Administrative reforms

The Hanoitimes – An expert suggested local authorities take the pro-active approach to review and streamline the approval process for foreign-invested projects in order to attract the next FDI wave.

A stronger push for the administrative reform, among other solutions, would help Vietnam achieve a 5% GDP growth rate for this year, significantly higher than the 2.7% estimation of the International Monetary Fund (IMF) for Vietnam, according to Mai Tien Dung, minister-chairman of the Government Office.

Overview of the conference. Photo: VGP.

“The government is moving towards digital transformation with paperless office,” Dung informed at a conference discussing measures to help the business community recover from the Covid-19 pandemic on May 26.

Dung noted the national public service portal, after being launched five months ago, has so far integrated 408 public online services, of which 170 are for citizens and 238 for enterprises.

According to Dung, the portal has received 39 million visitors, 150,000 registered accounts and nearly 8.5 million documents have been processed.

Minister of the Governmetn Office Mai Tien Dung expected administrative reform to help Vietnam achieve the 5%-GDP growth target. Photo: VGP.

Since May 12, the portal has been integrated with six additional public services to better support people and the business community, Dung added.

“Public online services are estimated to save nearly 18 milion working days per year,  equivalent to VND6.49 trillion (US$298 million),” Dung stressed.

Economist Can Van Luc backed Dung’s view that a 5% GDP growth target is feasible, for which one of the main pillars is administrative reform.

According to Luc, such a reform would help free up the resources of people and businesses from complying with unnecessary procedures, while creating a healthy and efficient business environment

Moreover, a stronger administrative reform could reduce the state’s overseeing costs as well as compliance costs of people and businesses, Luc said, adding there are also opportunity costs, or expenses arising from the asking-approving mechanism that could be significantly reduced thanks to the efforts.

Fred Burke, a representative of the American Chamber of Commerce (AmCham), urged the government to continue building a robust online application system.

Burke expected the authorities to take the pro-active approach to review and streamline the approval process for foreign-invested projects in order to attract the next FDI wave into Vietnam.

He raised the issue that major shources of FDI such as the US, UK, EU, Japan, Singapore, Hong Kong, are still under lockdown, and obtaining legalized documents and wet signatures from these countries have become a challenge. As a result, this has delayed submissions in Vietnam for two months on average.

While this is not Vietnam’s problem, it has become a huge problem for foreign investors and foreign invested companies in Vietnam due to the fact that Vietnamese administrative authorities are not flexible to waive or simplify these administrative formalities, Burke added.

In addition to that, different authorities responsible for various aspects of the licensing procedures do not have a sufficient central database or a streamlined method for communication among them. The authorities still communicate with each other through post services, and physical mail exchange between provinces can take up to one to two weeks during the Covid-19 pandemic.

Last but not least, the provincial administrative authorities have adopted the approach of obtaining in-principle written approvals from various ministries prior to granting Investment License, which can prolong approval for a project to four to six months, or even longer, Burke asserted.

The government’s 2011-2020 master program on the state administration reform has come to an end.

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Vietnam saves US$640 million per year through administrative reform and e-government

Over 1,000 administrative procedures, 3,893 out of 6,191 business conditions and 6,776 out of 9,926 categories of goods subject to specialized inspection have been simplified or removed in four years.

The Hanoitimes – Higher quality in newly promulgated legal documents and laws in terms of practicality and feasibility are reasons for a significant less number of circulars issued at ministerial-level agencies in 2020.

The government’s effort in perfecting legal framework and policies to support businesses during the Covid-19 pandemic is a major factor helping Vietnam gain the positive GDP growth rate of 2.91 in 2020.

Overview of the meeting. Source: VCCI.

Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc gave his view at the launching ceremony of a report discussing Vietnam’s legal environment in 2020 on January 12.

In 2020, government agencies issued a total of 17 laws, 158 decrees, 39 decisions and 310 circulars.

“While the number of laws, decrees and decisions remain the same against previous years, there had been a sharp decline in the number of circulars,” stated Mr. Loc, referring to the corresponding figures in 2019, 2018 and 2017 at 467, 643, and 556.

“Higher quality of new legal documents and laws in terms of practicality and feasibility are reasons for a significant less number of circulars issued at ministerial-level agencies,” Mr. Loc continued.

According to Mr. Loc, this is also in line with the ongoing administrative reform initiated by the government, focusing on reducing the number of legislation pieces and regulations that businesses are required to follow and comply with.

“The works of drafting new regulations have been shifted to the National Assembly and the government, instead of ministries and ministerial-level agencies,” he added.

