)
Documents to export
5 5 8 4 10 4 6 5 Ireland (2)*
(number)
Time to export (days) 21.0 21.0 21.0 17.0 23.0 11.0 15.0 14.0 5 Economies (6.0)*
Cost to export (US$ per
610.0 610.0 823.0 571.8 1,950.0 525.0 755.0 595.0 Timor-Leste (410.0)
container)
Cost to export (deflated
610.0 639.0 823.0 571.8 1,950.0 525.0 755.0 595.0
US$ per container)
Documents to import
8 8 5 8 10 4 7 5 Ireland (2)*
(number)
Time to import (days) 21.0 21.0 24.0 26.0 26.0 8.0 15.0 13.0 Singapore (4.0)
Cost to import (US$ per
600.0 600.0 800.0 646.8 1,910.0 560.0 915.0 760.0 Singapore (440.0)
container)
Cost to import (deflated
600.0 628.6 800.0 646.8 1,910.0 560.0 915.0 760.0
US$ per container)
Enforcing Contracts
47 47 35 172 99 29 124 25 Singapore (1)
(rank)
Enforcing Contracts
65.89 65.89 68.21 37.28 57.49 69.39 52.02 70.05 Singapore (89.54)
(DTF Score)
Time (days) 400.0 400.0 452.8 471.0 443.0 425.0 842.0 440.0 Singapore (150.0)
Cost (% of claim) 29.0 29.0 16.2 115.7 31.6 37.3 31.0 15.0 Iceland (9.0)
Procedures (number) 36.0 36.0 37.0 40.0 42.0 29.0 37.0 36.0 Singapore (21.0)*
Resolving Insolvency
104 104 53 75 189 36 50 45 Finland (1)
(rank)
Resolving Insolvency
41.27 39.97 55.31 46.75 0.00 65.61 56.74 58.73 Finland (93.85)
(DTF Score)Doing Business 2015 Vietnam 15
Best performer globally
Philippines DB2015
Indonesia DB2015
Malaysia DB2015
Thailand DB2015
Vietnam DB2015
Vietnam DB2014
Lao PDR DB2015
Indicator
China DB2015
DB2015
no
Time (years) 5.0 5.0 1.7 1.9 1.0 2.7 2.7 Ireland (0.4)
practice
no
Cost (% of estate) 14.5 14.5 22.0 21.6 10.0 32.0 36.0 Norway (1.0)
practice
Outcome (0 as
no
piecemeal sale and 1 as 0 0 0 0 1 0 1
practice
going concern)
Recovery rate (cents on
18.6 16.2 36.0 31.7 0.0 81.3 21.2 42.3 Japan (92.9)
the dollar)
Strength of insolvency no
10.0 10.0 11.5 9.5 7.0 14.5 11.5 5 Economies (15.0)*
framework index (0-16) practice
Note: DB2014 rankings shown are not last year’s published rankings but comparable rankings for DB2014 that capture the effects of such
factors as data corrections and changes to the methodology. Trading across borders deflated and non-deflated values are identical in
DB2015 because it is defined as the base year for the deflator. The best performer on time for paying taxes is defined as the lowest time
recorded among all economies in the DB2015 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and
VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice”
mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a
competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the
relevant indicator.
* Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number
of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website
(http://www.doingbusiness.org).
Source: Doing Business database.Doing Business 2015 Vietnam 16
STARTING A BUSINESS
Formal registration of companies has many WHAT THE STARTING A BUSINESS
immediate benefits for the companies and for
business owners and employees. Legal entities can INDICATORS MEASURE
outlive their founders. Resources are pooled as
several shareholders join forces to start a company. Procedures to legally start and operate a
Formally registered companies have access to company (number)
services and institutions from courts to banks as well
Preregistration (for example, name
as to new markets. And their employees can benefit
verification or reservation, notarization)
from protections provided by the law. An additional
benefit comes with limited liability companies. These Registration in the economy’s largest
limit the financial liability of company owners to their business city1
investments, so personal assets of the owners are not
Postregistration (for example, social security
put at risk. Where governments make registration
registration, company seal)
easy, more entrepreneurs start businesses in the
formal sector, creating more good jobs and Time required to complete each procedure
generating more revenue for the government. (calendar days)
What do the indicators cover? Does not include time spent gathering
information
Doing Business measures the ease of starting a
business in an economy by recording all procedures Each procedure starts on a separate day (2
officially required or commonly done in practice by procedures cannot start on the same day).
