Comments on the Draft of amended Decree No. 59/2006/NĐ-CP dated June 12, 2006 detailing the Commercial Law on goods and services that are banned from business, subject to restrictions and conditions. Date Update 09-08-2010
Comments by Lawyer Tran Thanh Tung – Senior Associate of Phuoc & Partners. For further information about Lawyer Tung, please click here.
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These shorts comments are expected to contribute to complete the draft (“Draft”) of amended, supplemented decree No.59/2006/NĐ-CP dated June 12, 2006 detailing implementation of Commercial Law on goods and services that are banned from business, subject to restrictions and conditions and the Decree No.43/2009/NĐ-CP dated May 07, 2009 amending and supplementing the Decree No. 59/2006/NĐ-CP (Hereinafter referred to “Decree 59”).
1. Obstacles in drafting the Draft
This Decree will be a hot, sensitive and controversy due to its adjusted contents: goods and services that are banned from business, subject to restrictions and conditions – which have been considered “sensitive”. This Decree has to settle two contradictory matters: one is demand of state management regarding goods and services that are banned from business, subject to restrictions and conditions, the other is the right of free business of enterprises. This Decree, like an arbitrator, has to find out a harmonious limit for the two matters: inclining toward state management, the Decree will restrict the right of free business of enterprises, however, otherwise we will probably have to face negative consequences arising from trading process of these goods and services.
Despite of being considered as detail regulations on implementations of the Commercial Law, the Draft, by its nature, is a decree synthesizing categories of goods, service banned from business, subject to restrictions and conditions from other specific laws. Thus, this decree provides guidelines on implementation of not only the Commercial Law but also other laws and ordinances (Law on drug prevention and fight, Law on publication, Law on cultural heritage, Veterinary Ordinance, Ordinance on domestic animal, etc.), thus, this is also a difficulty in the process of drafting.
2. Criterions to classify goods into categories of banning from business, subject to restrictions and conditions
In the face of such a controversy Draft, in a practical approach, we have to find out objective foundations/criterions to specify and deal with adjusted contents in the Decree: it means the Decree needs to outline criterions for determination of what goods and services belong to “banned from business, subject to restrictions and conditions”. This is fundamental matter of this Decree.
However, from the Decree 59 to the Decree 43 and this Draft, we cannot find out any criterions for such classification. For a sufficient and stable decree, we think that it is required a more specific analysis on classification criterions of goods and services.
Despite of a large scope of goods and services need adjusting in this Decree, we, however, can categorize goods and services based on its impact on:
· national security, national defense, weapons, explosive materials, noxious chemical . .
· social order, security: sky lantern, gambling, etc.
· heath of people, cultivated crops, domestic animals: drug, medicines, cosmetic, medical products, cigarettes.
· culture and personality: harmful toys for personality education, relics, antiques, etc.
·environment: noxious minerals, polluted chemicals, ship repair, ship disassembling, etc.
· finance: gold trading through bank account.
Thus, we will base totally on impact scope [negative] of the supplying of such goods and services to society to categorize them as banned from business, subject to restrictions and condition. This is a personal suggestion for the consideration of the draft preparing board.
Moreover, when the criterions have been determined, we will have a more concrete and appropriate decree. If we only use the method of enumeration regarding goods and services banned to business, subject to restrictions and condition, this Decree is not stable and will be amended regularly upon the arising of other “sensitive” goods and services.
It appears that the deficiency in common of the criterions of goods and services that are banned to business, subject to restrictions and condition makes us confused when determining the scope of the three above mentioned groups of goods and services. Recalling the Article 6 and Article 7 of the Decree 59, we recognized that it is difficult to distinguish conditions applied to trading goods and services that is banned, subject to restrictions and conditions. Besides, the deficiency of common criterions makes some goods and services whose scopes are almost similar put into different groups. For instance, “service of gambling and running a gambling-den” is a banned services, however, a similar service with the same nature named “business of casino and electric games with awards” is categorized as subject to condition.
We should be flexible when making classification of goods and services due to the fact that social awareness will change over time and goods and services that are considered “sensitive” at present would be the normal ones in the future.
3. Mechanism for permission of trading goods and services banned from business.
Pursuant to the Article 5.2 of the Decree 59, supply of goods and services banned from business in specific circumstance shall be approved by the Prime Minister. Thus, it is advisable that this Decree only regulates methods and procedures to get approval from the Prime Minister in specific circumstances for knowledge of enterprises and consideration of their own condition if they want to get the license.
4. Then how is “subject to condition”?
Category of goods and services subject to condition is fairly long and the concept of “subject to condition” is large and up to the outlook of different legal fields.
The Article 7 of the Decree 59 regulates the conditions applied to trading of goods and services subject to condition as the following :
a) Goods and services in business have to meet regulations of laws;
b) Business subjects shall be entrepreneurs as regulated by the Commercial Law;
c) Enterprises shall guarantee criterions of technique, equipment, business processes and other criterions as regulated by laws; location of enterprises shall be in conformity with the planning of development network of goods and service subject to condition ;
d) Managers, technical officers and staff who directly involve in goods business shall guarantee requirements of professional competence, speciality, experience and health pursuant to regulations of laws;
đ) Business entrepreneurs are obliged to have the business registration Certificates issued by competent authority.
Determining criterion of “subject to condition” as above is not clear and enterprise sometimes is passive in satisfying the above conditions such as the condition of “in conformity with the planning of development network of goods and service subject to condition”, because planning is the government’s job.
Perhaps, the viewpoints of goods and services that are subject to condition should be more favorable to enterprises, it means the less conditions, the more convenient to enterprises. In essence, these are fields of business, and business may be unprofitable, so we should allow the market to regulate itself rather than impose prohibition conditions.
Above are some individual comments for the Draft with expectation of contributing something to the preparing board in the course of drafting and completing the Draft./.
The comment is published in the Forum Website of Vietnamese Enterprises: www.vibonline.com.vn/vi-VN/Forum/TopicDetail.aspx