Last year, as the pandemic wreaked havoc on the local economy, government agencies issued 95 documents to help ensure efficient enforcement of laws and regulations that are aimed at addressing difficulties for local firms affected by the pandemic, including starting a business.

This resulted in Vietnam ranking 49 ^th globally in terms of startup ecosystem, stated Mr. Loc.

Regarding the government efforts in improving the business environment, Mr. Loc pointed to Prime Minister Nguyen Xuan Phuc’s decision in setting up a task force to review and remove obsolete regulations.

“The government has been more active in receiving feedback from the business community, with the response rate of 55% in 2020, up 10% year-on-year,” Mr. Loc continued, while seven business lines were no longer conditional.

Director of the VCCI’s Legal Department Dau Anh Tuan.

New mindset required for drafting laws

Despite strong efforts in improving the quality of legal framework, Director of the VCCI’s Legal Department Dau Anh Tuan expressed concern over the overlapping and ambiguity in existing laws, causing difficulties during the law enforcement process.

Mr. Tuan cited an example of enterprises having to present their own business strategy for the authorities, or there remains confusion in differentiating between pharmaceutical materials and foodstuff.

“The issues of frequent inspection by local authorities have also caused inconvenience for businesses,” he added.

Mr. Tuan stressed these shortcomings show the necessity to push for stronger reform to ensure a more transparent and fair business environment, so that Vietnam could soon become among the top friendly-business countries in the ASEAN.

“The government should change the old mindset and adopt international practice in issuing new laws for greater convenience in doing business for enterprises,” stated Mr. Tuan.

In order to boost the performance of administration tasks in such a megacity like HCMC, the municipal authorities conducted research on an urban administration model (UAM) 10 years ago.

This model aims at :

·         improving the performance of state management in HCMC in relation with specific characteristics of the city and the conditions of the market mechanism and the globalization process;

·         promoting innovation and activeness of residents in HCMC, increasing the autonomy and accountability of state organizations, mobilizing all possible resources for a sustainable growth and the establishment of a civilized, modern city with fairness in public services;

·         building a professional administrative management apparatus with the devoted staff to answer the needs of individuals and businesses.

However, at that time, legal documents only allowed HCMC to pilot the content related to re-organizing the People’s Committee and People’s Council from 2009-2016.

Thanks to Article 111 in the Constitution, the Law on Local Government Organization, and the Law on Amendment for the Law on Government Organization, the necessary legal corridor has been created to actually form UAM in HCMC, based to some extent on the content piloted so far.

In particular, chapter IX of the 2013 Constitution for the first time defines the term ‘local government’ and concretizes it with the Law on Local Government Organization in 2015, where the People’s Committee and People’s Council are organized consistent with the features of rural areas, cities, islands, and special administrative-economic units provided by the law.

On November 22, 2019, the Amendment for the Law on Government Organization allows administration units in the district and ward levels not to mandatorily have a People’s Council. This is the legal foundation for UAM in HCMC.

However, inadequacies in urban management arise when legal documents related to state management do not provide sufficient regulations for the 3 mechanisms of decentralization, delegation of powers to local governments, and delegation of powers to local State administrative agencies. This has led to overlapping of functions among different agencies and levels.

A local government should synchronously carry out reforms in the three parts of administrative institution, organization and operation, the civil staff. HCMC’s UAM is one that can satisfy the reform of all three.

At the moment, HCMC is implementing two resolutions by the National Assembly and the Standing Committee of the National Assembly, namely establishing an UAM in HCMC and Thu Duc City – a municipal city of HCMC. These are actually two important points in the mentioned research of HCMC 10 years ago. They have been updated in accordance with the current applicable law.

One notable detail is that the omission of a People’s Council in the district and ward levels is just the first step in forming an UAM. The core point is this model in HCMC is the clear mechanisms of decentralization, delegation of powers to local governments, and delegation of powers to local State administrative agencies.

These mechanisms are normally displayed in the four fields of planning and construction investment, finance – state budget, land and environment management, administrative apparatus organization. Thus, there is a need to research more on the expansion of decentralization and delegation of powers between the Government and the municipal authorities in order to increase autonomy and accountability of UAM.

The establishment of Thu Duc City is essential and consistent with the project to create the Eastern innovative urban area of HCMC. Yet to ensure its success, the three following aspects should be taken into account:

·         comprehensively re-planning the 211-km urban area to make it smarter, more modern and innovative so that it can become the foundation for an open, connected public traffic system of the whole HCMC

·         re-organizing the civil staff in way of being more professional and systematic, with a priority on quality

·         allowing higher decentralization and delegation of powers to Thu Duc City to promote its activeness and creativity while reducing the workload of state departments and agencies in HCMC.