an entrepreneur to start up and formally operate an Procedures that can be fully completed
industrial or commercial business—as well as the online are recorded as ½ day.
time and cost required to complete these procedures. Procedure completed once final document is
It also records the paid-in minimum capital that received
companies must deposit before registration (or
within 3 months). The ranking of economies on the No prior contact with officials
ease of starting a business is determined by sorting Cost required to complete each procedure
their distance to frontier scores for starting a (% of income per capita)
business. These scores are the simple average of the
distance to frontier scores for each of the component Official costs only, no bribes
indicators. No professional fees unless services required
To make the data comparable across economies, by law
Doing Business uses several assumptions about the Paid-in minimum capital (% of income
business and the procedures. It assumes that all per capita)
information is readily available to the entrepreneur
and that there has been no prior contact with Deposited in a bank or with a notary before
officials. It also assumes that the entrepreneur will registration (or within 3 months)
pay no bribes. And it assumes that the business:
Is a limited liability company, located in the Has a start-up capital of 10 times income per
largest business city and is 100% domestically capita.
owned1.
Has a turnover of at least 100 times income per
Has between 10 and 50 employees. capita.
Conducts general commercial or industrial Does not qualify for any special benefits.
activities.
Does not own real estate.
1
For the 11 economies with a population of more than 100 million, data for a second city have been added.Doing Business 2015 Vietnam 17 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in Vietnam? largest business city of an economy, except for 11 According to data collected by Doing Business, starting a economies for which the data are a population-weighted business there requires 10.0 procedures, takes 34.0 days, average of the 2 largest business cities. See the chapter costs 5.3% of income per capita and requires paid-in on distance to frontier and ease of doing business minimum capital of 0.0% of income per capita (figure ranking at the end of this profile for more details. 2.1). Most indicator sets refer to a case scenario in the Figure 2.1 What it takes to start a business in Vietnam Paid-in minimum capital (% of income per capita): 0.0 Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
Doing Business 2015 Vietnam 18 STARTING A BUSINESS Globally, Vietnam stands at 125 in the ranking of 189 average ranking provide other useful information for economies on the ease of starting a business (figure 2.2). assessing how easy it is for an entrepreneur in Vietnam The rankings for comparator economies and the regional to start a business. Figure 2.2 How Vietnam and comparator economies rank on the ease of starting a business Source: Doing Business database.
Doing Business 2015 Vietnam 19
STARTING A BUSINESS
Economies around the world have taken steps making it they often are part of a larger regulatory reform
easier to start a business—streamlining procedures by program. Among the benefits have been greater firm
setting up a one-stop shop, making procedures simpler satisfaction and savings and more registered businesses,
or faster by introducing technology and reducing or financial resources and job opportunities.
eliminating minimum capital requirements. Many have
What business registration reforms has Doing Business
undertaken business registration reforms in stages—and
recorded in Vietnam (table 2.1)?
Table 2.1 How has Vietnam made starting a business easier—or not?
By Doing Business report year from DB2010 to DB2015
DB year Reform
Vietnam eased company start-up by creating a one-stop shop
that combines the processes for obtaining a business license
DB2011
and tax license and by eliminating the need for a seal for
company licensing.
Vietnam made starting a business easier by allowing
DB2013
companies to use self-printed value added tax invoices.
Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.Doing Business 2015 Vietnam 20
STARTING A BUSINESS
What are the details?
Underlying the indicators shown in this chapter for
STANDARDIZED COMPANY
Vietnam is a set of specific procedures—the
bureaucratic and legal steps that an entrepreneur
must complete to incorporate and register a new Legal form: cong ty trach nhiem huu han -
firm. These are identified by Doing Business through Private Limited Liability Company
collaboration with relevant local professionals and
the study of laws, regulations and publicly available Paid in minimum capital requirement: VND 0
information on business entry in that economy. City: Ho Chi Minh City
Following is a detailed summary of those procedures,
along with the associated time and cost. These Start-up Capital: 10 times GNI per capita
procedures are those that apply to a company
matching the standard assumptions (the
“standardized company”) used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators measure).
Table 2.2 Summary of time, cost and procedures for starting a business in Vietnam
Time to
No. Procedure Cost to complete
complete
Check the proposed company name; obtain a business registration
certificate as well as a tax registration certificate from the local
business registration office under the Department of Planning and
Investment
The applicant has to submit documents in accordance with Government
Decree 43/2010/ND-CP (15 April 2010) on enterprise registration, as
amended by Government Decree 05/2013/ND-CP (9 January 2013)
("Decree 43"). Pursuant to Article 26 of Decree 43, when the application
file for enterprise registration fully satisfies the conditions for issuance
of an enterprise registration certificate, information about that file shall
be transferred to the database of the Department General of Taxation VND 200,000
1 (Ministry of Finance). The Department General of Taxation is 14 days
(official fees)
responsible, within two working days from the date of receipt of
information from the national database of information, to create an
enterprise code number and to transfer it to that national database in
order for the provincial business registration office to issue it to the
enterprise. Each enterprise is issued one unique enterprise code
number. This code number is both the business registration code
number and the tax code number of that enterprise (Article 8 of Decree
43).
Agency: Department of Planning & InvestmentDoing Business 2015 Vietnam 21
Time to
No. Procedure Cost to complete
complete
Make a company seal
The company obtains a company seal from a seal maker. VND 165,000 - VND
2 8 days 370,000 for bronze
Agency: Sealmaker seal
Registration of the seal-sample at the Police Department
Most business transaction documents must be signed and stamped
before they are considered valid and legal. Pursuant to Circular No.
193/2010/TT-BTC of the Ministry of Finance dated December 2, 2010,
the fee to register the seal-sample is VND 50,000. The seal will be
3 registered by the police division. The representative has to lodge a copy 1 day VND 50,000
of the Business and Tax Registration Certificate and also present his or
her identity card.
Agency: Local Police Office
Open a bank account
Each bank requires a different minimum deposit to open an account.
For instance, whereas Vietcombank requires the fixed amount of VND 1
million for an account in VND and USD 300 for one in USD, Asian
Commercial Bank requires VND 1 million for a VND account and US 100
for a USD account. To open the account, the bank requires a bank- 1 day no charge
4
issued application form, the company seal, the company’s business
registration certificate, and the resolution of the management board on
the authorized signatures.
Agency: Bank
Publish the registration contents on the National Business
Registration Portal (NBRP)
According to the Decree No. 05/2013/NĐ-CP dated 09/01/2013, within
30 working days since the date of the establishment or the amendment
registration, enterprises shall post their registration contents on the
National Business Registration Portal (NBRP) as stipulated in the Article
28 of the Enterprise Law and pay the fee for publishing the business
registration information. 5 days VND 300,000
5
The fee for publishing the registration contents on the National
Business Registration Portal is VND 300,000 according to the Circular
No. 106/2013/TT-BTC of the Ministry of Finance dated August 9, 2013.
This Circular takes effect on October 01, 2013.
