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Chaos looms as small businesses are forced to vacate residential towers
The Ministry of Construction ended a vigorous debate when it ruled that business offices cannot be set up in residential apartment buildings. Is the question settled? Experts point out that a lot of problems will arise.
Businesses will have to spend more money on their offices
According to Dau tu, the highest percentage of apartments used as business premises in the Hanoi area are found in Trung Hoa-Nhan Chinh, My Dinh and Linh Dam neighborhoods, in some areas reaching 50 percent of the units. The investment newspaper cites a number of examples to prove its point.
The Hanoi Planning and Investment Department counts about 82,000 businesses in Hanoi, including 1200 foreign invested enterprises, nearly 700 state-owned firms and 80,000 small and medium enterprises. If only one-fourth of these do business from rented apartments, this means that 20,000 enterprises in the capital alone will suffer from the the Ministry of Construction’s Instruction #2544 of 19 November 2009.
A lot of businesses are preparing to move from the apartments which have been their headquarters. They are moving heaven and earth to find suitable offices. Of course, they will have to spend a big sum of money for ‘actual offices’.
Nguyen Thanh Hung, Director of Hung Ha Trade and Service Company said that his company’s office rent costs will increase by two or three times. It can lease a 75 to 100 square meter apartment in a residential building for $1000 to $1500 per month, while it will have to pay $1000 to $2000 more for the same space in an office building.
Then there’s the cost of moving, from ten to thirty million dong. Other expenses including the equipment installation and ‘virtual’ expenses will also be costly. Altogether, businesses forced to rent a real office face several hundred million dong more in costs every year.
However, money is not the only obstacle in moving office. These small companies will have to apply for a new business certificate, which will take time as well as money. Lawyer Nguyen Quan Thanh of the Hoa Binh Bar Association says that when moving head offices to other places, enterprises must show a lots of original documents and submit copies to the business registration office.
Thanh said that the procedures are not really complicated, but they always take time. In some cases, the changes in the head offices may influence the business results of the enterprises and affect relationships between the enterprises and loyal clients.
More work for management agencies
Of course, when thousands of businesses move their head offices at the same time, there will be a lot of work for management agencies too.
A senior officer of the Hanoi Planning and Investment Department (Who requested anonymity) said that relevant agencies will have to sit together to discuss the detailed process for granting business certificates. He said that the government offices will be overloaded if thousands of businesses move at the same time, and that it is thus necessary to stipulate the roadmap for relocation.
Taxation agencies seem not to suffer headaches as acute as the agencies that grant business certificates, because enterprises will still pay tax via the electronic system. However, enterprises will have to follow the procedures relating to issuing bills and make tax finalization before relocating their principal place of business.
This will be a burden on businesses, because if they cannot complete this work, they will not be able to issue bills and make transactions with partners.
As such, there will be a lot of things to do when thousands of businesses will have to relocate their offices and it is clear that relevant agencies ought to sit together to discuss ways to settle the problems in the quickest and least costly way.
VIetNamNet, Dau tu
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