Areas that Need Further Reform

“Post-registration” procedures still burdensome

To explore the burden of “post-registration” procedures, the PCI surveys have over many years asked the question “how long did it take you to get all required registration certificates, licenses, and stamps to become a fully legal business in your province?”¹⁶ The share of firms having to wait for a) more than one month; and b) at least three months is calculated in individual provinces and considered an indicator for measuring the “post-registration” burden in the subindex of entry costs. Results are shown in Figure 1.12.

The PCI 2018 found that many firms still feel that the burden is substantial with 15.8 percent having to wait over one month to complete all the required paperwork (aside from the business license) to become fully legal. It should be noted that this number, after a drastic decline from 27.2 percent in 2007 to 9.8 percent in 2014, has tended to climb over the last five years. Another indicator, the share of firms waiting more than three months to legally operate, was at three percent in 2018. This figure is also on the rise in recent years after a remarkable decline to 1.92 percent in 2014.

Figure 1.12: A Sample of Entry Costs Indicators over Time

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2006 2010 2014 2018

0102030405060

2006 2010 2014 2018

Share of Firms (%)

Reg. Wait > 1 Month

Share of Firms (%)

Reg. Wait > 3 Months

Orange lines represent the median provincial score, while the dashed blue lines depict the minimum and maximum scores, respectively.

16 2018 PCI Survey Question C5: Respondents were given multiple choice answers: 1) Within one day; 2) Within one week; 3) From one week to less than a month; 4) 1-3 months; 5) 3-6 months; 6) More than 6 months.

The PCI 2018 survey examined the areas that were creating the largest burdens, and found that businesses needed the following certificates: fire safety (63 percent); qualification to do business (48 percent); technical-regulation conformity (33 percent); advertising license (31 percent); and other permits (26 percent). The share of firms that claimed difficulty completing administrative procedures to obtain these licenses is alarming. As depicted in Figure 1.13, 34 percent of firms met with obstacles when obtaining certificates of qualification to do business while 30 percent experienced delays obtaining certificates of fire safety. A further 29 percent reported challenges with receiving certificates of technical-regulation conformity or with other types of certificates, and 17 percent had difficulty with advertising licenses.

Figure 1.13: Level of Difficulty Completing Administrative Procedures to Obtain Documents Required to Operate Legally

63

26

010203040506070 010203040506070

30 34

29

17 30 29

48

33 31

Share of firms (%)

Additional certificates must be obtained Difficulty in obtaining additional certificates

Certificate of Fire Safety Certificate of Qualification to Do Business Certificate of Technical−Regulation Conformity Advertisement License

Other License or Certificate

Question C4. PCI 2018 Questionnaire: Apart from business licenses, did your firm need any of the following documents to legally operate and please rate your experience completing the procedure to obtain the document(s).

Reforms of administrative procedures need more focus

Over the years, PCI surveys have asked firms to list the most burdensome administrative procedures that take place after registration and recur as the business grows and expands.

Understanding which of these critical procedures still require attention may be useful information for public administration reform.

Figure 1.14 shows which administrative procedures the firms consider as being the most burdensome. Procedures related to land (30 percent), tax (28 percent), social insurance (25 percent), market management (16 percent), transportation (15 percent), and construction (14 percent) remain the costliest for domestic firms in Vietnam.

Figure 1.14: Troublesome Administrative Procedures

2 6

16 13

17 8

13

28 13

7 10

26 12

26

0 10 20 30

2017

4 6

15 13

16 8

14

28 12

8 9

30 11

25

0 10 20 30

2018

Share of Firm (%) Others

Food Safety & Sanitation Transportations Payment Clearance Market Management Labor Construction Tax, Fees Fire Safety Customs Biz/Investment Registration Land Environment Protection Social Insurance

Others Food Safety & Sanitation Transportations Payment Clearance Market Management Labor Construction Tax, Fees Fire Safety Customs Biz/Investment Registration Land Environment Protection Social Insurance

Share of Firm (%) Question D2. PCI 2018 Questionnaire: From your experience, please indicate the most troublesome administrative procedure (multiple choice).

Transparency has yet to be improved

The Law on Access to information, which was ratified by the Vietnamese National Assembly on June 4, 2016, and came into effect on July 1, 2018, was expected to ensure people’s right to access information (“Information Access Law: Will information ‘stifle’ end?”, VOV.VN, 2018). Article 17 of this law lists 14 types of information subject to mandatory disclosure, including various types of information covered by the PCI survey, such as legal documents, social and economic development strategies, projects, master plans, plans at national and local levels, technical sector plans, local budget documents, statistical information in management areas/fields, and national technical databases. Although the law has been in effect for part of the year, the 2018 PCI demonstrates that much still needs to be done.

It is clear in the 2018 findings that businesses’ access to information is an ongoing issue (Figure 1.15). On a scale of 1-5 (ranging from Impossible (1) to Very Easy (5)), access to planning documents was rated 2.38 points in 2018, approximating the scores achieved in 2015 and 2016, and was significantly lower than the high of 2.63 recorded in 2006.

Accessibility of legal documents scored better, yet also shows only marginal improvement since the early years of the PCI. 69.4 percent of respondents stated they needed “relations”

to access provincial documents (compared to 70 percent in 2017). The lack of openness prevents businesses from anticipating how local governments will implement national laws and regulations, and leaves them vulnerable to shocks. Limited information constrains business expansion and investment plans.

Figure 1.15: A Sample of Transparency Indicators over the Years

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2006 2010 2014 2018

11.522.533.544.55

2006 2010 2014 2018

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2006 2010 2014 2018

Score (5pt Scale)

(1=Impossible; 5=Very Easy) Access to Planning Documents

Score (5pt Scale)

(1=Impossible; 5=Very Easy) Access to Legal Documents

Share of Firms (%)

Predictability of Prov. Implementation

Orange lines represent the median provincial score, while the dashed blue lines depict the minimum and maximum scores, respectively.