Agency: National Business Registration Portal (NBRP)Doing Business 2015 Vietnam 22
Time to
No. Procedure Cost to complete
complete
* Pay business license tax
The business license tax is paid to the tax authority where the enterprise
registers its tax reports or through designated commercial banks. Such
business license tax is paid annually and in the first month of a year
(with regards to enterprises are operating) and in the month when the 1 day,
VND 1,000,000
newly established enterprise obtains the tax registration certificate and simultaneous with (business license
6
tax code. The new company established during the first 6 months of the previous
tax)
year shall pay the entire annual business license tax, if established procedure
during the last 6 months, then pay 50% of annual license tax.
Agency: Tax office or commercial bank
* Buy pre-printed VAT invoices from the Municipal Taxation
Department or obtain and print self-printed VAT invoices
All companies shall use their shelf-printed VAT invoices from 1 January
2011 according to Decree No.153/2010/ND-CP and its guidelines (if
any), therefore, the Company must contact with the publisher to order
the print of its VAT Invoice Books for its demand and must implement
the legal procedure on registration and circulation of shelf-printed VAT
Invoices with the Municipal Taxation Department.
To register for self-printing of invoices, company founders must submit
an application on a standard form, along with (a) a sample self-printed
invoice, including all statutory details; (b) a map showing the location of
the company’s office or copy of the lease contract if the premises are
leased, certified by the ward commune people’s committee; (c) the
general director’s identification card; (d) a copy of the business
registration certificate; and (e) and the tax registration certificate and
copy.
According to Ministry of Finance Circular 64/2013/TT-BTC (May 15, 10 days,
2013) which amending Ministry of Finance Circular 153/2010/TT-BTC simultaneous with about VND 200,000
7
(28 September 2010), a company can self-print the VAT invoices if it has previous per book
incurred a total tax penalty amount of less than 50 million Vietnamese procedure
dong within 365 consecutive days before the first self-print.
The company shall prepare an announcement of self- issuance of
invoice and send it to the relevant tax authority of where the company
has its head office, within 10 business days from the date of signing the
announcement and 5 business days at the latest before the date on
which the invoice is in use, and the announcement must immediately be
listed at all establishments using such invoice to sell goods and services
during the entire period of such use (Article 11 of Decree 51 and Article
9.4 of Circular 153/2010/TT-BTC guiding the implementation of Decree
51).
In total, it may take about 10 days to get the printed VAT invoices and
register them with the Municipal Taxation Department.
Agency: Municipal Taxation DepartmentDoing Business 2015 Vietnam 23
Time to
No. Procedure Cost to complete
complete
* Register with the local labor office to declare use of labor
(Municipal Department for Labor, Invalids and Social Affairs).
Within 30 days of starting operations, the employer must register all
employees and their qualifications with the Labor Office (in conformity 1 day,
with set forms). The relationship between the employer and its simultaneous with
8 no charge
employees are regulated by the Labor Code and set forth in labor previous
contracts. procedure
Agency: Municipal Department for Labor
* Register employees with the Social Insurance Fund for the
payment of health insurance and social insurance.
The company must register with the Social Insurance Fund all
employees who have contracts for 3 months or longer. The employer
must complete a form provided by the Hanoi Social Insurance and
include the following information: the employee name and date of
birth, salary (as stated in the labor contract), the social insurance book
serial number (for employees already issued with those books), a
certified copy of the company's business registration certificate, and a
copy of each labor contract. 1 day,
simultaneous with
9 The Social Insurance Office must, within 30 days from the date of no charge
previous
receipt of the application file, issue an insurance registration book for
procedure
each new employee that was not issued such book by the previous
employer. The employer is responsible for paying social and health
insurance contributions for each employee. Since the health insurance
merged with the social insurance funds, payment is made (monthly or
quarterly) directly to the Social Insurance Fund. Health insurance
certificates are issued during the first month of the year.
Agency: Social Insurance Fund
* Register for trade union with Vietnam General Confederation of
Labor
The employer must register with the local trade union or industry trade
union (as defined below) no later than 6 months from the date it starts
operations.
