Report No. 51327-VN Vietnam Development Report 2010 Modern Institutions December 2009 Poverty Reduction and Economic Management Sector Unit East Asia and Pacific Region Document of the World Bank Report No. 51327-VN Vietnam Development Report 2010 Modern Institutions December 3, 2009 Poverty Reduction and Economic Management Sector Unit East Asia and Pacific Region Document of the World Bank VIETNAM GOVERNMENT FISCIAL YEAR January 1 to December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective as of October 28,2009) Currency Unit VND US$1.00 17,007 Weights and Measures Metric System ACRONYMS AND ABBREVIATIONS ADB Asian Development Bank AECID Spanish Agency for International Development Cooperation ASEAN Association of Southeast Asian Nations AusAID Australian Agency for International Development BOT Build Operate Transfer BT Build Transfer BTO Build Transfer Operate CBO Community Based Organization CAP Center for Agricultural Policy CDD Community Driven Development CECODES Center for Community Support Development Studies CFAA Country Fiduciary and Accountability Assessment CIDA Canadian International Development Agency CIEM Central Institute for Economic Management CSO Civil Society Organization DEPOCEN Development and Policies Research Center DERG Development Economics Research Groups of the University of Copenhagen DFID Department for International Development of the United Kingdom EBRD European Bank for Reconstruction and Development EC Economic Commission FDI Foreign Direct Investment GDP Gross Domestic Product GSO General Statistics Office HCFP Health Care Fund for Poor HCMC Ho Chi Minh City ICT Information and Communication Technology ILSSA Institute for Labor Studies and Social Affairs INGO International Non-Government Organization IPSARD Institute of Policy and Strategy for Agriculture and Rural Development IT Information Technology JICA Japan International Cooperation Agency JRS Judicial Reform Strategy LCC Legal Consultancy Center LURC Land Use Right Certificate LSDS Legal System Development Strategy M&E Monitoring and Evaluation MOF Ministry of Finance MOHA Ministry of Home Affairs MOJ Ministry of Justice MONRE Ministry of Natural Resources and Environment MPI Ministry of Planning and Investment NA National Assembly NAPA National Academy of Public Administration NGO Non-Government Organization NHU National Hanoi University NTP National Targeted Program P135 Program 135 ODA Overseas Development Agency ONA Office of the National Assembly OSS One Stop Shop PAR Public Administration Reform PC People's Council PCI Provincial Competitiveness Index PFM Public Financial Management PM Prime Minister PPWG People's Participation Working Group Q&A Question and Answer RIA Regulatory Impact Analysis SAV State Audit of Vietnam SDC Swiss Agency for Development and Cooperation SDU Service Delivery Unit SPC Supreme People's Court SPP Supreme People's Procuracy SEDP Socio Economic Development Plan SME Small and Medium Enterprise SOE State Owned Enterprise TCER Training Center for Elected Representatives TV Television UNICEF United Nations Children Fund UNDP United Nations Development Program USAID United States Agency for International Development VAT Value Added Tax VID Vietnam Innovation Day VIDS Vietnam Institute of Development Studies VCCI Vietnam Chamber of Commerce and Industry VNCI Vietnam National Competitiveness Initiative VND Vietnam Dong VHLSS Vietnam Household Living Standards Survey VUFO Vietnam Union of Friendship Organizations VUSTA Vietnam Union of Science and Technology Associations WB World Bank WTO World Trade Organization ACKNOWLEDGMENTS This report was prepared in partnership by the Asian Development Bank, Australia (AusAID), Canada (CIDA), Denmark, European Commission, Finland, Japan (JICA), Spain (AECID), Sweden, Switzerland (Swiss Development Cooperation), United Kingdom (DFID), United Nations, United States of America (USAID), and the World Bank. These donors contributed by providing analytical works on which the report draws, by participating in the working group meetings at which the storyline for the VDR was determined, and by providing direct inputs for the draft. The contributions of Oxfam GB are also acknowledged. The donors involved in this partnership also provided guidance on the process and reviewed an advanced draft in a meeting of the Steering Committee. In addition, the preparation of the report involved consultations with Vietnamese researchers and practitioners who participated in a personal capacity on a Reviewing Committee. The inputs and feedback of Hop Hoang Ha (Vietnam Journalists Association), Hung Khac Nguyen (Management Consulting and Development), Vo Hung Dang (HNU), Diep Thi Bich Nguyen (VUSTA) , Tuan Anh Dau (VCCI), Thang Nguyen (VASS), Loan Thi Thanh Le (HCMC PSO), Phuong Minh Nguyen (Ministry of Justice), and Dinh Ngoc Dang (CECODES) are gratefully acknowledged, although they are not responsible for remaining errors. The assistance of Hieu Minh Hoang and Hung Van Phung (Office of the National Assembly) in locating data is also gratefully acknowledged. We are also grateful to Edmund Malesky (University of California, San Diego) and to VCCI/VNCI for assistance with the PCI survey data. Preparation of the report was led by a core team from the World Bank including James Anderson (Task Team leader), Maria Delfina Alcaide Garrido, and Tuyet Thi Phung. Contributions and comments were also provided by Dung Viet Dao (ADB); Cameron Hill, Loan Hong Duong and Chi Mai Nguyen (Australia-AusAID); Andrew Smith, Deidre Yukich, Jacqueline DeLima Baril, Chau Hoai Nguyen, Yen Thi Vu (Canada-CIDA), Frances Gordon (CIDA-funded JUDGE Project) and Charles Philpott (CIDA legal consultant); Dorte Chortsen, Tove Dengbold (Denmark); Helena Sterwe and Thanh Van Le (European Commission); Huong Thi Lan Tran (Finland); Ha Thi Vinh Nguyen and Veronique Saugues (France); Toru Arai, Fuminori Ito, Yosuke Kobayashi, Junichi Imai, Khanh Thi Mai Nguyen and Eiichiro Hayashi (JICA); Hoa Thi Le Nguyen and Huyen Thu Truong (Oxfam GB); Chau Minh Dao and Gabriella Spirli (Switzerland-SDC); Antonio J. Peláez Tortosa (Spain-AECID); Elsa Hastad and Anna Rosendahl (Sweden-SIDA), Renwick Irvine, Lien Thi Kim Nguyen, Huong Thi Thien Than and Kirsty Mason (UK-DFID); from the United Nations family: Jairo Acuna-Alfaro, Nicholas Booth, Huong Nam Le, and Christophe Bahuet (UNDP), Lan Thi Pham and Rajen Kr. Sharma (UNICEF), Graham Harrison and Socorro Escalante (WHO), Anne-Claire Guichard (UNAIDS), Peter Reeh and Ingrid Fitzgerald (UN Resident Coordinator's Office), Suzette Mitchell (UNIFEM); Jim Winkler, Hoang Anh Do, Phuong Vo (USAID/VNCI Project), Vien Hong Bui (USAID/STAR Project); Mai Thi Hong Bo, Quang Hong Doan, Viet Tuan Dinh, Nguyen The Dung, Hisham A. Abdo Kahin, Valerie Kozel, Keiko Kubota, Daniel Mont, Ngan Hong Nguyen, Ha Diep Nguyen, Nga Nguyet Nguyen, Toomas Palu , Duc Minh Pham, Hoa Thi Mong Pham, Mai Thi Thanh, Viet Quoc Trieu, Quyen Hoang Vu, and Nha Thi Vu (World Bank). Nguyen Viet Cuong (National Economics University) helped with analysis of the VHLSS, and Viet Tuan Dinh (World Bank) prepared the statistical annex. This report draws on data from a Governance Module that was attached to the 2008 round of the VHLSS. The Governance Module was led by MPI and implemented by GSO with support from DFID, SDC, and the World Bank. We are very grateful to MPI for agreeing to a preliminary release of the data for this Vietnam Development Report. We are also grateful to all the individuals who helped prepare and implement the Governance Module, and to the 9,189 Vietnamese citizens who participated in the survey. Guidance for the overall process was provided by Vikram Nehru, Victoria Kwakwa, and Martin Rama from the World Bank. The advice of the peer reviewers, who advised on the concept and the draft, is gratefully acknowledged. The peer reviewers were Soren Davidsen (Denmark, Ministry of Foreign Affairs), Martin Gainsborough (University of Bristol), Yasuhiko Matsuda, and Joel Turkewitz (World Bank). The advice of others who provided comments and ideas are gratefully acknowledged. CONTENTS Executive Summary ............................................................................................................................... i 1 The State and Institutional Reform ................................................................................................1 A Devolving State ..........................................................................................................................1 New Forms of Accountability ........................................................................................................4 Data for Informing the Analysis .....................................................................................................5 Organization of the VDR................................................................................................................7 2 Central Government .....................................................................................................................10 The Role and Organization of the Central State...........................................................................11 Managing the Public Administrative Reform Process .................................................................12 Human Resource Management ....................................................................................................13 Public Financial Management ......................................................................................................20 3 Local Governance ........................................................................................................................26 Fiscal and Administrative Decentralization .................................................................................27 Planning Processes .......................................................................................................................37 Regional Planning ........................................................................................................................40 Land Use.......................................................................................................................................42 4 Administrative and Direct Services .............................................................................................52 Administrative Services ...............................................................................................................53 Direct Services for Citizens--Health and Education ...................................................................63 5 Legal and Judicial Systems ..........................................................................................................80 Legal Development ......................................................................................................................81 Dispute Resolution .......................................................................................................................85 Administrative Disputes ...............................................................................................................94 Legal Awareness ...........................................................................................................................94 6 Oversight .......................................................................................................................................99 Anticorruption ............................................................................................................................100 Organized Civil Society .............................................................................................................110 National Assembly and People's Councils .................................................................................116 Information .................................................................................................................................122 Media ..........................................................................................................................................129 7 Themes and Lessons for Governance Reform ...........................................................................132 Progress ......................................................................................................................................132 Prospects.....................................................................................................................................132 Themes .......................................................................................................................................133 The Next Decade? ......................................................................................................................135 Endnotes.............................................................................................................................................137 References ..........................................................................................................................................143 Annex 1. Timelines ............................................................................................................................154 Annex 2. Statistical Appendix ...........................................................................................................172 Boxes: Box 1.1. Institutional challenges highlighted in the Vietnam Fatherland Front's report to the National Assembly ........................................................................................................6 Box 1.2. Key data on governance and institutions.................................................................................8 Box 2.1. Remuneration of civil servants..............................................................................................16 Box 2.2. Lessons from international research: meritocracy is at the heart of performance ................18 Box 2.3. Extending the scope and quality of audits.............................................................................25 Box 3.1. Obstacles for the decentralization to the lowest levels -- the case of Bach Ninh and Ha Nam provinces ..........................................................................................................28 Box 3.2. Innovation in exercising powers at the local level--The Chu Lai Open Economic Zone ....31 Box 3.3. The development impact of participation..............................................................................36 Box 3.4. Consultative planning and budgeting in Hoa Binh ...............................................................40 Box 3.5. Leveling the gender playing field with joint land titling .......................................................43 Box 3.6. Land-users' discontent with resettlement areas .....................................................................48 Box 3.7. The current system of settling land-related administrative complaints.................................50 Box 4.1. The implementation of One Stop Shops in Dak Lak.............................................................54 Box 4.2. Innovation in building downward accountability at the local level -- Citizens Report Cards in Ho Chi Minh City .......................................................................................58 Box 4.3. Decision space in health care ................................................................................................64 Box 4.4. Competition and rent-seeking in pharmaceuticals ................................................................65 Box 4.5. Self-financed public schools and kindergartens in Ho Chi Minh City ..................................66 Box 4.6. The downsides of "envelope payments" in the health sector ................................................67 Box 4.7. Role of civil society organizations in improving access to health and education .................68 Box 4.8. Reforms in education user fees .............................................................................................72 Box 4.9. International experience in reducing unofficial payments ....................................................78 Box 4.10. User feedback from patients at the National Hospital of Pediatrics ...................................79 Box 5.1. Culture and legal values ........................................................................................................87 Box 5.2. Independence with accountability--the experience of other transition countries ................90 Box 5.3. The paucity of lawyers in provinces with socio-economic difficulties .................................97 Box 6.1. How do bribes affect the performance of small and medium enterprises? .........................100 Box 6.2. Anticorruption policies specified in the law on anticorruption of Vietnam ........................101 Box 6.3. Inspections system challenges.............................................................................................102 Box 6.4. The battle of a corruption whistleblower ............................................................................106 Box 6.5. Sector specific approaches to corruption--customs in Russia ............................................107 Box 6.6. The role of associations in monitoring the government ......................................................114 Box 6.7. People's Inspection Boards and Community Investment Supervision Boards ...................115 Box 6.8. The Vietnamese Women's Caucus ......................................................................................121 Box 6.9. Regulations on information .................................................................................................123 Box 6.10. Monitoring implementation of access to information in international experience ...........126 Box 6.11. Access to information in Hanoi, Quang Binh, Ninh Thuan, and An Giang ......................127 Box 6.12. Innovative sources of information to address unanticipated policy needs ........................128 Box 6.13. Role of the media in uncovering problems with taxis at Ho Chi Minh City airport .........130 Figures: Figure 1.1. A devolving state .................................................................................................................2 Figure 2.1. Average state salary premium over formal sector alternatives ..........................................17 Figure 2.2. Average state salary premium over formal sector alternatives, accounting for unobserved characteristics, 2006-2008 ........................................................................17 Figure 2.3. An official misuses public funds or assets for private benefit: is it corruption? ................20 Figure 3.1. Information that meets households' needs on commune budgets and plans (among those with interest)...............................................................................................32 Figure 3.2. Households who provided opinions on commune budgets and plans during the period 2006-2008 (among those with interest) ...........................................................32 Figure 3.3. Confidence in land property rights ....................................................................................42 