A female entrepreneur recently reached out, expressing her growing frustration with the increasing difficulties of doing business in Vietnam. She cited declining orders, burdensome administrative procedures, tax barriers, and stringent new regulatory requirements as significant challenges.

“Running a business has become so difficult that we no longer find joy in it,” she lamented.

Fearing negative repercussions, she declined an interview but hoped that improvements in Vietnam’s business environment - aligned with government leaders’ commitments - would provide better conditions and new motivation for entrepreneurs.

Her concerns resonate with many businesses across Vietnam, especially following recent discussions between the Prime Minister and the country’s business community.

The burden of excessive regulations

Despite efforts to cut business regulations, Vietnam still enforces nearly 16,000 business conditions, standards, and requirements. While many of these are necessary for public safety and regulatory oversight, an overwhelming number of them act as barriers to business operations.

In several industries, such as fuel distribution, businesses must obtain licenses that typically expire every five years. According to the Vietnam Chamber of Commerce and Industry (VCCI), securing a fuel business license requires significant investment in infrastructure, including ports, storage facilities, transportation fleets, and retail outlets.

However, these assets often have a depreciation period exceeding 20 years. When license renewal hurdles arise, businesses that have invested in long-term, high-value infrastructure face major financial risks.

The fuel industry is not alone in this struggle. Many other sectors - including passenger transport terminals, gas distribution, fertilizer and pesticide production, veterinary medicine, groundwater drilling, meteorological forecasting, environmental monitoring, telecommunications services, online gaming, and social media platforms - face restrictive licensing periods.

In many cases, these expiration-based regulations are unnecessary. If authorities are concerned about businesses failing to meet operational requirements, regular inspections and compliance checks can address these issues. Businesses that violate regulations can be penalized or have their licenses revoked as needed.

A tangled web of business restrictions

Vietnam’s Investment Law officially lists 227 conditional business sectors. However, various specialized laws expand this list significantly, resulting in an even larger number of regulated industries.

These legal frameworks introduce thousands - or even tens of thousands - of additional requirements that act as obstacles to business operations.

Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, previously warned that excessive and unclear regulations create a hostile environment for businesses. He noted that many business conditions lack transparency, reasonability, and clear management objectives.

These regulatory burdens have transformed Vietnam’s constitutional principle of “freedom to conduct business in any sector not prohibited by law” into a restrictive framework where businesses can only operate under predefined legal conditions.

This situation limits market entry, stifles competition, and disproportionately affects small and medium-sized enterprises. Overly complicated regulations protect established businesses, allowing interest groups to dominate the market and influence policies in their favor. This, in turn, fosters corruption and bribery, distorting the business environment.

When business conditions are vague, unreasonable, or incompatible with market mechanisms, compliance becomes excessively costly - if not outright impossible. This leads businesses to either partially comply, comply superficially, or unknowingly violate regulations. As a result, regulatory enforcement often proves ineffective in practice.

For businesses, this regulatory uncertainty translates into constant legal risks. Those operating in regulated sectors face potential administrative penalties or even criminal liability for non-compliance. Over the years, numerous business executives and officials have faced legal consequences due to unclear or overly complex business conditions.

This legal uncertainty discourages innovation and investment. When entrepreneurs are forced to navigate bureaucratic hurdles and seek constant government approval, they lose autonomy over their own business decisions, making it nearly impossible to optimize operations.

Calls for reform and a better business climate

General Secretary To Lam has repeatedly emphasized the need for continued institutional reform and business environment improvements. His objectives include:

Reducing administrative processing times by at least 30%

Cutting business compliance costs - particularly customs and regulatory fees - by at least 30%

Eliminating at least 30% of unnecessary business conditions

Positioning Vietnam’s investment environment among the top three in ASEAN within 2–3 years

The government has committed to refining legal frameworks and regulations, emphasizing that institutional reform is a top priority. Policies are being shaped to facilitate easier market entry and exit while improving access to resources for businesses.

Regulatory reforms are also expected to shift from a restrictive “prohibit what cannot be controlled” approach to a more progressive “results-based management” model. This will involve replacing excessive pre-approval processes with post-operation audits while strengthening compliance monitoring.

Under these changes, businesses and individuals will be granted greater operational freedom within the limits of the law. The ultimate goal is to create a more positive business climate that encourages investment, economic participation, and entrepreneurial activity.

Addressing regulatory risks to encourage investment

Many business licenses in Vietnam continue to be issued with unnecessary expiration dates, increasing risks for long-term investment projects. When license durations are significantly shorter than business plans or project lifecycles, companies face uncertainty and potential financial losses.

The process of renewing these licenses further adds to business risks. Companies must navigate bureaucratic hurdles, with no guarantee of approval, leading to potential disruptions in operations and wasted capital investments.

Experts argue that these risks and regulatory barriers can be removed without compromising state oversight. Simplifying business regulations would provide a much-needed boost to investor confidence and entrepreneurial enthusiasm, fostering sustainable economic growth.

Tu Giang