7 days,
The term “trade union” includes (a) provincial or municipal-level simultaneous with
10 no charge
confederations of labor under the Vietnam General Confederation of previous
Labor; (b) central-level industry trade unions; (c) trade unions of procedure
corporations under the Vietnam General Confederation of Labor; (d)
confederations of labor of districts, towns, and provincial cities; (e)
local-level industry trade unions, (f) trade unions of processing zones,
industrial zones, and high-tech zones; (f) trade unions of corporations;
and (g) superior trade unions of other establishments. These trade
unions are responsible for establishing a trade union for the company,Doing Business 2015 Vietnam 24
Time to
No. Procedure Cost to complete
complete
according to the provisions of the Labor Code, the Law on Trade
Unions, and the Charter of the Trade Union of Vietnam, to represent
and protect the lawful and legitimate rights and interests of the
employees and the labor collective.
If a company trade union is not established within 6 months, the
superior trade union shall appoint a provisional executive committee of
the trade union to represent and protect the lawful and legitimate
rights and interests of the employees and the labor collective. This
mandate is provided for by the Labor Code, the Law on Trade Unions,
and the Charter of the Trade Union of Vietnam. The term of the
provisional executive committee of the trade union and the extension
of that term is subject to the regulations of the Vietnam General
Confederation of Labor.
Agency: Confederation of Labour
* Takes place simultaneously with another procedure.
Note: Online procedures account for 0.5 days in the total time calculation.
Source: Doing Business database.Doing Business 2015 Vietnam 25
DEALING WITH CONSTRUCTION PERMITS
Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION
public. But it needs to be efficient, to avoid excessive
PERMITS INDICATORS MEASURE
constraints on a sector that plays an important part in
every economy. Where complying with building
regulations is excessively costly in time and money, Procedures to legally build a warehouse
many builders opt out. They may pay bribes to pass (number)
inspections or simply build illegally, leading to Submitting all relevant documents and
hazardous construction that puts public safety at risk. obtaining all necessary clearances, licenses,
Where compliance is simple, straightforward and permits and certificates
inexpensive, everyone is better off. Submitting all required notifications and
What do the indicators cover? receiving all necessary inspections
Doing Business records the procedures, time and cost Obtaining utility connections for water and
for a business in the construction industry to obtain sewerage
all the necessary approvals to build a warehouse in Registering the warehouse after its
the economy’s largest business city, connect it to completion (if required for use as collateral or
basic utilities and register the warehouse so that it for transfer of the warehouse)
can be used as collateral or transferred to another Time required to complete each procedure
entity. (calendar days)
The ranking of economies on the ease of dealing with Does not include time spent gathering
construction permits is determined by sorting their information
distance to frontier scores for dealing with
Each procedure starts on a separate day.
construction permits. These scores are the simple
Procedures that can be fully completed online
average of the distance to frontier scores for each of
are recorded as ½ day.
the component indicators.
Procedure considered completed once final
To make the data comparable across economies, document is received
Doing Business uses several assumptions about the
business and the warehouse, including the utility No prior contact with officials
connections. Cost required to complete each procedure (%
The business: of warehouse value)
Official costs only, no bribes
Is a limited liability company operating in
the construction business and located in Will have complete architectural and
the largest business city. For the 11 technical plans prepared by a licensed
economies with a population of more than architect or engineer.
100 million, data for a second city have
Will be connected to water and sewerage
been added. Is domestically owned and
(sewage system, septic tank or their
operated.
equivalent). The connection to each utility
Has 60 builders and other employees. network will be 150 meters (492 feet) long.
The warehouse: Will be used for general storage, such as of
books or stationery (not for goods requiring
Is valued at 50 times income per capita.
special conditions).