Figure 3.4. Informal payments by firms for Land Use Rights Certificates in 2006 .............................44 Figure 3.5. Opinion on level of corruption in issuance of Land Use Rights Certificates (among those whoused the service since) .........................................................................44 Figure 3.6. Formal complaints related to land issues...........................................................................45 Figure 3.7. Administrative complaints against land compensation and resettlement for land recovered by the State, breakdown by cause .............................................................46 Figure 4.1. On-time performance at One-Stop Shops in Dak Lak.......................................................55 Figure 4.2. Households that experienced difficulty when dealing with administrative services .........59 Figure 4.3. Difficulties when applying for Land-Use Rights Certificates ...........................................60 Figure 4.4. Level of difficulty for households to find guidance information on administrative procedures ............................................................................................60 Figure 4.5. Administrative procedures are getting easier, according to households (2006-2008) .......61 Figure 4.6. Getting information without a relationship with provincial officials ................................62 Figure 4.7. Overall satisfaction with health and education services at national level .........................76 Figure 4.8. Health and education services are improving, according to households (2006-2008) ......77 Figure 4.9. Trends in corruption in health and education services, according to households (2006-2008) ...............................................................................................79 Figure 5.1. Provinces with more predictable laws have more firms willing to invest .........................82 Figure 5.2. Methods of providing opinions on legal documents (among those participating) ............84 Figure 5.3. Reasons for not providing opinions on legal documents...................................................84 Figure 5.4. Growing economy, growing pressure on the courts ..........................................................88 Figure 5.5. Strategies for dealing with business disputes ....................................................................88 Figure 5.6. Legal awareness for fighting corruption ............................................................................95 Figure 5.7. Legal aid cases handled by the Legal Aid Agency ............................................................96 Figure 6.1. Is corruption is a major problem for you and your family? ............................................101 Figure 6.2. How much information do households have on the regulations to prevent and fight corruption? .......................................................................................................104 Figure 6.3. Reasons for not reporting corruption...............................................................................104 Figure 6.4. Is it "corruption"? Views of citizens...............................................................................105 Figure 6.5. Citizens' perception of overall level of corruption (among those with opinions) ...........108 Figure 6.6. Citizens' perceptions that corruption is serious ...............................................................108 Figure 6.7. Trends in corruption in services, according to households (2006-2008).........................109 Tables: Table 2.1. Ministries and agencies at the central level.........................................................................11 Table 2.2. Why do civil servants intend to leave the government? .....................................................14 Table 2.3. Increase in civil servants' minimum wage vis-à-vis the cost of living and individual incomes .......................................................................................................15 Table 2.4. Countries that have finalized Public Financial Management assessments under PEFA .....23 Table 3.1. Participation of households in decision-making and supervision of infrastructure works in P135-II communes in the provinces of Lai Chau, Lao Cai, Binh Phuoc, and Soc Trang ..32 Table 3.2. Participation in decision-making and supervision of commune-level infrastructure projects; communes in the provinces of Lai Chau, Lao Cai, Binh Phuoc, and Soc Trang ....34 Table 3.3. The voices of citizens and commune-level officials: What are the difficulties with the implementation of "grassroots democracy"? ................................................................35 Table 3.4. Complaints in land recovery (percent of land users whose land was recovered) ...............47 Table 3.5. Percentage of households lacking production resources after the agricultural land acquisition (%) ....................................................................................................................48 Table 3.6. Evaluation of participatory approaches on land acquisition activities in Ho Chi Minh City, Hung Yen, and Thai Binh provinces (% of people) .........................49 Table 3.7. Percentage of households having received feedback to their complaints on land recovery and types of feedbacks received (Ho Chi Minh City, Hung Yen and Thai Binh provinces) ..51 Table 4.1. Percentage of provinces planning on-line administrative services for 2010, out of 36 surveyed provinces ..............................................................................................56 Table 4.2. Satisfaction of citizens with a selection of administrative services in Ho Chi Minh City, 2006 and 2008 .....................................................................................................................61 Table 4.3. Government and household expenditure in the health sector .............................................70 Table 4.4. Household expenditure on health and education out of total household expenditure.........70 Table 5.1. Execution of civil judgments ..............................................................................................93 Table 6.1. Types of local Civil Society Organizations that are legally recognized............................111 Table 6.2. Number of legally registered associations (approximate figures) .....................................113 Table 6.3. Full-time deputies in the National Assembly ....................................................................118 Table 6.4. National Assembly Deputies since the 1992 Constitution ................................................120 Table 6.5. The media in Vietnam .......................................................................................................129 EXECUTIVE SUMMARY Institutions are not buildings or organizations, new relationships. Rather they need to be they are the rules by which citizens, firms, and consciously created. In fact, many new forms of the state interact. The photographs that grace accountability are being introduced, but they are the cover of this Vietnam Development Report not always optimal, and important gaps remain. epitomize Modern Institutions. The settings may not appear modern, but the activities they This Vietnam Development Report focuses on represent are cutting edge, and are transforming devolution and accountability, two aspects Vietnam. Local level planning with the active of modern institutions that are the essence of engagement of citizens. Monitoring of public Vietnam's experience in the past two decades. works by citizens groups. Efficient administrative services with the citizen as the client. Legal At the risk of over-simplifying, this VDR advice being provided to citizens. Professional distinguishes between two types of accountability, media coverage of important events. These are upward accountability focusing on compliance the roots which feed the growth of a modern, with rules, dictates, and instructions coming open, and high-performing society. from within the hierarchy, and downward accountability focusing on the results that the The Doi Moi reforms are widely credited with person or body is entrusted to deliver. A person improving incentives for production and growth. or body concerned with upward accountability Devolving responsibility to decentralized actors, emphasizes adherence to rules. Those concerned in this case farmers and firms, and allowing with downward accountability serve their clients. them to sink or swim yielded strong results in Both forms of accountability are needed. a way that hierarchical controls could not. Yet, Vietnam's experience of the past two decades Like all models this paradigm omits many has also exhibited devolution in other respects: nuances, such as variations and hybrid forms to provincial and lower levels of government, to of accountability. But models can be powerful administrative and service delivery units, to the precisely because they focus on the core aspects courts and to elected bodies, and to the media of an issue. In this case, the defining features and civil society. of upward accountability are hierarchy and administrative rewards and punishment, while Devolving authority and removing hierarchical the defining features of downward accountability controls may have benefits, but also poses a are feedback from clients, information for clients, fundamental problem: how can accountability and participation in decision making. be assured after devolution? The fundamental tension between autonomy and accountability is Vietnam's devolution has shown many positive not self-correcting. Accountability mechanisms results. Competition among the provinces will not automatically evolve to mediate these is driving them to improve their business environments. Eased entry for non-state i modern institutions providers of services and greater autonomy for services such as health and education follows. the management of state facilities are supporting We then examine the increasing importance innovation and increasing the variety of of the legal and judicial system, whose role is services. shifting as devolution takes place. Finally, we discuss the expanding array of forms of oversight While these forms of devolution can bring for the devolving system--anticorruption positive results, there is no presumption that bodies, civil society, the media, and the National devolution is always good. On the contrary, Assembly have existed for a long time, but central controls are sometimes essential. When their roles are shifting and they may need more competition among provinces leads them to devolution themselves in order to be effective. ignore the impacts of their policies on their An examination of the lynchpin that holds many neighbors, some encouragement of regional of the mechanisms of accountability together, planning is needed. When national uniformity is information, rounds out the report. needed, such as in the system of law making, less devolution is needed, not more. Recent changes Central Government in the law making process are improvements in part because they centralize who can make laws Through the devolution to firms and households, and how. When there is asymmetric information, to lower levels of government and to autonomous such as for the quality of health care and the service delivery units, the government is credentials of health care professionals, or when gradually being transformed from the director equity concerns demand equal access to services, to the rule-maker, and in this process the role national standards are needed. of the central state in bringing uniformity and consistency to the whole government apparatus To provide some empirical grounding, this is becoming more important than ever. Indeed, VDR draws on a large number of surveys the tension between the self-governance of the and case studies, most notably the data from different entities and uniformity of government the 2008 round of the Vietnam Household administration calls for a shift in way the central Living Standards Survey (VHLSS), which government operates. The transformation of the included a new Governance Module, covering central state in Vietnam has included changes citizen satisfaction with government services, in internal organization and a re-definition of participation in policy making, access to functions and tasks. Managing the change well information, and other issues. Administered to calls for coordination of policy making and more than 9,000 households across Vietnam, this planning across ministries and agencies, to help dataset is an important asset for attempting to minimize confusion and ensure that policies understand Vietnam's institutional development. achieve their desired objectives. The fact that this data was collected and can now inform debates on governance reform represents Efforts to reform public administration have an important milestone for Vietnam. been ambitious. Launched in the 1990s, the Public Administration Reform Master Plan To explore the impacts of Vietnam's devolving covered decentralization, defining of functions, character and nascent systems of accountability, modernizing public financial management, we start with what remains after the devolution, e-government, and civil service reform, among the central state apparatus which must itself others. The objectives of the reforms were many, adjust when other functions and responsibilities and there have been some successes, particularly are devolved. Next, we examine the experience in the simplification of administrative procedures, of geographical devolution to lower levels of but there has also been, at times, slow translation government. Functional devolution, to units of policy into actions. providing administrative services and direct ii Executive Summary In order to remain efficient in its new role the professions, and for some locations, however, state will also need to face new challenges state salaries may indeed lag those of the private brought about by the devolution of authority. sector. Some of the state premium may be due to One of those challenges is to remain staffed with better qualifications of civil servants not easily qualified and motivated people, while competing captured by surveys. for talent with a rapidly growing private sector. While it is tempting to focus on salary as the The system of recruitment and promotion is a key variable by which the state and the private key factor affecting the ability of the state to staff sector compete for talent, many other factors itself. Getting the basics right, through uniform also contribute, such as the opportunity for staff systems of control and competitive recruitment, to use their talents and to be rewarded for their is essential before embarking on sophisticated efforts. Indeed, on average government salaries performance management programs. The need do not appear to be grossly out of line. Increases for uniformity within much of the civil service in the minimum wage upon which state salaries provides a good example of the sort of decision are based have far outpaced inflation and have that is best kept centralized, rather than devolved. roughly kept pace with GDP growth. (Figure The new Law on Cadres and Civil Servants has I). The system of remuneration, which relies adopted the principle of meritocracy, but the heavily on allowances and bonuses, is complex challenge now is to translate this principle into making it difficult to compare state salaries and concrete recruitment and managerial processes, private sector salaries. What data does exist and then implement them. suggest that state salaries are not significantly lower than in the private sector, and may even Even the best set of laws and regulations, however, be higher. (Figure II) For some high demand will face challenges. The tension between I. Minimum wage compared to CPI and GDP II. Average state salary premium compared to formal sector alternatives, 2006-2008 400 350 20% 300 250 January 2000=100 15% 200 11.0% 150 10% 100 50 5% 2.4% 0 January 2000 through December 2008 0% State premium without State premium after controlling for controlling for individual individual, regional, and CPI GDP current Minimum Wage characteristics: 2008 household characteristics: 2006-8 Note: The chart on the left uses annual GDP figures. For the chart on the right, the bars show the coefficients on the state dummy variable for cross-section regressions of log wages on various characteristics, and for the similar coefficient for a panel regression with respondent characteristics. The bar on the right, which is based on panel data with individual characteristics, is not statistically significant, while the one on the left is highly significant. The numbers of observations for the two bars in the right-hand chart are 3,668 and 2,083, respectively. Source: Own estimates based on VHLSS 2008. Analysis for figure on the right is based on the approach of Cuong, 2008. iii modern institutions meritocracy, which calls for differentiating toward a more nimble set of arrangements suited rewards according to performance, and career for markets has included the decentralization of stability, one of the attributes that many civil responsibilities and powers to lower levels of servants find attractive, makes such reforms government. The extent of devolution from the difficult in countries around the world. Moreover, national government to the provinces in Vietnam many would stand to lose from some types of is by any objective measure, quite large. With reforms, such as increasing the differentiation new authority, the provinces are, more so than in in performance ratings, while the benefits are the past, able to align their mix of services with diffuse, exactly the sort of collective action local desires. problem which stymies many needed reforms. Even when the net benefits of reform are positive, As the central government granted additional the lack of a clear constituency pushing for powers and responsibilities to provincial change or the presence of constituencies pushing and lower levels of government, they the other way can block or delay reforms. strengthened the manner and degree of potential oversight. Downward accountability was also A second challenge for the central state strengthened through measures requiring greater apparatus is to ensure that the public's finances transparency--commune-level administrations, are managed properly, a concern for many among others, were required to publicize Vietnamese citizens. Among the many forms of the estimates and uses of annual budgets, corruption that Vietnam is wrestling to contain, assorted funds and people's contributions. Yet, misuse of public resources raises the most ire strengthening downward accountability through with the population. While an ongoing program participation and transparency requires a cultural of reforms aims to strengthen the control shift that cannot be achieved quickly. A decade environment, and places a greater emphasis on after the passage of the Grassroots Democracy transparency and accountability, risks could be Decree, which recognized the importance of further reduced by improving the budget process, publicizing information and including active and increasing