That was the main content of talks entitled “Changing policies to enhance economic vitality,” held recently by VietNamNet, with the participation of three experts: Dr. Nguyen Dinh Cung, Vice Director of the Central Institute for Economic Management, Scott H. Jacobs, high-ranking advisor of the US Agency for International Development-funded Vietnam Competitiveness Initiative project and Nick Malyshev from the Organisation for Economic Cooperation and Development (OECD).
The world’s biggest renovation project
In 2007, the Master Plan for Simplification of Administrative Procedures in state management for the 2007-2010 period, also called Project 30, “opened fire” straight into one of the biggest concerns of citizens and businesses: costly and cumbersome administrative procedures.
Under this project, Vietnam has developed the first-ever national database on administrative procedures, which are applied at four government levels. The database includes more than 5,400 procedures and over 9,000 regulations.
More importantly, the project has helped standardize and cut down the numbers of commune and district level procedures from 10,000 and 700 to 63 only.
"Project 30, which consider business-related regulations as one of the priorities, may be regarded as the largest reform project in the last 10 years in the world”, said Jacobs.
Jacobs added that if the project was fully implemented, it would help Vietnam save about US$1.5 billion. "The savings will help increase wages and income to really benefit the people and businesses.”
However, Dr. Cung, said that despite of the promising savings derived from Project 30, the Vietnam Chamber of Commerce and Industry’s Provincial Competitiveness Index 2010 showed that the actual cost paid by Vietnamese enterprises for administrative procedures seemed to rise, including informal costs.
"This means our reforms so far have not actually translated into full results for citizens and businesses," Cung emphasized.
From control to policy making
An administrative reform like Project 30 is very essential but it is not the strong-enough medicine to improve the economy’s vitality. To make a breakthrough, a change of mindset from control to policy making is a must.
"If we get ourselves indulged in control, then we simply just change and cut here and there, not to build a new policy system," Cung said.
A policy must have well-defined goals such as improving efficiency of state management, creating a particular number of jobs, cutting down a specific amount of cost. In Vietnam, policy makers do not set the ultimate goals but pursue intermediary goals and goals that are of solution nature.
Vietnam should apply a tool called the Regulatory Impact Assessment (RIA) before, during and after the policy making process, as advised by OECD experts.
In the United Kingdom and some EU countries, RIA is made mandatory when a bill is out for approval or disapproval. Ministers and heads of agencies responsible for the bill have to sign on the RIA document and attach it to the bill.
RIA was “imported” into Vietnam in 2009 but has not been actually implemented, especially the public consultation step, Jacobs said.
Jacobs added another principle in policy making: the government cannot simply sit in the “ivory tower” and issue policy.
"We are living in a dynamic society. The government has to address very complicated social issues that are related to many subjects in the society. That’s why various subjects in the society like businesses, citizens and the media should be consulted,” said Jacobs.
At the same time, the Government should consider consequences of its regulations and actions before issuing a policy.
OECD’s Nick Malyshev stressed the significance of a government agency which is responsible for assessing draft laws and regulations against legal and economic standards. This agency also leads the encouragement of reform initiatives.
Reviewing the renovation process which was initiated in the 1980s, Jacobs remarked that Vietnam had gone through the way with success. However, the “heat” of the reform is cooling down and the second renovation is needed right now, as the economy is facing plenty of difficulties.
Dr. Cung believed that past success does not guarantee future achievement. The nature of renovation is giving rights back to citizens and businesses, and giving the price fixing right back to the market. That means facilitating the market to function better and more effective in distributing resources and promoting creativity in production. It is also important to connect the Vietnamese market to external markets, and integrate more deeply into the international market.
"More market reform does not make the state smaller and weaker. It actually strengthens the state’s power because the state can control interest groups, enable the market to function effectively and create opportunities for related sides to improve production," Cung analyzed.
We will publish the full text of the discussion in the coming time.
Lan Huong
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