Household businesses to be regulated: NA deputies

Household businesses to be regulated: NA deputies

Minister of Planning and Investment Nguyen Chi Dung presented the draft law to deputies during the 14th NA’s ongoing eighth meeting in Ha Noi, raising the idea of placing household businesses under the law.

Under Decree 78/2015 issued by the Government, a household business employs less than 10 workers, and cannot expand beyond its registered district.

Some deputies supported the idea, saying it would highlight the legal status and power of household businesses in the Vietnamese economy. In addition, household businesses would have better access to policies and resources provided by the Government.

Deputy Hoang Van Cuong said the development and governance of household businesses would be more sustainable as any household targeted by the amended law would be required to establish labour relations between managers and employees within its organisation.

“Household businesses will have to register with authorities and their operations will be overseen, thus boosting growth. They should be treated like small- and medium-sized enterprises,” he said.

But other deputies did not back the idea, saying household businesses were not really “businesses” by definition, structure or operation.

Deputy Nguyen Quoc Binh said the Law on Enterprises was about the establishment, operation and dissolution of a company, so household businesses should not be included.

He said the law should be renamed the Law on Enterprises and Household Businesses to reflect the role and responsibility of household businesses in Viet Nam.

There should be a separate decree on household businesses and they should not be subject to the amended law, he added.

If the decree then proved effective, it could be rewritten into a separate law on household businesses, he suggested.

In other economies, household businesses were often managed by taxes and invoices but the latter were missing in Viet Nam, leading to the fact that some household businesses that were larger than some small companies were not being monitored.

According to Phung Van Hung, a member of the NA’s Economic Standing Committee, there were about 4.59 million households doing business in the sectors unrelated to agriculture, forestry and aquaculture with registered addresses. Of the total, 1.33 million households had business licences.

In 2018, the individual economy, including household businesses, contributed 29.24 per cent to Viet Nam’s total GDP. The General Statistics Office reported in 2017 that registered household businesses in the non-agriculture, aquaculture and forestry sectors employed 7.6 million people and earned about VND2.37 quadrillion (US$102.2 billion). Their earnings were equal to 13.3 per cent of registered companies’ earnings, but their tax payments were only 1.35 per cent of the total.

If the Government wanted to monitor household businesses under the amended law, there should be a comprehensive, large-scale assessment because the new law would have big impacts on tens of millions of people, Hung said.

The assessment should be submitted to the NA’s ninth meeting next year, he said, adding the law should be applied to 30 per cent of household businesses that had been licensed by Government agencies.

With the new law, household businesses would have access to bank loans to expand their businesses, he added.

Business registration

According to Minister of Planning and Investment Nguyen Chi Dung, the amended Law on Enterprises would create favourable conditions for individuals and organisations to start businesses.

It would cut administrative steps, costs and time for newly-established firms and help raise Viet Nam’s doing business ranking by 25 places in the World Bank’s Doing Business Report.

Viet Nam ranked 70th in the World Bank’s Doing Business Report 2019, down one place from the previous assessment.

In addition, the rights, obligations and benefits of shareholders, investors and members of the company would be protected and the quality of corporate governance would be improved, the minister said. 

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