transparency and oversight. A participation of the citizenry in making decisions, large difference remains between budgeted and implementation remains unbalanced. actual expenditures and revenue, and user fees and charges of many service delivery units--a While there has been clear progress in establishing direct consequence of Vietnam's devolution-- these new accountability arrangements, it is contribute to the lack of clarity in budget coverage. also clear that there are gaps in many areas. Better and more public information can also help Participation in decision making does exist, but strengthen accountability. Budget proposals are often focuses more on implementing what has not currently disclosed to the public until after already been decided, for example in selecting the budget is adopted--together with the lack of a sites under the targeted poverty alleviation formal mechanism for public consultation on the program P-135. Participation in the broader budget, this practice limits public participation. planning process may be limited in part by The system of external oversight, particularly the institutional setup, with planning agencies by the National Assembly and by State Audit of well established at the national and provincial Vietnam, has improved. Such external oversight levels but thin at the district and commune is essential for a devolving system. levels. Although many people may not actively participate simply due to lack of interest, even Local Governance a small number of interested citizens could potentially help make consultations a success. Vietnam's move from a highly centralized Ensuring the opportunity for participation is hierarchical state designed for central planning essential. iv Executive Summary Although somewhat less empowered than the is the misalignment of accountability with new province or district levels, the commune level has arrangements. been the locus of considerable experimentation with downward accountability systems. Yet, As provinces recognize that investors are around half of the households in Vietnam drawn to places with unobtrusive business reported having no information on commune environments, the autonomy to make policies budgets and plans. Although the people most that are friendly to growth can engender some interested in these budgets and plans are more positive competition between provinces. Yet, likely to say they have some information, they competition between provinces is not always generally report that the information does not beneficial. Decisions in one province can have meet their needs. (Figure V.) Other studies important impacts, positive or negative, on others. point to the complexities of filling these gaps. The cross-border nature of many environmental The reasons why information does not meet the problems makes independent planning by each people's needs are diverse, including literacy province in isolation inefficient. In addition, and language issues, education, and the distances uncoordinated planning can lead to wasteful needed to travel to get the information. duplication. There are also positive spillovers, since growth in one province could be beneficial Most of the new mechanisms of downward to its neighbors, if the proper infrastructure is in accountability--responsiveness directly to place. When the benefits of regional planning are citizens through participation and enhanced mutually beneficial, provinces may be expected transparency--have taken place at the commune to work together of their own volition. When the level, while much of the devolved power has costs and benefits are asymmetric, however, then gone to the provinces. One challenge, therefore, the role of the national government can be much III. Do people participate in decision-making and IV. If they do participate, how? supervision of infrastructure works? 100 Not Aware 75 aware and 27% provided input 50 28% 25 0 Aware Selection of Construction Supervision of but did work site of works construction not works provide input 45% Note: Chart depicts the simple average over infrastructure works in P135-II communes in the provinces of Lai Chau, Lao Cai, Binh Phuoc, and Soc Trang, including electricity works, transportation works, schools, water supply works, health stations, markets, communal houses, and irrigation works. Source: Own calculation based on "Report on Results of Citizen's Report Card Survey on People's Satisfaction with P135-II" (Quyen et al, 2009) v modern institutions V. Information that meets households' needs on commune budgets and plans (among those with interest) Land use plan at the commune level 100% Use of the people's voluntary Resettlement and contributions at the commune compensation schemes at the level 50% commune level Use of the funds and 0% Community infrastructure subsidies from the investment plans at the government at the commune commune level level Fees and charges collected by SEDP at the commune level the commune government Percent of respondents who have a little information, but it doesn't meet their needs Percent of respondents who have information that meets their needs Note: Based only on respondents who said they were interested in the various budgets and plans. Number of observations ranged from 2,481 to 4,424. Source: Own estimates based on 2008 VHLSS Governance Module stronger. National standards may be part of the Successive revisions of the Land Law in the solution, but there is also scope for national past two decades have introduced the concept of intervention to encourage regional planning, for prices for land, strengthened rights for investors, example among provinces that share the same and laid out detailed rights and obligations of watersheds or municipal areas. both land users and state bodies. Several other key milestones have been reached in formalizing Devolving authority over production decisions what was previously a very informal system of to farmers and enterprises established basic property rights, and in strengthening due process, property rights over their outputs, but property transferability, control and protection. In the last rights over their assets, particularly land, was few years alone, firms have gained increased needed to encourage investment. The authority to confidence in their property rights. (Figure allocate land was devolved to the local authorities VI). Despite these advances, the allocation of which have gained significant powers of land- land and resettlement once land has been re- use management. The process of decentralized designated for a new purpose continues to be a land-use management has coincided with a major source of conflict in Vietnam. Between vigorous conversion of agricultural land into 70 and 90 percent of complaints involve land, non-agricultural land for industrial zones, and these have increased significantly over time, export processing zones, urban areas, tourist more than doubling in five years. (Figure VII). and commercial areas. However, the shifting of land use from one purpose to another, or from The set of circumstances that define when land one land-holder to another, did not emerge in can be taken in Vietnam include not only cases a balanced way. In this conversion processes, that would traditionally be interpreted as for provincial government officials have strong the public good, such as the building of a road, incentives to favor investors. but also cases where the benefits are arguably vi Executive Summary VI. Confidence in land property rights VII. Formal complaints sent to MONRE related to land issues 5=very 5 low risk of 14000 expropriation 4 12000 10000 3 8000 1=very 6000 high risk 2 4000 of expropriation 2000 1 0 2006 2007 2008 2003 2004 2005 2006 2007 Note: Chart on the left shows average of averages from overlapping panels. Number of observations ranged from 342 to 1,212 firms in the panels. Source: Chart on the left shows own calculations based on data from VNCI and VCCI, Provincial Competitiveness Survey, Overlapping Panels. Chart on the right is based on data from MONRE. private. Moreover, the most important cause of In 2001, administrative units gained considerable dissatisfaction is the low compensation given to decision-making power over a block grant from those who lose their land. The identification of the government for administrative expenditures "market" prices for use in setting compensation and staff costs. They were allowed to use cost for involuntary resettlement is problematic as the savings to increase staff remuneration within market is new, and problems are compounded certain limits and there was also a change in the by asymmetric information between seller and way they work. One set of reforms, launched on buyer--farmers do not necessarily know the an experimental basis in the 1990s, sought to value of the land for their livelihood or the make it easier for citizens and firms to deal with value of land for other uses. Greater reliance on the state through the introduction of "one stop voluntary, negotiated, land transfers would ease shops" for administrative services. The pilots some of these problems. have since been extended considerably. Eighty- four percent of departments at the province level Administrative and Direct Services had established their one stop shops by October 2009. And by most accounts, the one stop Responsibilities have also been devolved along shops are successful. For citizens and firms, the functional lines to units providing services. The prospect of long lines and unanswered questions tension between autonomous service provision are less of a concern than they had been in the and the desire for uniform standards of quality past. for services that are accessible to the whole population presents a challenge for which While one stop shops focus on the manner there is no magic formula. Experimenting with in which existing administrative procedures the mechanisms for balancing autonomy and are applied, a second initiative called Project accountability has been a feature of Vietnam's 30 aims to streamline the stock of procedures development for some time. themselves. With top-level government backing, vii modern institutions Project 30 is making real progress. A new on-line environment stemming from administrative national database with some 5,700 administrative reforms. By 2008, nearly 90 percent of respondents procedures was launched on October 26th 2009 to the Provincial Competitiveness Index (PCI) setting the stage for a culling process next year. survey said that the one stop shop model had Success at Project 30 has come about in part been implemented locally, and nearly as many because there was a constituency with both the agreed that the provincial implementation of one ability, through collective voice by business stop shops is good for business. When asked associations, and the incentive to push for about access to a wide range of documents, from change. local budgets to planning documents, to tax and business registration data, firms reported easier Simplifying administrative procedures has access and less need for personal relationships already had a positive effect. Citizens responding with officials in order to get the documents. to the VHLSS Governance Module report low levels of difficulty when dealing with most While the view among citizens that administrative administrative procedures, although more than procedures had improved was widespread-- one in four respondents reported trouble related in every province more citizens reported to land and housing procedures. Reinforcing improvement than worsening--the degree of the pivotal role of information, the survey also improvement was stronger in the richer provinces. suggests that being able to easily find guidance Mirroring the findings for citizens, the firm level information enables citizens to avoid difficulties. PCI survey also shows that improvement is felt (See Figure VIII.) The business community also somewhat more strongly in the richer provinces. generally reported improvements in the business Compared to the poorer third of provinces, firms VIII. Dealing with administrative services and the ease of accessing information 70 Percent saying it is simple to find guidance Certification of documents by notary Registration of 60 household residence Registration of household business information 50 Application for Application for Land 40 repair/construction of Use Right Certificate Application for residential house House Ownership Right 30 Administrative complaints 20 0 10 20 30 40 50 Percent experiencing problems with administrative services Note: Includes only respondents who had used the service since 2006. Number of observations ranged from 71 to 4,085. Chart shows the percentage of respondents who said it was simple or very simple to find guidance information and the percentage of respondents who said they encountered difficulty when dealing with the service. Responses of "don't know" were dropped from the analysis. Source: Own estimates based on 2008 VHLSS Governance Module viii Executive Summary in the richer third were more likely to report level hospitals, the amount and variety of improvements in paperwork, costs, numbers of revenues have increased, while the trend is not visits required, and friendliness of staff. so clear for district-level health facilities. The user fee scheme for the health sector has not As Vietnam and its citizens become wealthier, been revised since it was established in 1994 and it is clear that the pressure to further improve there has been a gradual erosion of the surplus of these services will not ease. As wages and revenues that were first brought about through salaries increase, so will the value of time and the user fees. In the education sector, likewise, consequently the cost of waiting. As Vietnam the low levels of regulated tuition fees are progresses in strengthening property rights, in reported to be a key cause the high turnover of the form of house ownership and land use right teachers in self-financed schools. certificates, citizens will increasingly be utilizing administrative services. A growing demand for Echoing a theme found throughout the VDR, more efficient administrative services will be conflicts of interest accompanying the devolution a fact of Vietnam's development in the next pose problems for service delivery. In some public decade. hospitals, the medical staff moonlight as private providers, providing an incentive for these staff Service delivery units, such as hospitals and to refer patients for tests or other services from schools, have achieved substantial autonomy in which they will personally profit. Inappropriate several respects. They have been given the power incentives from drug distributors to health to generate their own revenues, by charging user facility staff may lead them to prescribe more fees on core services, setting fees within a band for expensive drugs, or multiple drugs, or excessive non-core and on-demand services, and borrowing quantities, even if unnecessary. Regulations from commercial banks, among others. They explicitly prohibit health professionals from have also been given significant authority over asking for bribes or gifts, but these regulations the use of their financial resources, both their are not strongly enforced. Recent regulations self-generated resources and block grants from explicitly prohibit public health professionals the state. The reforms undertaken since Doi Moi from establishing or participating in the have provided service delivery units not only management of private enterprises such as with more autonomy on financial issues, but also private hospitals. Nevertheless, working after on other aspects of their management. hours in private health facilities is currently allowed and encouraged. The rationale for making service delivery units more autonomous was to improve service The tension between delegated power and quality. The case of the health sector shows that the need to maintain standards calls for shifts some positive effects have indeed taken place. in accountability mechanisms, both upward Service delivery units in the health sector have accountability for compliance with national cut administrative costs by eliminating irrational standards, and downward accountability to expenditures and allocating a fixed expenditure users. To address a fundamental problem of budget to separate departments. Managers have asymmetric information in the provision of become more dynamic and entrepreneurial, health care, a sound system of certifying not only organizational structures have been enhanced health care facilities, but the people providing and existing human resources have been used health services, is needed. Such a system can more efficiently. help ensure that those practicing medicine are qualified and competent, and discipline those Some of the most important positive effects have who significantly breach ethical and clinical taken place unevenly, benefiting more certain standards of care. facilities. In most central-level and provincial- ix modern institutions Legal and Judicial Systems since the Law on the Promulgation of Legal Normative Documents took effect in January Thousands of new laws and regulations at all of 2009, is a clear advance, but focusing levels of government have been generated to consultation on existing drafts misses the chance address the changing landscape of Vietnam's for upstream debate on what a proposed law is economy. The changes in the legal framework intended to achieve. Separating the function of ultimately generate uncertainty for firms, policy-making from technical drafting could households, and the government officials who help reduce this risk. must enforce those laws. The key challenge for legal reform is to ensure that the legal framework The links between Vietnam's devolving is internally consistent, implementable, and is economic and administrative system and well understood by the public and by those who the judiciary are complex. On the one hand, enforce it. A stable and predictable set of laws can devolution in economic decision making in give firms the confidence they need to undertake other spheres increases the work of the courts costly investments. At present, however, firms in as more disputes come before them. At the same Vietnam generally do not report that economic time, the responsibility for resolving disputes is and financial laws are predictable. And in general, also being gradually devolved from the central firms with confidence in the predictability of and local government bodies to the courts. laws are more likely to invest. (Figure IX.) To be credible, courts need to be efficient and independent. At present, however, judges often Making laws more predictable begins with consult with higher courts and even with local publication of drafts, but it does not end there. governments when deciding on a case. Publicizing drafts of laws, as has been done IX. Provinces with more predictable laws have more firms willing to invest 5.75 Index of plans to invest in the next 5.50 two years 5.25 5.00 4.75 4.50 2 2.2 2.4 2.6 2.8 Index of predictability of laws Note: The dots represent the provincial averages of these two questions: "Which statement best characterizes your firm's investment plans over the next 2 years? 