Is a new construction (there was no
Will take 30 weeks to construct (excluding all
previous construction on the land).
delays due to administrative and regulatory
requirements).Doing Business 2015 Vietnam 26 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to build an economy, except for 11 economies for which the data a warehouse in Vietnam? According to data collected by are a population-weighted average of the 2 largest Doing Business, dealing with construction permits there business cities. See the chapter on distance to frontier requires 10.0 procedures, takes 114.0 days and costs and ease of doing business ranking at the end of this 0.7% of the warehouse value (figure 3.1). Most indicator profile for more details. sets refer to a case scenario in the largest business city of Figure 3.1 What it takes to comply with formalities to build a warehouse in Vietnam Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database.
Doing Business 2015 Vietnam 27 DEALING WITH CONSTRUCTION PERMITS Globally, Vietnam stands at 22 in the ranking of 189 economies and the regional average ranking provide economies on the ease of dealing with construction other useful information for assessing how easy it is for permits (figure 3.2). The rankings for comparator an entrepreneur in Vietnam to legally build a warehouse. Figure 3.2 How Vietnam and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database.
Doing Business 2015 Vietnam 28
DEALING WITH CONSTRUCTION PERMITS
Smart regulation ensures that standards are met while an effort to ensure building safety while keeping
making compliance easy and accessible to all. Coherent compliance costs reasonable, governments around the
and transparent rules, efficient processes and adequate world have worked on consolidating permitting
allocation of resources are especially important in sectors requirements. What construction permitting reforms has
where safety is at stake. Construction is one of them. In Doing Business recorded in Vietnam (table 3.1)?
Table 3.1 How has Vietnam made dealing with construction permits easier—or not?
By Doing Business report year from DB2010 to DB2015
DB year Reform
Vietnam made dealing with construction permits easier by
reducing the cost to register newly completed buildings by
DB2011 50% and transferring the authority to register buildings from
local authorities to the Department of National Resources and
Environment.
Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports
for these years, available at http://www.doingbusiness.org.
Source: Doing Business database.Doing Business 2015 Vietnam 29
DEALING WITH CONSTRUCTION PERMITS
What are the details?
The indicators reported here for Vietnam are based
BUILDING A WAREHOUSE
on a set of specific procedures—the steps that a
company must complete to legally build a
warehouse—identified by Doing Business through Estimated cost of
information collected from experts in construction VND 1,898,404,942
construction :
licensing, including architects, civil engineers,
construction lawyers, construction firms, utility
City : Ho Chi Minh City
service providers and public officials who deal with
building regulations. These procedures are those The procedures, along with the associated time and cost,
that apply to a company and structure matching the are summarized below.
standard assumptions used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators cover).
Table 3.2 Summary of time, cost and procedures for dealing with construction permits in Vietnam
Time to
No. Procedure Cost to complete
complete
Obtain the certification of the designs from the Police Department
for Fire Fighting and Fire Prevention of Ho Chi Minh City
According to Decree No. 35/2003/ND-CP dated 04/04/2004 of the
Government and Decree No. 46/2012/ND-CP dated 05/22/2012 of the
Government on amending and supplementing some provisions of the
government's Decree No. 35/2003/ND-CP dated 04/04/2003
implementing certain articles of the Law on Fire Prevention and Fire
Fighting and the Government's Decree No. 130/2006/ND-CP dated 30 days no charge
1
08/11/2006 on the compulsory fire and explosion insurance regime, all
new commercial buildings must obtain a certification of their designs
by the Police Department for Fire Fighting and Fire Prevention. The
certification is required for the construction permit application.