Obviously, Thu Duc City should become the model of a modern urban administration.

In general, the establishment of an UAM in HCMC must be consistent with the mission of making this megacity a multi-center with a series of sub-cities along the length of 50km, as well as the core of the Southern key economic zone.

UAM is not the ultimate goal but merely a method of effective organization and management for a sustainable development of HCMC where residents are better cared for.

By Dr. Tran Du Lich – Translated by Huong Vuong

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The Hanoitimes – The Government Office and the People’s Supreme Court signed the Coordination Regulation on building e-government and e-court for enhancing administrative reform and improving management.

The Vietnamese Government Office and the Supreme People’s Court of Vietnam signed on January 12 in Hanoi the Coordination Regulation on building e-government and e-court for improving management and enhancing administrative reform.

An overview of the signing of the Coordination Regulation on January 12 in Hanoi. Photo: tapchitoaan.vn

Speaking at the signing ceremony, Minister-Chairman of the Government Office Mai Tien Dung emphasized that the signing marked a milestone in linking the building of e-government with the building e-court of the judicial branch.

“The cooperation will create a basis for more in-depth, substantive and effective coordination between the Government Office and the judicial organs,” said Minister-Chairman Dung.

This regulation is the basis for the Government Office to improve the quality of advising and assisting the government and the Prime Minister in administrative reform as well as building e-government towards a digital government, digital economy, and digital society.

In order to effectively implement the regulation, Minister-Chairman Dung suggested the two sides continue the cooperation in electronic documents exchange on the National Document Axis between agencies of People’s Courts and government bodies at all levels.

The Hanoitimes – Experts have said that Vietnam should further focus on administrative reform and improve the existing legislation framework to boost economic growth this year.

Many experts have expressed their confidence that Vietnam would be able to realize or even surpass the growth target of 6-6.5% in 2021.

Production at Garment 10 Company. Photo: Thanh Hai.

Vice Chairman of the European Chamber of Commerce in Vietnam (Eurocham) Nguyen Hai Minh in an interview with the World & Vietnam Report said the country’s GPD growth target of 6% in 2021 is both “ambitious and feasible.”

According to Mr. Minh, such a high growth remains challenging given the severe consequences of the Covid-19 pandemic to the world’s economy.

“However, for Vietnam, it is not impossible as the country has   successfully contained the pandemic in the past,” he said.

Mr. Minh also referred to the high optimism of the European business community towards Vietnam’s business and investment environment by giving it a score of 63.6 in Eurocham’s Business Climate Index (BCI) that was conducted in the fourth quarter of last year, the highest score since the first Covid-19 outbreak.

For Vietnam to continue pushing for high economic growth this year, Mr. Minh expected Vietnam to further press on administrative reform and improve the existing legislation framework.

Mr. Minh expected the EU – Vietnam Free Trade Agreement (EVFTA) that was signed last year could open up a new wave of investment capital and knowledge transfer from Europe to Vietnam.

For the time being, Mr. Minh expected Vietnamese companies to grasp opportunities from the ongoing diversification of global supply chains as a result of the Covid-19 pandemic.

“Local firms should take on innovation and adopt new technologies to further integrate into supply chains and enhance their linkages with multinationals,” he noted.

On the outlook of Vietnam’s economy, former Director of the Central Institute for Economic Management (CIEM) Nguyen Dinh Cung said the Vietnamese government has taken a cautious approach in setting a growth target of 6.5% for 2021.

“Vietnam could reach the target of 7-7.5% for this year,” Mr. Cung asserted.

Nguyen Van Toan, vice chairman of Vietnam’s Association of Foreign Invested Enterprises (VAFIE) said a 6.5% growth target is “ attainable when taking into consideration what Vietnam had achieved last year.”

“A strong and resilient agricultural sector that is well-adapted to the current pandemic environment and high risks of natural disaster would be key for high economic growth in 2021,” said Mr. Toan.

“Meanwhile, exports should further improve in 2021 following the recent signing of major trade deals last year, including the EVFTA, Regional Comprehensive Economic Partnership (RCEP) and the UK-Vietnam Free Trade Agreement (UKVFTA).”

At the launch of World Bank’s report for Vietnam titled “Taking Stock” last December, the bank’s lead economist Jacques Morisset said Vietnam’s economy is on track to rebound to 6.8% this year and stays among world’s fastest growing economies.

Despite growing global uncertainties, the introduction of effective Covid-19 vaccines and resumption of trading activities would benefit Vietnam’s further growth, he noted.