1=Plan to close, 2=Plan to reduce size of operations considerably, 3=Plan to reduce size of operations, 4=Plan to stay at present size, 5=Plan to increase size, 6=Plan to increase size considerably." And "How predictable are changes in economic and financial laws at central level affecting your business? 1=Never, 2=Seldom, 3=Sometimes, 4=Usually, 5=Always". Source: Own estimates based on Vietnam National Competitiveness Initiative. Provincial Competitiveness Index 2008. x Executive Summary Enhancing independence of the courts is easier court cases track economic growth much more said than done. But several steps could help closely than population growth, as illustrated in move in that direction. The length of judicial Figure X. tenure, now only five years, could be lengthened, and providing court financing directly by the The Vietnamese system calls for a conciliation legislature could also enhance independence. process before going to court for some types of Shifting to an adversarial system, already cases, and millions of cases have been handled envisioned under the Judicial Reform Strategy this way in the past decade. However, the tension to 2020, can make the judges' role as arbiters, between a system aimed at amicable resolution of rather than participants in the case, clear and problems, and the distinctly non-amicable nature thereby strengthen the presumption of innocence of many disputes, causes problems when there is and other basic human rights. a fundamental imbalance of power between the parties. Moreover, the impartiality of the body The tension between independence and may be called into question for some disputes, accountability is especially challenging for the since commune-level conciliation councils are judiciary. Yet, accountability can be enhanced headed by local officials from the commune without sacrificing independence by placing People's Committee, posing a conflict of interest greater emphasis on transparency. While there when the dispute involves the local government. has been some progress in making case records Even if these issues were resolved, however, the public, the disclosure of judgments, and the need for a sound judiciary would remain. analysis leading to judgments, remains low. Nontrivial numbers of firms encounter disputes The courts are not used in Vietnam to the extent with local government or government officials. that they are in other countries. However, this Although the courts have had jurisdiction to does not mean that the courts should be a low settle administrative disputes since 1996, the priority for reform. On the contrary, in Vietnam's number of administrative cases accepted and devolving system with citizens becoming more heard by the courts is still limited. Many types demanding of the government, with rapid growth of cases can not be heard by the courts until and more and more arms-length economic first settled with the local governments, raising activity, the pressure on the courts to deliver additional questions about the impartiality of the justice fairly and efficiently will grow. Indeed, system. X. Growing economy, growing pressure on the courts 180 Number of civil cases to be 160 executed (2000=100) 140 Real GDP (2000=100) 120 Population (2000=100) 100 80 2000 2001 2002 2003 2004 2005 2006 2007 Sources: Own estimates based on data from Ministry of Justice; GSO xi modern institutions A key role of the legal and judicial system and only reap a small share of the benefits. A is to stop disputes before they even occur. collective action organization like the newly Improving the quality of legal development created National Bar Federation can help resolve can help in this regard, but equally important is this contradiction. to raise awareness on the part of the citizenry and the business community about their legal Oversight rights. Significant efforts have been made to enhance legal dissemination and consultancy In this story of devolution and accountability, in Vietnam. Mobile legal aid clinics provide some bodies stand out in a fundamental way. legal aid services, especially in rural and remote Rather than merely being the recipients of areas, and the number of legal aid cases has new powers who consequently need to be held been steadily increasing. Getting legal advice accountable, these bodies differ for the oversight through the market, the default option in most role that they play in ensuring accountability countries, faces challenges in many places in of others. Those entrusted with detecting and Vietnam. Indeed, vicious circle is at work: the preventing corruption, organized civil society, lack of use of the courts limits the demand for elected bodies, and the media all play different legal services, while the limited availability of parts in the evolving accountability system, and legal advice also makes the courts less attractive each faces its own challenges. Assuring access for settling disputes. to information would make all of these bodies more effective. The legal profession itself could help move judicial reforms along, but faces a collective One manifestation of governance weakness action problem. As argued elsewhere in this is corruption. While corruption exists in every VDR, collective action organizations can help country, uncontrolled corruption can deter resolve the fundamental contradiction between investment, waste resources, and erode the trust diffuse benefits and concentrated costs and risks. of the population. The citizenry is well aware of In this case, an individual lawyer might not find the importance of the fight against corruption. it worthwhile to push for certain improvements, Although very few reported encountering since that lawyer would expend all of the costs corruption directly, the perception that corruption XI. "Is corruption a major problem for you XII. Citizens' perception of the overall level of corruption and your family?" Very serious Don't know corruption Hard to 28% 9% Serious say 13% corruption 35% No No corruption 22% 1% Yes Slight 65% corruption Average 8% corruption 19% Note: The number of observations is 9,188. Sources: Own estimates based on 2008 VHLSS Governance Module xii Executive Summary poses a problem for people is pervasive. (Figure the population. Nevertheless, even though an XI and Figure XII. approach that relies on whistle-blowers faces a number of challenges, the importance of making Identifying trends in corruption is more complex, this avenue available for interested citizens is yet examining trends can provide lessons for how beyond dispute. anticorruption efforts are working. Assessments are somewhat mixed, as one would expect. Another pillar of Vietnam's anticorruption effort Citizens are not pessimistic and most do not say introduced with the Law on Anticorruption and things are getting worse. Yet only a fraction say subsequent decrees was to require declarations things are getting better. Surveys of firms suggest of assets and income for a broad cross-section of that corruption is posing less of an obstacle for public sector employees--as of the end of 2008, their operations, but the same surveys show that some 395,000 officials had submitted declarations the magnitudes of bribes, as a percentage of of assets and income. At present the declarations revenues, is not declining. Whatever the trend, themselves are not public information, but are the levels remain worrisome--more than half only verified internally, although this is not done of the firms in the PCI survey indicated that often or systematically. The verification process firms in their industry pay commissions when does not provide for spot checks, although contracting with the government. The need to the declarations will reportedly be used in the remain vigilant and step up the fight against vetting process for promotions prior to the next corruption is as strong as ever. But how? Party Congress. Enforcing the rules laid down about proper Beyond approaches that center on finding wrong- behavior in the laws is an essential element doers, transparency, for example of procurement of upwards accountability. While specialized transactions, can be a particularly effective tool. bodies such as the Government Inspectorate, In addition, an approach that works well for one State Audit of Vietnam, and the Ministry of sector may not work well for others. While the Public Security are clearly key for carrying out National Anticorruption Strategy to 2020 calls enforcement, the Law on Anticorruption places for sector-specific approaches, it remains to be primary responsibility for organizing inspections seen how well these strategies will be customized on the heads of the organizations themselves. for the corruption vulnerabilities in each sector. The system is more effective for identifying fraud and waste than for detecting corruption. Many policy reforms whose main purpose is not The potential for conflicts of interest, in which anticorruption also have the effect of reducing the head of the organization being investigated opportunities for corruption. The administrative refers the case to the competent investigative reforms that have simplified life for firms and body, may dissuade some investigations. citizens also limit the opportunities for corruption. Reforms in public financial management improve Vietnam's anticorruption system also places transparency and efficiency of public spending, much stock in denunciations by citizens. While but they also make it harder to hide corruption. important and sometimes successful, this Making all of society allies in the fight against approach faces practical challenges in Vietnam corruption, for example by devolving more as anonymous reports of corruption are not authority to civil society and the media, would permitted. Although whistle-blowers are, in also help. principle, protected by law, many people are simply unaware of the procedures or their rights. Indeed, when groups of citizens or firms In addition, the sort of corruption that people sharing common interests can form civil society are most likely to encounter may not be viewed organizations, they can help overcome many as corruption at all by a significant portion of of the collective action problems discussed in xiii modern institutions this VDR. Mass-organizations, which were is being accompanied by devolution of oversight traditionally seen as intermediaries between the responsibilities. Party and the people, have seen some devolution themselves with a reduction in state financing. This expanded mandate is facing a number of In addition, the legal space for several new practical constraints. At present only 29 percent forms of civil society organizations has been of National Assembly deputies are working full- opened. Yet, the processes of creating new time, even fewer at the local level. Having part- civil society organizations are burdensome, and time deputies has been argued to have advantages, not all are treated equally. Mass-organizations but the importance and volume of work, at least have been granted some additional rights and at the national level, call for full time attention. responsibilities which have not been given to the Efforts to improve the professionalism and others. capacity of deputies have included expanding training opportunities, and greater efforts aimed In Vietnam's devolving system, the devolution at generating and disseminating knowledge of civil society has been approached cautiously. to the deputies. A stronger emphasis has also The introduction of each new type of civil been put on contact with voters and on assisting society organization has gone hand in hand voters with their petitions, complaints and with the introduction of measures to hold denunciations. them accountable, mostly emphasizing upward accountability through the hierarchy. This form In addition, the potential for conflicts of interest of accountability may be appropriate in some for deputies in the National Assembly or People's circumstances, for example for the regulation of Councils abound and may diminish oversight. those that provide health services, but may also Many deputies work in the government, and the weaken civil society's ability to play its oversight conflicts of interest become apparent during the role. Restrictions on public criticism by some question and answer sessions with government. forms of civil society organizations undermine their ability to distill clear messages collectively The media has benefitted from a considerable and to contribute to policy debates. expansion of autonomy in the past two decades, gaining more control over their finances, more The nucleus of many of Vietnam's public policy choices in their organizational structures, and debates is the National Assembly which, together permission to organize business activities in with the locally elected People's Councils, various stages of the product cycle. Beyond the has seen some devolution in the decades since legal changes that devolved greater authority the beginning of Doi Moi. These bodies have to the media, other changes, particularly over gained certain powers of oversight and have content, have also taken place. generally become more assertive. Deputies call government ministers to testify before the The devolution of authority to the media National Assembly, frequently press them to accompanied a growing acceptance of the media explain the performance of their ministries, and as an ally for advancing several goals, including periodically reject government proposals. These the fight against corruption. Indeed, autonomy question and answer sessions are televised and is essential for the media to do this job well. attract a large audience. The oversight role by Yet, a countervailing concern by some over the provincial People's Councils has also become quality of reporting and the impact of vigorous more important as provinces have gained new reporting has generated a refocused effort on powers over public finance, public investment strengthening accountability of the media itself. and land use management, among others. The The mechanisms, however, have been almost devolution that has occurred elsewhere in society entirely a return to upwards accountability for xiv Executive Summary compliance with rules--rules whose boundaries, there are formidable challenges. Addressing in the case of the media, are not entirely clear. the genuine need to safe-guard certain forms The challenge for media reform, as with other of information is one challenge. Changing the aspects of Vietnam's devolving system, is to align legal and organizational culture that emphasizes the system of accountability with incentives to secrecy is another. Although access to information generate positive results, notably vigorous and is recognized as a right in the Constitution high quality reporting. and there are currently many legal documents regulating access to government information, More cleanly separating regulatory functions that information may not be easily accessible. from direct management is showing positive Most legal documents regulating access to results in the economic sectors, and this could information do not clearly assign institutional and be true for the media sector, as well. Similarly, individual responsibilities for the publication of reorienting efforts to deter poor reporting toward information. More fundamentally, the provisions civil remedies through the courts, rather than in the current legislation constitute a "positive subjecting journalists to the specter of criminal list" of information that should be disclosed. The sanctions, can provide accountability without presumption that all information not prohibited, draconian measures that tend to stifle edgy for example on national security grounds, should reporting altogether. be considered public is still lacking in Vietnam. Ensuring that the right to request information Many journalists feel that improving the is extended to all types of information not professionalism of reporters and reporting will specifically excluded and is applicable to all help bring about the confidence needed to attain sectors and levels of government would be a independence with accountability for the media. major advance. Ensuring that the media has the information to do the job can improve the professionalism of Establishing an effective access to information the media and encourage accurate reporting. law will also need to overcome a related accountability barrier. If the system of Indeed, the new systems of accountability accountability is asymmetric, for example if that are called for by a devolved system rely making a mistake is punished more than failure crucially on accurate and timely information. to do something good, the result will be overly At the moment, however, Vietnamese citizens risk-averse behavior. But this neatly describes and enterprises, the media and civil society, and Vietnam's system: those who release information even some public officials have difficulty getting can be punished if they make a mistake, but are needed information. Access to legal documents not rewarded for making information available. is improving, if not yet complete, and access to administrative procedures is also increasing with Themes and Lessons for Governance Reform the government's program on administrative procedure reform. Yet, even for this most The shifting landscape of devolution and practical function of information--how to do accountability is neither linear nor predetermined. things--some citizens find information hard to Indeed, the Vietnamese approach to reform, obtain. The draft Law on Access to Information, searching step-by-step for solutions to society's slated for discussion in the spring 2010 session problems, is one of experimentation. And of the National Assembly, could be an important experimentation, pushing boundaries in one advance. way or another, continues to occur. A snapshot of several initiatives in local governance, service Although the need to make public information delivery, and oversight is provided in Box I. the rule rather than the exception seems clear, xv modern institutions Some are more successful than others, but the for better services, and more voice and spirit of experimentation and the willingness to participation will only get stronger. push the boundaries are the common features. Devolving authorities, whether along economic, geographical or functional lines raises In surveying the breadth of Vietnam's institutional fundamental questions of accountability. Indeed, reforms and the experience of the past two the notion of "devolution with accountability" decades, several repeated themes emerge. would seem to be a contradiction. While it is · The extent of devolution has been substantial, not a contradiction that is easily resolved, new both geographically and functionally. mechanisms of accountability are helping fill the void. · New systems of accountability are being put in place, but often with a lag and not always The first decade after Doi Moi was the era of of the best form. devolution of economic power, from central · Inthedevolvedsystem,conflictsofinterest planners to farmers and enterprises. The second are becoming more evident. decade saw significant devolution of powers and responsibilities to the provinces, and stronger · Information plays a central role in any accountability for communes. More recently, system of