Agency: Police Department for Fire Fighting and Fire Prevention of Ho
Chi Minh City
Request and obtain construction permit from the (District)
Department of Construction of Ho Chi Minh City
The decision to grant a construction permit is made by the Chairman of
the People’s Committee, at the provincial level, and the Director of the
Department of Construction. The following documents are required:
a) Application for issuance of building permit (standard form)
b) Notarized or certified copy of one of the papers on the land use
2 right in accordance with the Law on Land. Land is national property in 30 days VND 100,000
Vietnam. Only a business can be the holder of the land-use right. It is
assumed that the BuildCo already holds the land-use certificate.
c) Two sets of design drawings, each of which includes:
- Drawing of the works position on the land lot with a scale of 1/100 -
1/500, together with the outline of works position;
- Drawing of surface, main elevation and section of the works with a
scale of 1/50 - 1/200;
- Drawing of foundation with a scale of 1/100 - 1/200 and foundationDoing Business 2015 Vietnam 30
Time to
No. Procedure Cost to complete
complete
section of 1/50, together with the connection diagram to the system of
transportation infrastructure, water supply, wastewater and rainwater
drainage, wastewater treatment, electricity supply, communications and
other technical infrastructure related to the project with a scale of 1/50
- 1/200.
If deemed necessary, the Department of Construction consults any of
the following related offices:
• Office of the Chief Architect
• Office for Land Planning
• Office for Land Management
• Department of Culture
• Department of Health
• Department of Natural Resources and Environment
• Fire Protection Office
• Department of Public Traffic and Transportation
• Local National Defense Office
Each consultation separately takes 10 days. However, under Article 9.6
of Decree 64/2012/ND-CP of the Government dated 4 September 2009,
The Department of Construction has 20 working days from the date of
receiving the completed file to issue or deny the construction permit.
In practice, this time limit is seldom met. The application form can be
obtained at the local department of construction. It is currently
required for a construction company to go to the office and obtain the
form. After obtaining a construction permit, within a time limit of 7
working days prior to the date of commencement of construction of
the warehouse, BuildCo is required to provide written notification of the
commencement date to the People's Committee at the district level
where the warehouse is located (according to Article 68.2 (a) of the Law
on Construction No. 16/2003/QH11, dated November 16, 2003).
Agency: Department of Construction of Ho Chi Minh City (Municipality)
Notify the Department of Construction about the commencement
of construction and receive inspection
This inspection and the following ones are not stipulated by specific
regulations. However, because the authority is mandated to supervise 1 day no charge
3
the inspections, these do take place in practice.
Agency: Department of Construction of Ho Chi Minh City (Municipality)
Request and receive inspection from the municipality after
completion of foundation works
The company must notify the Department of Construction at the
different stages of construction and suspend construction until the 3 days no charge
4
department visits the site 3 days after the notification.
Agency: Department of Construction of Ho Chi Minh City (Municipality)Doing Business 2015 Vietnam 31
Time to
No. Procedure Cost to complete
complete
Request and receive inspection from the municipality upon
completion of building surroundings
The company must notify the Department of Construction at the
different stages of construction and suspend construction until the 3 days no charge
5
department visits the site 3 days after the notification.
Agency: Department of Construction of Ho Chi Minh City (Municipality)
Request water and sewage connection
Different areas in Ho Chi Minh City are covered by different public
water companies. Therefore, BuildCo is required to contact the relevant
water company and submit the following documents:
• The application form (available at the water company)
• A notarized copy of the business registration certificate of BuildCo
• A certified copy of the land use right certificate or the construction
permit
6 1 day VND 4,000,000
The costs of obtaining water/sewage connection depend on the usage
capacity of the warehouse, as well as on its exact location in relation to
the main water lines. The standard water meters cost approximately
VND 1.5 million.
Agency: Ho Chi Minh City Water Supply Company
Receive inspection by water company
7 1 day no charge
Agency: Ho Chi Minh City Water Supply Company
Connect to water and sewage services
8 14 days no charge
Agency: Ho Chi Minh City Water Supply Company
Notify and receive inspection from the municipality after
completion of building
At the end of construction, the Department of Construction visits the
site to confirm that the building was built according to the master
9 plans, rules, and regulations. BuildCo must provide written notification 1 day no charge
of the completion of construction.
Agency: Department of Construction of Ho Chi Minh City (Municipality)You can also read