accountability. functional devolution to service delivery units · The most successful reforms had a has improved results even while raising new constituency that was empowered to push challenges in aligning accountability with for change. incentives. · People are becoming more demanding--as What will the next decade look like? Vietnam endeavors to develop into a modern middle-income country, the pressure xvi Executive Summary Box I. Experimentation in Vietnam's devolution and accountability landscape Accountability in health care: Recognizing the importance of making patients and their parents happy with their treatment, the National Hospital of Pediatrics sought to improve their understanding of the reasons for dissatisfaction, proposing a mini-project to gather parents' feedback through surveys of patients and their care givers. The first round of 6,000 interviews is expected to be completed in November 2009. Lessons from decentralizing business environment decisions: By decentralizing policy and fiscal authority to leaders in the Chu Lai Open Economic Zone in Quang Nam Province, local officials were expected to have the regulatory space and incentives to experiment with policies and institutions and ultimately spur development in that area. Chu Lai was intended to give local leaders increased fiscal, policy, and legal authority, since fiscal and policy decision making authority are divided between local officials and the central government. As a consequence of consensus decision making process, which includes ministries with conflicting interests in Chu Lai's experimentation and success, Chu Lai's attempts to innovate have stalled. Strengthening communication and information after decentralization: Hoa Binh Province has begun to streamline the planning process by drafting "planning guidelines" at the commune level and district levels. The guidelines cover several aspects of better planning practice, such as participation of local people in the process of planning, emphasis on the evidence-based analysis, prioritization of policy interventions, and active consultation. Accountability at the city level: Ho Chi Minh City carried out a "Survey on Citizen's Satisfaction with Public Services" in 2008 at its own initiative and at its own expense. The city's People's Council mobilized the funds to repeat the surveys, which collected information on difficulties and problems with using services, levels of satisfaction and dissatisfaction, levels of transparency and access to information, and feedback mechanisms. Resistance was overcome by a plan to work closely with the concerned bodies, holding consultations during planning to be sure that the questionnaires were right, and workshops afterward to ensure the results were properly understood. Challenges and success of an anticorruption whistle blower: Mr. Dinh Dinh Phu, a retired colonel living in Do Son town in Hai Phong city, detected in 2003 some serious corruption related to land use management. Perceiving this situation to be unfair, Mr. Phu started at the beginning of 2004 to submit denunciations to many places, but was met with silence. Mr. Phu was accused of "taking advantage of democracy to slander the leader, the Party and the authority". Mr. Phu was brought to the lower court of Hai Phong, where a verdict was issued against him. But as a retired soldier, Mr Phu would not give up easily. After emergency petitions to the Supreme People's Court, the Ministry of Public Security, the Prime Minister and the Deputy Prime Minister, the case was investigated and Mr. Phu was cleared by the Government Inspectorate. Media playing its oversight role: Since 2007, charging unmetered fares became common among the different taxi companies in the Ho Chi Minh City airport. Thanh Nien reporters started to investigate this situation by interviewing passengers and taxi drivers, and then exposed the situation in the newspaper. Following additional investigations, it reported that the guards in the airport were asking taxi drivers for bribes in order to have priority in picking up passengers. Taxi drivers claimed that it was the bribe payment which was forcing them to charge higher fares. Vigorous reporting helped strengthen accountability of many parties who contributed to the problem of unmetered fares. xvii 1. THE STATE AND INSTITUTIONAL REFORM The year 2009 brought a new set of challenges As institutional reform is a long-term agenda, for Vietnam. Faced with a rapidly deteriorating framing the issues facing Vietnam today and for world economy, the key focus of leaders and the the next decade requires some understanding public was how to wrestle with the domestic of how institutions have been evolving. The fallout from a crisis that began elsewhere. While next section argues that one of the defining the challenge of early 2008 was to control an characteristics of Vietnam's experience of the overheating economy with rapidly accelerating past decades has been the devolution of authority, inflation fueled by massive inflows of foreign not only along geographical lines, but in other capital, by 2009 the pendulum had swung the dimensions as well. other way. Inflation concerns had eased and the real impacts of the financial crisis occurring A Devolving State overseas took center stage. As this report goes to press, growth forecasts are again on the rise and A standard analytical framework for exploring yet another macroeconomic challenge confronts governance relationships has three discrete sets Vietnamese policy makers. of actors: the state, the business community and civil society. This staple of many institutional While the macroeconomic pendulum swings, a studies implicitly assumes a great degree wide range of other challenges, both long-term of independence between actors in terms and emerging, call for reforms of a different sort. of objectives and control, with institutions Citizens increasingly call for more efficient and mediating the relationships. transparent delivery of services for all, not only for those who can afford them. There is growing In Vietnam, however, the bodies that comprise recognition of the need to ensure that public society have been more tightly linked than in investments are selected properly, and that most countries. This was especially so in the those who are displaced are fairly compensated. 1970s and 1980s prior to the opening of economic Corruption remains a concern of many, both policies known as Doi Moi. Units of the state within and outside of government. existed along geographical and functional divisions, the latter even including economic This Vietnam Development Report (VDR) production including farms and industry, but focuses on the somewhat longer term challenge all were viewed as part and parcel of the same of institutional reform. Institutions, the rules whole. Accountability rested strongly in the by which society and its constituents interact, system of administrative controls for complying have come to be understood as key factors that with rules and for achieving targets. determine how a country develops in the longer term. In response to the disappointing performance in the post-war years, a series of "fence-breaking" 1 modern institutions experiments began to shift Vietnam's economy terms of accountability, the top-down system toward a new model.1 Even before the start of the of accountability through compliance with Doi Moi process in 1986, some units of this whole administrative rules began to give way over began to receive greater autonomy. Agriculture, the next decades to an accountability system which had been collectivized in fits and starts that was more strongly oriented toward bottom- since the 1950s, began a transformation process up accountability for results. For economic in the 1980s that established basic property production, such bottom up accountability rights for farmers, allowing them to keep some came naturally through the market mechanism. of their output. The process accelerated with Doi By today, the agricultural and (private) Moi, which serves as a convenient starting point industrial sectors resemble much more closely for examining the changes. In the enterprise fully autonomous bodies whose arms-length sector, firms were given some autonomy to make relationship with the state must be mediated by production decisions. The incentive system new institutions. In essence, one of the central no longer relied on selfless effort to advance features of Doi Moi was the devolution of some society's goals, but began to incorporate rewards types of power. for the economic producers themselves. In Figure 1.1. A devolving state Pre - Doi Moi Today nits ery U Me Service ice Deliv dia Delivery Firms Serv Farmers Units Central Government Enterpri ses Apparatus r owe Civil Society nd L ment es a Provinces Organizations stem Pro vinc Govern Central Government ial Sy ls of and Lower udic Leve Levels of Apparatus al-J Media Leg People's Councils Government embly Legal-Judicial National al Ass Farm Nation System Assembly ers ciety Civil So The devolution of decision-making power and devolution of land-use decisions continued. in the economic sectors has been followed Local levels of government also gained more by considerable devolution in other spheres. say over their human resource management Figure 1.1 provides a snapshot of the devolving decisions. And recent years have seen further relationships. Sub-national governments have decentralization of public investment decisions, been given increased autonomy in selecting expansions of public-private arrangements in investment projects and allocating budget investments, and further decentralization of resources. In the first decade after Doi moi, the human resource management at the local level. planning process and decision making over land- use decisions saw considerable decentralization Parts of the government that are directly to the provinces. In the second decade after Doi involved in providing services to the population, Moi, provinces gained a larger role in the budget particularly in health and education, have been process and over public investment decisions, given increased autonomy to perform, and finance, 2 the state and institutional reform those functions on their own. In the first decade For some areas, the devolution that has taken after Doi Moi, service delivery units gained the place has been more limited, although still right to collect user fees, and private providers unmistakable. Civil society, as it exists in were authorized to provide some services. In the Vietnam, remains dominated by organizations second decade, there was further delegation of that maintain close ties to the state, although there financial authority to service delivery units and have been changes that somewhat ease entry and administrative units and engagement of non-state facilitate voice for civil society organizations. In actors in service provision was broadened. More the first decade after Doi Moi mass organizations recently the process has continued, with further received increased independence over their delegation of authority to service delivery units management and finance, and more forms of and deepened "socialization" of service delivery, civil society organizations were allowed to be allowing the engagement of non-state actors and established and to operate. In the second decade, even granting preferential policies to non-state mass organizations have gained greater authority providers. to undertake numerous public affairs activities, and additional forms of civil society organizations Some aspects of the legal and judicial system were allowed to be established and to operate, also have the earmarks of devolution. Lawyers always based on the principle of self-finance. have seen expanded rights to provide legal More recently, mass-organizations and other civil consultancy and participate in legal proceedings, society organizations were devolved authority to and there has been devolution of jurisdiction undertake new public affairs activities, especially to the courts to handle economic disputes. in the areas of anticorruption, service delivery, Devolution of powers continued in the second grassroots democracy, administrative procedure decade after Doi Moi, with lawyers becoming reform and law making. authorized to practice in law offices and law firms, and civil society organizations gaining The media, while still linked more closely to the ability to provide legal consultancy services. the state than in most countries, was given more There was further devolution of jurisdiction autonomy in terms of financing and circulation, to the courts to handle some administrative and to some extent over content. In the first cases, and an expansion of the mandate of the decade after Doi Moi the reporting rights of district courts to handle economic disputes. The the media and journalists were expanded. In devolution of powers, particularly to lawyers and the second decade, media agencies became lawyers' organizations, has continued in recent financially and managerially more independent years. Civil judgment execution has been made from their parent organizations and were allowed more independent from the executive, and the more flexibility in production. jurisdiction of the courts over administrative cases has expanded, as has jurisdiction over criminal While the devolution that has taken place has and civil cases. Experiments in socialization of arguably brought many positive results, there some judicial and judgment execution activities is no presumption that devolution is always are ongoing. good. On the contrary, this VDR will argue that central controls are sometimes essential. The National Assembly has been empowered to When competition among provinces leads them play an oversight role. In the first two decades to ignore the impacts of their policies on their of Doi Moi, devolution expanded the oversight neighbors, some encouragement of regional powers of the National Assembly and the locally planning is needed. When national uniformity is elected People's Councils, a process which has needed, such as in the system of law making, less continued in recent years. Oversight bodies such devolution is needed, not more. Recent changes as State Audit of Vietnam now report directly to in the law making process are improvements in the National Assembly. part because they centralize who can make laws 3 modern institutions and how. When there is asymmetric information, The type of accountability system that is most such as for the quality of health care and the appropriate for a particular function depends on credentials of health care professionals, or when the features of that function or activity. If there equity concerns demand equal access to services were perfect information, then the two types national standards are needed. of accountability would be very similar, since a top-down monitor could easily tell how well Even when devolution is appropriate, a new an organization is performing its role. But when conundrum arises. To devolve powers is to also information is not perfect, and of course it never devolve responsibilities, and ensuring that newly is, then it is costly to play that monitoring role. In empowered bodies perform their functions well the case of service provision, those with the best is the duty of the accountability system. information may be the clients--those who are using the services. The health sector provides a New Forms of Accountability good example here. Being responsible to patients and their families through a bottom-up system of The Vietnamese terms for accountability and accountability for results can be more efficient responsibility are very similar, but the meanings than a purely top-down hierarchical approach. of the words are quite different.2 While being At the same time, some information may not responsible for something implies whose job it be well known to the clients. To follow through is, being accountable calls for more. It assumes with the health sector example, the quality of the that there is accurate and accessible information doctors and pharmaceuticals can not be easily on which to judge whether the job is being done detected by most patients--some measure of well, and it assumes that there are mechanisms upward accountability is also needed. to reward good performance and discourage bad performance. This VDR distinguishes between Another key distinction to be made in examining two types of accountability. systems of accountability is between the reasons for good and poor performance. There is a · Upward accountability for compliance: The world of difference between intentional errors, person or body focuses on the rules and errors of negligence, and innocent errors. dictates from above, emphasizing adherence An accountability system that treats them all to instructions coming from within the the same will not achieve the desired effects. hierarchy. Similarly, if making a mistake is punished more · Downward accountability for results: The severely than failure to do something good, the person or body focuses on the results they are result could be overly risk-averse behavior, long entrusted to deliver, and mechanisms ensure delays in getting things done, the ubiquitous that poor performance has consequences need for higher approvals, and so forth. On and good performance has rewards. the other hand, an accountability system that focuses entirely on the negatives--punishing Like all models, this focus on two forms of mistakes or poor performance--is only half of accountability omits many nuances, such as an accountability system. Ensuring rewards for variations and hybrids of forms of accountability. positive performance is equally important. All But models can be powerful precisely because too often, the penalties for acting without official they focus on the core aspects of an issue. authority outweigh any benefits for making the In this case, the defining features of upward right decision, a feature that is evident in many accountability are hierarchy and administrative areas in Vietnam, from the release of information rewards and punishment, while the defining to making even small decisions. As Vietnam features of downward accountability are advances to become a middle-income country, feedback from clients, information for clients, one of the toughest challenges will be to get the and participation in decision making. accountability system right.3 4 the state and institutional reform One way of thinking about a system of Indeed, the Vietnamese approach to reform, accountability was provided by the World searching step-by-step for solutions to society's Development Report 2004 which distinguished problems, is one of experimentation. And between the long route to accountability and the experimentation, pushing boundaries in one way short-route to accountability. The long route to or another, continues to occur.Yet, the fundamental accountability involved citizens holding service tension between autonomy and accountability is delivery organizations accountable indirectly not self-correcting. Accountability mechanisms through the election process. will not automatically evolve to mediate these new relationships. Rather they need to be Such a system also has an important information consciously created. Collective action problems, aspect, providing the system with feedback about in which the benefits for an action accrue to a the types of services that the population feels are diffuse group while the costs are borne solely by most important. the one carrying out the action, are evident in many places in the report and may also stymie In Vietnam one mechanism by which preferences progress. and concerns are revealed is through the Vietnam Fatherland Front, which collects opinions, The annex of this VDR contains a series petitions, and grievances through consultations of devolution and accountability timelines with its network of mass organizations. These highlighting key changes in both. The purpose are reported every year at the opening of the of the timelines is not to provide an exhaustive National Assembly. With the Vietnam Fatherland list of actions; indeed, it is a subjective judgment Front's status as an official organization, even when identifying the dates that for a change in one with constitutional rights and duties, this devolution or accountability. Rather the value report to the National Assembly carries weight. is in the entirety of the timelines, for the visual Box 1.1 summarizes some of the issues that are depiction of a changing system they represent. on people's minds, and even highlights areas where the accountability systems seems to be Data for Informing the Analysis coming up short. The central theme of this VDR is that devolution This system helps satisfy the information aspects of authority over the past decades has covered a of accountability--that is, the system provides wide range of activities and services and is also information to leadership about the concerns and calling for new mechanisms of accountability. preferences of the population. But it does not While the fact of such devolution can, in most fully satisfy the central role of accountability of cases, be determined through readings of laws ensuring that that those concerns and preferences and a review of history, the impact of the changes are addressed--if they are not addressed, requires a different sort of analysis. And that what are the consequences? The same World analysis requires data that captures how citizens Development Report that introduced the long- and firms assess the institutional environment, route to accountability also introduced the about their experiences with the state, and about short-route to accountability. The short route the problems they face. Such governance data to accountability focuses on specific services has always been sparse compared to economic emphasizing the direct interactions between data, but whereas a few decades ago there was a service providers and their clients. Such a system veritable information vacuum on such topics, in is only emerging in Vietnam, in some places and Vietnam and elsewhere, there is a growing body for some functions, but will become ever more of survey data that help to fill this void. important as responsibilities are devolved. This VDR makes extensive use of several key The shifting landscape of devolution and sources of governance data. (Box 1.2) First, an accountability is neither linear nor predetermined. important innovation took place in the 2008 round 5 modern institutions Box 1.1. Institutional challenges highlighted in the Vietnam Fatherland Front's report to the National Assembly In its May 2009 report to the National Assembly the Vietnam Fatherland Front reported that it had collected 2,446 opinions and petitions of the voters and the people throughout the country. While praising the leadership for achievements in many areas the report also cited areas of concern. A summary of some of these concerns is instructive both for the concerns themselves and for the weaknesses in accountability they identify: The lack of good data on what is happening in terms of labor and employment during the economic downturn. The report notes that statistics on the number of people losing jobs and economic areas and fields, types of production and business "remains inaccurate and inconsistent which causes difficulties for the implementation of support solutions of the government." The problems related to resettlement are discussed in several places in the report. While noting that the government has launched many policies on agricultural and rural development, the report also states that such policies "fail to satisfy the growing and emerging needs and requirements, and the gaps between the rich and the poor are still widening. Reclamation of farming land and forestry land to build industrial parks/zones, urban centers and golf courses/courts in many localities is still irrational leading to a situation where the agricultural land reserves are declining continuously; and many units that have been allocated land to launch projects fail to do so, leave the allocated land unused, or use such land for wrong purposes, or trade such land for illicit earnings which causes discontent and dissatisfaction on the part of the people." While appreciating the cash bonuses distributed during Tet, the report also notes the regrettable mistakes that took place in many places. They note that in some localities the policy was implemented in an arbitrary, irresponsible and undemocratic fashion. They note that many poor people have not benefited from the policy or benefited only with delays or reduced amounts. "Huge numbers of voters petition to the government and levels of administration to pinpoint the responsible officials to deal strictly with wrongdoers." While applauding achievements in the area of preventing and combating corruption and waste the report notes that the situation of corruption and waste still takes place. "Many cases of corruption have been brought to light which won support and attracted a lot of interest and attention of the general public. However, responsible functionary agencies were still slow to take action or failed to deal satisfactorily with certain cases of corruption, below expectations, thus fading away trust and confidence of the people in the fight against corruption." To help improve the battle against corruption and waste the report noted that voters petition the government "to speed up the public administration reform, to strengthen and to promote openness and transparency in order to stop and to roll back corruption and waste, especially in such fields as land administration, investments, capital construction, use of public assets, etc. Voters also petition the National Assembly to strengthen and to enhance effectiveness of its oversight in this regard." In the area of legal development the report applauds the increased work that is going into legal development. It notes that more law development projects are approved and commented upon and each session of the National Assembly than in the past. But it also notes that laws are slowed to be developed. There seems to be a particular issue with the development of secondary legislation. The report calls on the National Assembly and the standing committee of the National Assembly to gradually reduce the number of articles and laws stipulating that the government and line-ministries are responsible for issuing concrete and specific under- laws. In other words the practice of leaving the details for secondary legislation is something that the voters seem to think contributes to the slowness in developing the secondary legislation. Finally, the Vietnam Fatherland Front report to the National Assembly neatly summarized the challenge of building accountability for a devolved system: "Many voters petition the government to... `grasp those difficulties and obstacles in the real running and governance of socio-economic activity of the country, especially regarding administrative procedures, attitudes, sense of responsibility of public officials and civil servants in the course of performing official functions and duties in order for timely issuance of correct and appropriate solutions and mechanisms, thus solving difficulties and obstacles, speeding up economic development, meeting expectations of the people.'" Source: Central Committee of the Vietnam Fatherland Front, Presidium. Hanoi 19 May 2009. "Report: Synthesis of opinions and petitions of voters and the people." Delivered at the Fifth Session of the 12th National Assembly. 6 the state and institutional reform of the Vietnam Household Living Standards The data provide for a rich source of information Survey (VHLSS) conducted by the General to move beyond guesses and assertions Statistics Office (GSO). A new Governance about Vietnam's governance challenges. The Module was attached and administered to more producers of the data, GSO and VNCI-VCCI than 9,000 households across Vietnam. Sample and the thousands of citizens and enterprises sizes ranged from 72 in Kon Tum to 300 in Ho that participated in the surveys, have provided Chi Minh City, and most provinces had over a a valuable service. As with any data, however, hundred respondents. The availability of more their responsibility ends with the quality of the than 9,000 observations on citizen satisfaction data. The subsequent conclusions and analysis in with government services, participation in this VDR in the not their responsibility, but that policy making, access to information, and other of the authors of this VDR. issues, is an important asset for any researcher attempting to understand Vietnam's institutional Organization of the VDR development. The fact that this data was collected and is now informing debates on governance This Vietnam Development Report, like its reform represents an important milestone for predecessors, draws on the contributions of Vietnam. many development partners. The VDR series provides a vehicle to communicate not only with A second source of data is familiar to many government and the broader community, but also researchers: The annual survey conducted by the among donors that contribute to its preparation. Vietnam Competitiveness Initiative (VNCI) and The VDR series aims to influence the reform the Vietnam Chamber of Commerce and Industry agenda, build consensus among thinkers (VCCI) has, since 2005, been used to construct and the public at large, harmonize upstream the popular Provincial Competitiveness Index with donors, and position those involved as (PCI). The PCI is widely acknowledged to have substantive contributors of knowledge and been a positive influence on the competitive expertise. The present VDR, focused on Modern spirit of the provinces, all of whom would like Institutions, represents a joint statement of the to see themselves ranked higher year after year. donor community on progress and prospects It is also a somewhat unique source of data on for Vietnam's development and aspirations for the institutional environment facing firms. With devolved, yet accountable, system. over 7,000 firms participating in the survey in 2008, a rather large number for such a survey of To examine the extent and nature of devolution, enterprises about business environment issues, and the mechanisms of accountability that the annual PCI survey represents a valuable are being developed and need to develop, this cross-section of firms' views. In addition, the VDR will examine five broad parts of the state fact that some of the same firms were included apparatus. Chapter 2 examines the central state in the survey at different points in time makes it apparatus that governs society even after other possible to examine changes over time in a fairly functions are devolved, focusing on two key powerful way. This VDR will draw on both the resources that the state has at its disposal: human 2008 round of the full PCI survey and the panels and financial. Chapter 3 examines the system of of firms that participated in the survey in both governance at the sub-national level. Chapter 4 2006 and 2008 in order to better understand the centers on the interface between governmental dynamics of Vietnam's institutional environment. bodies that interact most closely with the general In addition to these two large-scale surveys of public, providers of services, and examines the firms and households, a broad range of other mechanisms of accountability that have come to survey data will be examined. exist after these service providers were granted 7 modern institutions Box 1.2. Key data on governance and institutions The General Statistics Office (GSO) conducted the Viet Nam Living Standard Survey (VLSS) in 1993 and 1998, and since 2002, the survey, whose name was changed to the Vietnam Household Living Standards Survey (VHLSS), has been repeated every two years.. The VHLSS Governance Module* was appended to the much longer household survey questionnaire for the first time in 2008, collecting governance data from 9,189 households. The basic features of the survey are as follows: The questionnaires were administered through face-to-face interviewing, and quality control was supervised by GSO. As respondents are mandated by law to participate, the response rate for the VHLSS is extremely high. The households selected to be administered the Governance Module were chosen at random from among the households sampled for the broader VHLSS. Sample sizes for each province were approximately proportional to the population of the provinces. The VHLSS is not a simple random sample of respondents, but rather a sample of households within the sites that were chosen for each province. As long as the sites are representative of the population in that province, then the Governance Module sample can be considered a representative sample at the provincial level. If, however, the sites are not representative of the province as a whole, then the sample may not fit the strict definition of representativeness. In addition, the well known challenge of properly sampling certain respondent groups, especially un-registered migrants, are present for the Governance Module as they are for the broader VHLSS. The VNCI-VCCI Provincial Competitiveness Index Survey** has been conducted every year since 2005. Sample sizes and response rates have grown over the years as the popularity of the PCI has grown. The 2009 round of the survey, whose results are expected to be released about the same time as this VDR, received responses from more than 10,000 firms. This VDR will draw on the 2006-2008 rounds of the PCI Survey whose main features include: The PCI survey is a mail-in survey. Each year the team at VNCI and VCCI mail out tens of thousands of questionnaires, and follow up with additional letters. As a voluntary mail-in survey asking sensitive question, the response rate was initially very low. As the PCI became better known, the response rate has increased to about 30 percent for the 2008 round of the survey. In order to examine how well the final sample matches the population it is drawn from, the team compares the PCI data against median data from the Tax Authority or Enterprise Census. After re-weighting the PCI survey to reflect differences in province population, the sample generally "looks like" the population, with a few exceptions. PCI firms tend to be slightly older (15% vs. 10% registered before Enterprise Law) and slightly bigger (30% vs. 16% greater than 5 employees) than firms in the overall population of enterprises, and to be slightly more profitable. As a whole, however, the large sample size and general similarity to the overall population of firms, makes the PCI data very useful for examining a wide range of governance and institutional issues. While the increase in the response rate makes the PCI survey increasingly valuable for examining the cross-section of governance challenges reported by firms, it poses challenges for examining changes over time. In the increase in response rate is due to changing levels of confidence that responses will be held confidential. For this reason, the panel element of the sample, that is set of firms that answered the survey in different years, is particularly valuable. The were more than 2,000 firms that participated in the PCI survey in both 2007 and 2008, and 635 that responded in 2006, 2007, and 2008. The data for the PCI survey can be found at http://www.pcivietnam.org/. Source: *General Statistics Office, Vietnam Household Living Standards Survey. **Edmund Malesky. 2008. The Vietnam Provincial Competitiveness Index: Measuring Economic Governance for Private Sector Development. 2008 Final Report. Vietnam Competitiveness Initiative Policy Paper #13. Vietnam Chamber of Commerce and Industry (VCCI) and United States Agency for International Development's Vietnam Competitiveness Initiative (VNCI): Hanoi, Vietnam. 8 the state and institutional reform measured autonomy. Chapter 5 focuses on the Whether it is a purely governmental function, legal and judicial system, for which the lines of such as investigating and prosecuting corruption, devolution are not as clear-cut--the law making or a non-binding role in bringing information to process arguably needs less devolution, while the public's eye, as could be played by the media the judicial system needs greater independence and civil society, or a mixture of both, as with in order to be able to do its job effectively. the National Assembly, these institutions of Chapter 6 examines the institutions of oversight. oversight can play a crucial role for Vietnam's These include the bodies whose job descriptions system of accountability in the next decade. include, but are not limited to, providing a form The centrality of information for accountability of external oversight over the rest of society. systems, and some challenges going forward, round out the report. 9 2. CENTRAL GOVERNMENT Even a highly devolved system needs a central state apparatus to advance society's goals by providing public goods, regulating externalities, addressing information asymmetries, and ensuring equity and stability. The shift from director to rule-maker and from the main purchaser of skills to one that must compete with the private sector presents new and difficult challenges for the central state apparatus. Public sector salaries do not seem to be greatly out of line with those in the private sector, but motivating the civil service calls for increased transparency and competition in the way human resources are managed. Management and oversight of financial resources through the public financial management system has improved markedly, but long lags for the release of certain information, incongruities between capital and recurrent budgeting, and limited capacity for internal and external auditing pose continuing challenges for the transparent and efficient management of public finances. Progress that has been made in public financial management has emanated from the consensus among stakeholders on the value of reforms. In contrast, the tension between accountability of civil servants and stability of career paths poses a challenge for civil service reforms. The lack of a clear constituency pushing for change makes this sort of reform particularly difficult and reliant on high level backing. The devolution of authority that has transformed Yet, the devolution of authority in other many aspects of economic life in Vietnam areas has important implications for how the has limits. While many decisions are best state manages itself and mediates the new left to decentralized actors--firms, farmers, relationships. Through the devolution to firms consumers--others should reside with the state. and households, to lower levels of government Providing public goods, controlling externalities, and to autonomous service-delivery units, the addressing information asymmetries are the government is gradually being transformed from classic functions of the state. Setting the rules the director to the rule-maker. In order to remain and enforcing them, providing national public efficient in its new role, however, the state will goods and using the power to tax in order to also need to face new challenges brought about pay for it all, must all be done by the state. No by the devolution of authority. With expanded matter how much devolution of authority takes freedoms for firms to employ resources on the place, there will always be the need for a strong terms they negotiate themselves, the state must and efficient central bureaucracy to hold it all compete for human resources. With decentralized together. Indeed, the very concept of a public economic activity comes the transformation from administration that is part of, but not the entirety implicit budget financing through price controls of, the state has been introduced through the and subsidies to rule-based financing through devolving of responsibilities that characterizes taxation, and pressure to use those finances Vietnam's reforms.4 10 central government efficiently. Information, fundamental to all The transformation of the central state in Vietnam decision making, becomes ever more important has included changes in internal organization when the authorities are devolved. and a re-definition of functions and tasks. In 1988, the central state apparatus started to be This chapter explores the implications of streamlined, with a reduction in the number of Vietnam's devolving system for the central management bodies, and in 1992 larger changes government apparatus, and how the central were in store: the new Constitution and Law government can adjust. The chapter will first on the Organization of the Government began summarize how the central state's internal to replace the system of direct management by organization has been realigned for its new role. administrative decree with management by law. Second, we examine the management of the In 2001 the organization and functions of the overall public administration reform process. central government were more clearly specified-- Next, we take up the question of how the state revisions to the Law on the Organization of the staffs itself, ensuring sufficient--and sufficiently Government provided a conceptual distinction qualified--human resources to perform its new between state administrative functions and role. Next, we examine how the institutions of activities of service delivery units. In addition, public financial management are being adjusted the Law made clear that independent agencies for the state's new role and the economy's new attached to the Government or the Prime Minister relationships. could no longer promulgate legal normative documents. The effort to centralize certain The Role and Organization of the Central authorities was sensible--devolved authority State in law making was generating a confused and conflicting body of laws, as will be discussed in With the devolution of authority from the central Chapter 5. state to other entities--local governments, administrative units, service delivery units--the The changes introduced by the Constitution and role of the central state in bringing uniformity the Law on the Organization of the Government and consistency to the whole government have had visible results, reducing the number apparatus becomes more challenging. Indeed, of ministries, ministerial-level agencies and the tension between the self-governance of the independent central-level agencies. (Table different entities and uniformity of government 2.1). Current discussions related to functional administration calls for a shift in way the central reorganization tend to focus on the possible government itself operates. merits of simplifying the structure of ministries, Table 2.1. Ministries and agencies at the central level Reasons Ministries and ministerial-level Independent agencies attached to the agencies Government or the Prime Minister 1986 67 48 1992 27 31 1997 23 25 2002 26 14 Since August 2007 22 8 Source: Nguyen Phuoc Tho, 2007. Thai Vinh Thang, 2007a, 2007b. 11 modern institutions for instance further reducing the number of established to manage the process. The reform ministries. While the merging of ministries and program was also supported by a secretariat units can generate upheaval in practice, other and steering committees at the province and reforms may be less ambiguous in their results. ministerial levels. Aiming for better coordination of policy making and planning across ministries and agencies, The objectives of the PAR Master Plan were for example, can help to minimize confusion many, and there have been some successes. and ensure that policies achieve their desired Administrative procedures were simplified and objectives. made more transparent, and new approaches such as the one-stop shop and integrated one Managing the Public Administrative Reform stop shop were widely applied, and performance Process management system and citizen's report cards were introduced on a pilot basis. Public Recognizing that adapting to its new role calls administrative services have become more for an overhaul in various aspects of public accessible, transparent, and accountable than administration, an ambitious set of reforms they were in the past, and as will be discussed began to receive attention in the 1990s. Public later in this chapter, transparency and efficiency administration reform as an integrating concept of public finance have improved. was officially endorsed by the Party Central Committee in 1995. Then, in 2001, the Public While the successes are notable, there has also Administration Reform Master Plan 2001-2010 been, at times, slow translation of policy into set out a program of reform in four strategic actions. Because implementation of PAR was areas: institutional reform, organizational decentralized to administrative units, there is reform, human resource reform, and public limited national or local cross-sector coordination financial reform. The original objectives of plan formulation and implementation. At included improving the quality of legal times there was a lack of adequate participation normative documents on public administration, by stakeholders outside the public administration decentralization, defining of functions, system such as the people's elected bodies, modernizing public financial management, private sector and civil society. As a whole, e-government, civil service reform--quite an public administration reform has been viewed ambitious program indeed. A mid-term revision as a collection of technical measures to improve of the PAR Master Plan provided more concrete efficiency rather than a fundamental effort objectives for some areas, such as training, to change the rules of the game of the public morale, salaries and management of civil administration, to make the administration servants. The plan supported both devolution, as accountable to society and the people. Many feel with the program of decentralization, and getting that where there have been successes in public the central government to do its work better, as administration reform, they have been mostly at with administrative procedures reform. the national level and in some better-off urban areas, while implementation in poor, rural and The reform program did not want for high level mountainous areas has lagged. backing, and because of the broad coverage of the PAR Master Plan, its management required As Vietnam approaches 2010, a review of the the involvement and coordination of various Public Administration Reform Master Plan 2001- central level agencies and ministries. A central 2010 to help understand better the successes and PAR Steering Committee chaired by the Prime failures is clearly in order. Identifying challenges Minister and including ministers of Home and pitfalls and analyzing the lessons learned in Affairs, Justice, Planning and Investment, and designing the Master Plan, and disseminating Finance and the Office of the Government, was and discussing with stakeholders, notably the 12 central government users of public administrative services and by the Office of Government. Finally, enterprises, will help inform the approach to measures to prevent corruption in the public public administration reform in the next ten administration--specification and evaluation years. of tasks of managerial positions, salary reform, staff rotations, income and asset declarations-- Indeed, such a review need not be a one-time are included in the Anti-Corruption Strategy to exercise. Developing a system to continuously 2020, which has its own action plan and its own and systematically review the strengths and governance arrangements. weaknesses of the implementation of the public administration reform agenda, for example by Human Resource Management attaching a monitoring and evaluation framework to the next 10-year PAR Master Plan, could One side-effect of Vietnam's booming economy help identify implementation challenges as they has been the impact it has on the ability of arise. At present there are indicators to track the government to staff itself. Even the most progress in some areas, but other areas are less advanced economies have long wrestled with well evaluated. Importantly, the current system how to ensure that the state has an efficient of indicators focuses on monitoring inputs and and qualified civil service. Faced with growing outputs of policies, but little attention is given competition from the private sector, and with the to outcomes such as the effect of reforms on need to respond effectively to global integration, citizens and enterprises. the government in Vietnam faces a fundamental challenge: How to attract, retain and motivate The institutional structures for managing the high performing people into the civil service. public administration reform program also need to be revised, as the PAR Steering Committee Indeed, competition may be contributing to was dissolved not long ago. Despite gaining a problem that vexes civil services in many increased resources and authority over the countries, and is often discussed in Vietnam, the years, the PAR Steering Committee nevertheless brain drain. With the development of the market lacked capacity, with just a few full-time staff, economy and with international economic dampening its impact in coordinating the integration, more attractive opportunities overall reform process. The need to strengthen outside the government may lure many qualified the role of the heads of administrative agencies and talented people away from the public contributed as well to the decision to dissolve administration. While it is natural, and even the PAR Steering Committee. laudable, for talented people to be interested in business and other forms of employment outside The breadth of coverage of reforms under the the state, competition that is too one-sided risks PAR Master Plan presented another challenge, leaving the civil service under-qualified, under- and many reforms which originally fell under motivated, or both. During the period from 2003 the umbrella of public administration reform are to 2007 period, more than 16,000 cadres and now sensibly pursued as agendas in their own civil servants, about 40 percent of which were in rights. Reforms related to legal development Ho Chi Minh City, voluntarily left government and public financial management (two of the agencies. key areas of the current Master Plan) require technical expertise found outside the Ministry of While it is tempting to focus on salaries as the Home Affairs and, not surprisingly, progress on key variable by which the state and the private these fronts has happened almost independently sector compete for talent, many other factors also from the PAR Master Plan. The revision of contribute. A survey conducted by the National administrative procedures is also covered by Academy of Public Administration (NAPA) in its own plan and is being led successfully 2006 found a range of influences. (Table 2.2). 13 modern institutions Table 2.2. Why do civil servants intend to leave the government? Reasons All (%) Female (%) Male (%) Experience not as expected 20.8 29.2 16.7 No encouragement, no award, no development 36.1 41.7 33.3 Improper remuneration 50.0 70.8 39.6 Being discriminated against 13.9 12.5 14.6 Seeking a chance to show off capacity 18.1 8.3 22.9 Seeking better opportunities 12.5 16.7 10.4 Other reasons 19.4 16.7 20.8 Note: The survey covered 460 civil servants in the Ministry of Agriculture and Rural Development, the Ministry of Fisheries, Nam Dinh Province, Hoa Binh Province. Source: "Building capacity for gender mainstreaming and research within NAPA." (NAPA, 2006) When asked why civil servants consider leaving For a variety of reasons, understanding how state the public service, the level of remuneration was salaries compare to the market wage is much more the most important for both men and women. complicated than just examining the minimum But many respondents also felt that the public wage. As discussed in Box 2.1, the salary structure service offers too little opportunity for them to for civil servants in Vietnam includes a range use their talents, and too little encouragement of allowances, bonuses, and additional income for their efforts. These two basic aspects of the beyond the basic salary. According to surveys management of civil servants--remuneration undertaken in 2006, the basic salary comprised and motivation--will be discussed in turn. only about 30 percent of total remuneration. In addition, changes in the coefficients over time Remuneration mean that even the base salary does not track the minimum wage perfectly. Finally, since How has the remuneration of civil servants labor markets may be segmented by profession changed over the years? Because of the and by location, focusing on national averages complexity of the calculation of salaries, and may mask important variations, particularly in the fact that some components are not widely high-cost areas and for skills which are in high known, this is not an easy question to answer. demand. It remains an open question as to how However, the most fundamental component, the state salaries measure up after the complex minimum wage, is public information. Table 2.3 system of allowances is taken into account. shows the size of adjustments to the minimum wage compared to several other baselines. The VHLSS 2008 provides an excellent source of The minimum wage has increased some 200 data for answering this question, since it includes percent since the beginning of 2000, while the data on total remuneration, including bonuses and Consumer Price Index has increased only about allowances, as well as information on a host of 84 percent. The minimum state salaries have other individual and family level characteristics. clearly outpaced inflation. However, as the state Simple cross-section regressions confirm that competes with the private sector for staff, it must on average, higher levels of education translate do more than keep up with inflation. Over the into higher salaries, as does age and marriage. same period of time that the basic minimum Everything else being equal, skilled workers wage has increased 200 percent, GDP per capita make more than unskilled workers, and those in has risen 238 percent.5 the South East Vietnam are paid the most. The 14 central government Table 2.3. Increase in civil servants' minimum wage vis-à-vis the cost of living and GDP growth Minimum Increase in Increase in Increase in Wage Min. Wage CPI (%) Nominal (VND) (%) GDP Per Capita3 (%) January 2000 - December 2000 180,000 16.7 -0.9 9.0 January 2001 - December 2002 210,000 38.1 4.6 18.1 January 2003 - September 2005 290,000 20.7 19.8 50.3 October 2005 - September 2006 350,000 28.6 6.5 14.7 October 2006 - December 2007 450,000 20.0 13.9 16.0 January 2008 - April 2009 540,000 20.4 19.1 27.6 Since May 2009 650,000 n\a n\a n\a Cumulative: January 2000 - December 2008 200.0 83.8 228.3 Source: Own elaboration, based on data from MOHA and GSO. results also show that after accounting for all Whether or not state salaries are higher on of these factors and more, state employees earn average, this average effect likely masks more, on average, than private sector employees considerable variation by profession, education, with the same characteristics. Figure 2.1 shows and maybe even by geography. The data suggests the coefficients from these regressions for each that while on average state salaries are better of the last three rounds of the VHLSS. than private salaries, the differences are much smaller in Ho Chi Minh City and Hanoi than in One methodological problem that vexes such the rest of the country. analysis is that while factors such as experience and education may well indicate how productive Similarly, for occupations that command high someone will be, other factors, such as hard salaries in the private sector, such as in banking, work and intelligence, are not easily measured. finance, and corporate law, a perceived mis- To account for these factors requires repeated match between private and state salaries can observations on the same person. In essence, this have important implications that stretch beyond technique removes the impact of all factors that the brain drain. Civil servants who feel they vary only by individual, including the difficult are underpaid may more easily succumb to the to measure attributes of hard work, attitude, temptation to enrich themselves outside of the intelligence, etc, After accounting for these rules. Allowing higher salaries for vulnerable effects, the difference between civil servants positions, and making salaries commensurate and formal private sector salaries vanishes in with risks and with market alternatives, can significance, as is shown in Figure 2.2. One help mitigate one factor that contributes to interpretation of these findings is that much of corruption. the state premium can be explained by these unobservable characteristics. This finding may Even if low salaries are contributing to the brain speak well for civil servants in Vietnam, if the drain or contributing to corruption, increasing higher wages are due to better endowments of salaries across the board is neither a panacea nor attributes that are difficult to measure such as feasible.7 The salary and wages expenditure for intelligence and hard work. government personnel already accounts for nearly 15 modern institutions Box 2.1. Remuneration of civil servants A civil servant's salary consists of several components, making it difficult to reach simple conclusions about the level of salaries vis-à-vis the private sector. Salary. This is the minimum wage multiplied by a coefficient that depends on the sector, the position and seniority. The minimum wage is common for all civil servants. When the new salary system took effect in April 1993, the common minimum wage was VND 110,000 and the range of coefficients was 1.0/1.78/8.5 (minimum/average/maximum). The common minimum wage has been adjusted several times since 1993, reaching VND 350,000 in October 2005. The coefficients were also modified in 2005, when the range of coefficients was decompressed to 1.0/2.34/10. According to surveys conducted by the Prime Minister's Research Department before 2006, the salary only represents about 30 percent of the income of civil servants. Allowances. There are eight types of allowances: area allowance (0.1­1.0 times the minimum wage); hazardous, difficult and dangerous duty allowance (0.1­0.4 times the minimum wage); mobility allowance (0.2­0.6 times the minimum wage); responsibility allowance (0.1­0.3 times the minimum wage); leading post allowance (0.1­1.3 times the minimum wage); seniority allowance for army and public security officers (5­6 percent of salary); special allowance for remote and border areas (30­100 percent of salary); and allowance for zones with deficient infrastructure (20­70 percent of salary). Since 2005, there are four additional allowances: over-rank tenure allowance, holder of more than one leading post allowance, profession or work related responsibility allowance, and special armed forces allowance. Bonuses. The government leaves the individual agencies much freedom to determine the amount of bonuses after paying taxes to the state. Nevertheless, annually there are instructions from the government on how to determine bonuses, their types and amounts. In some cases bonuses are divided on an equal basis among civil servants, and in other cases they are paid proportional to the salary of the civil servant. Based on the surveys of the Prime Minister's Research Department, allowances and bonuses together represent about 10 percent of the income structure of civil servants. Supplementary income. Civil servants can receive supplementary income from the agency where they work and from organizations and individuals, normally in the form of money put into an envelope. There are different types of supplementary income: received on a daily basis for services delivered to the public (ranging from VND 5,000­10,000 to VND 100,000­200,000); received on a monthly basis in the form of lunch fee and soft income (VND 100,000­200,000 for most agencies, and 200,000­500,000 VND for SDUs); received on an yearly basis, for work achievements (VND 1,000,000­2,000,000) and on the occasion of the lunar New Year (VND 200,000­1,000,000), the solar New Year (VND 100,000­500,000) and National Day (VND 100,000­500,000). Additional income. Civil servants can obtain additional payments for doing certain types of work in state agencies (e.g. projects, participation in approval committees, scientific research) or doing part-time work for organizations outside the government or directly with the market. Taking additional jobs to supplement state income has become common for civil servants and for the labor force in general. Source: The current salary system in Vietnam's public administration (NAPA and CIEM, 2006) half of recurrent government expenditures. Yet, improved qualifications, skills or responsibilities improvements can be made while living within rather than length of service, would help. a budget by making the salary scales simpler, by targeting increases on the skills profiles Motivation for which salaries are most out of line, or by matching salary increases with reduction in the Beyond salaries, other aspects of human resource number of state employees. In addition, making management are equally important, perhaps salary increases selective, and matching them to more important, for a high-performing public 16 central government Figure 2.1. Average state salary premium over formal Figure 2.2. Average state salary premium over formal sector alternatives sector alternatives, accounting for unobserved characteristics, 2006-2008 20% 20% 15% 11.9% 10.8% 11.0% 15% 10% 10% 5% 5% 2.6% 2.4% 0% 0% 2004 2006 2008 -5% -5% Coefficient after Coefficient after controlling for controlling for individual individual, regional, characteristics and household only characteristics Note: Chart on the left shows coefficients from repeated cross section regressions of log remuneration, including allowances and bonuses, on a state dummy and a range of other variables covering individual characteristics, household characteristics, and regional and provincial dummies. The coefficients are all highly significant. Chart on the right is based on fixed effects regressions with respondent dummies to remove variation in wages attached to the characteristics of the individual. None of the coefficients on the state employment variable are significant in the chart on the right. Source: Own analysis based on VHLSS, based on the approach of Cuong, 2008. sector. Officials that feel they work in a system be partially explained by the fact that women are where promotions and other personnel decisions much less likely to occupy higher level positions are well-deserved and based on transparent in public administration. In that sample, women criteria will be more motivated to work hard and were much less likely to occupy managerial maintain high ethical standards. International positions.8 These pattern are typical of public studies of how aspects of the public sector service in Vietnam. Although 31 percent of civil relate to corruption, for example, have found servants are women, only 12 percent of head that the degree of (perceived) meritocracy in the of departments and equivalent are women, and civil service was among the best predictors of only about 3 percent of chairpersons of People's public sector performance. (Box 2.2). Moreover, Committees of all levels are women.9 In addition, the same research emphasizes the importance a 2005 study by the Ministry of Home Affairs of getting the basics right, through uniform suggested that women civil servants received less systems of control and competitive recruitment training than men, and were less likely to change before embarking on sophisticated performance jobs or be promoted. While these difference may management. Indeed, the need for uniformity stem from many factors, they do suggest that the within much of the civil service provides a good potential contributions of a large portion of the example of the sort of decisions that are best population are not being fully realized. kept centralized, rather than devolved. The new Law on Cadres and Civil Servants10 Ensuring equal opportunities for advancement has adopted the principle of meritocracy, but the based on merit can help to motivate the civil big challenge now is to translate this principle service. The stark difference in responses into concrete recruitment and managerial between men and women in the Table 2.2 might processes, and then to put them in practice--not 17 modern institutions Box 2.2. Lessons from international research: meritocracy is at the heart of performance While the body of research on the determinants of private sector performance is immense, understanding public sector performance in terms of efficiency and integrity is less straightforward. But some research has been carried out to empirically answer the question of what attributes of public sector management contribute to public sector performance. One study* used cross-national data to examine how competitive salaries, internal promotion, career stability, and meritocratic recruitment affect bureaucratic performance in 35 less developed countries. The results show that meritocratic recruitment is the most consistently significant determinant of public sector performance. Another study** focused on variation in performance across public sector bodies within a country, using public officials surveys in three transition countries to ascertain which aspects of internal organization made the largest contribution to (self-assessed) performance. The study, which used data for Romania, the Slovak Republic, and the Kyrgyz Republic, examined aspects of human resource management, internal administrative procedures, and the use of specific incentives to improve quality. The results of all three countries suggested a very robust role of meritocracy in personnel decisions for improving performance, and a more indirect role for internal administrative procedures. Interestingly, the use of specific incentives to improve quality had very little explanatory power. Ensuring good work through merit-oriented personnel decisions was more powerful than any of the other attributes. Finally, a study from Indonesia echoed these findings, arguing that one should avoid putting too much effort on performance-related pay if the other more important building blocks of civil service reform are not in place. Performance-pay is secondary to improving motivation, and can be complicated and costly to implement. While the challenge of improving meritocracy is formidable these studies, from a variety of countries and using a variety of methodologies, show that the importance of the task is beyond dispute. * James E. Rauch and Peter B. Evans (2000). **James H. Anderson, Gary Reid and Randi Ryterman (2003). +Soren Davidsen (2007). an easy task. Although entry-level recruitment and help to bring in fresh ideas from outside the is based on competitive examinations and public service. personal interviews, there is much emphasis on theory and knowledge, with relatively little Building meritocracy requires good information attention to experience, competencies, skills or on a civil servant's performance and links appropriateness of those skills for the position. to career success. At present, however, the Moreover, entry-level recruitment suffers from methods for assessing performance provide untrained interviewers and opaque evaluation little link between performance and ratings, and criteria and recruitment results, creating performance appraisals are not strongly used as opportunities for recruitment outside of the rules. a tool for rewarding good performance through The recruitment for non-entry level positions is promotion and appointment, or for punishing based on grade promotion examinations, but the bad performance. The performance evaluation merit orientation is undermined by the lack of system would be improved if the evaluations competition from external candidates. External could be made more objective. Self-assessments competition has only been applied on a pilot by the civil servants and non-anonymous peer basis to some very senior positions. For non- reviews by colleagues are the core elements in entry positions in particular, greater competition the performance evaluation process. There is also and transparency, and more openness to external an evaluation by the immediate supervisor, who competition, could increase the pool of applicants typically rarely feels compelled to contradict the 18 central government outcomes of the self-assessment and the peer employees, and therefore allowing for different review. More importantly, a quota system sets regimes for employees of service delivery units, the proportion of the top ratings to be between also has the earmarks of a devolving system. 80-95 percent, which implies that a very large Indeed, reducing the rigidity in salary structures percentage of civil servants receive the top rating for some sectors, such as in health and education, regardless of their performance level. makes sense especially since service delivery units are increasingly self-financing.13 (This will The performance evaluation system could be explored further in Chapter 4.) also be improved with the development of job descriptions and competence frameworks. If job In short, while the devolving of responsibilities-- descriptions are generic, weak or nonexistent to firms and farmers, to local governments and officials will not know clearly what their job is to service delivery units--may appear to have and management may have difficulty judging eased the strain on the central government, the performance of subordinates. Job descriptions pressure to improve performance in terms of and competency frameworks can help in the efficiency and integrity remains. The challenge recruitment process, support proper performance of regulating human resources management appraisals, and provide a goal to which training to attract and retain talent is now at a critical plans can be directed. juncture. Ensuring adequate remuneration levels, while living within a budget, is one challenge-- Beyond introducing the merit-principle, meeting that challenge will be necessary, but not there are two other directions emerging from sufficient, for the modernization of Vietnam's Vietnam's efforts at civil service reform. One is civil service. Providing an open and supportive the separate treatment in the new Law for cadres working environment, and one in which good on the one hand, and civil servants on the other. performance is rewarded, is another. While the This could suggest a clearer division between new Law on Cadres and Civil Servants rightly political appointees and career civil servants, establishes some new directions--the merit- a fundamental element of reform in many principle, beginning to identify political versus countries. While the balance between political non-political appointments, and allowing appointees and non-political career civil servants variations across service delivery units-- varies from country to country, the conceptual the implementing regulations establishing distinction between the two is useful, as it helps how some of these new directions will be clarify the key difference between making policy implemented are key. Even the best set of and implementing policy. In Vietnam, the Party laws and regulations, however, will still face retains a key role in personnel management, challenges. The tension between meritocracy, and this is unlikely to change in the near future. which calls for differentiating rewards according Yet, other countries with single-party structures to performance, and career stability, one of the also make this key distinction between political attributes that many civil servants find attractive, positions, which focus on setting state policy, makes such reform difficult in countries around and non-political positions, which focus on the world. Moreover, many would stand to lose implementing policy.11 In China, for example, from some types of reforms, such as increasing one of the purposes of their civil service law is the differentiation in performance ratings, while said to be to make "a reasonable separation of the benefits are diffuse. While the net benefits the Party and public administration."12 of reform are positive, the lack of a clear constituency pushing for change will make such Second, limiting the scope of the Law on reforms a challenge indeed. Cadres and Civil Servants to core government 19 modern institutions Public Financial Management to improve the system in such a way as to both limit illicit practices and to build faith in the While the central state apparatus is ultimately population that such practices would be difficult made up of institutions, people, and the legal to hide. powers entrusted with them, resources are needed to carry out its mandate. Ensuring that resources As responsibilities are devolved even within are raised and spent wisely and transparently the public administration, the function and is a core, and not at all a trivial, task of states mechanisms of public financial managements everywhere. The population not only entrusts need to evolve, as well. And indeed, they are their government with extraordinary powers, changing. An ongoing program of reforms but with their money as well, and the system is aimed at creating a more robust control of public financial management safeguards this environment better suited for a devolved system, trust. with a greater emphasis on transparency and accountability. Importantly, the successes Among the many forms of corruption that that have been achieved in public financial Vietnam is wrestling to contain, misuse of public management are largely due to the unusually resources is the form of corruption that raises the high degree of consensus on the direction of most ire with the population. When respondents reform throughout the public sector. The value to the VHLSS Governance Module were asked of being better able to track and manage the whether they consider certain behaviors as flow of resources is apparently clear not only "corruption," people had the least tolerance for to those leading the effort, such as the Ministry abuse of public assets. (Figure 2.3) Modern of Finance and State Treasury, but also to those financial management systems are designed to implementing the reforms in line ministries and constrain such practices. The question here is not local governments, and those with newfound what is needed to make for a perfect financial roles in oversight, such as the National Assembly management system. Rather the question is how and the Provincial Peoples' Councils. Figure 2.3. An official misuses public funds or assets for private benefit: is it corruption? Hard to say 11% No 10% Yes 79% Source: Own estimates based on the VHLSS Governance Module 2008. 20 central government Overall the public financial management Vietnamese public financial management. The arrangements and their implementation leave a recurrent and capital investment budgets are still moderate, but not excessive, risk that funds will prepared separately, by the Ministry of Finance not be properly controlled or will not be used and the Ministry of Planning and Investment, for intended purposes. The recently published respectively. As capital expenditures usually Country Financial Accountability Assessment require recurrent expenditures for operation and (CFAA), which was prepared jointly by the maintenance, this bifurcated process hampers Government of Vietnam and the World Bank the effective management of resources. Perhaps with the support of the donor community14 as a consequence, the composition of public highlighted many of these changes. The legal expenditure is at times unbalanced, with the framework is fairly comprehensive and provides share devoted to capital accumulation too high a good foundation for government budgeting for some sectors to credibly allow for subsequent and execution at the central and local levels, recurrent costs. Moreover, the processes for and improvements have also been made to prioritizing expenditures is less effective than the budgeting system, the system of controls, it could be if the exercise was not conducted inspection and auditing of financial compliance separately for capital and recurrent spending. and accounting, and budget oversight. However, further reducing risks calls for addressing The system of accounting standards is also challenges, both long-standing issues and some improving. An updated and improved Chart that have arisen from Vietnam's devolved of Accounts is being developed which will character. provide consistency of classification of revenues and expenditures in budgeting, accounting Budget Formulation and Execution and reporting with expenditures classified on an administrative, economical and functional On the budget formulation side, budgets are basis. A roadmap for adoption of public sector becoming more realistic than in the past, accounting standards has been issued, which will although there remains a large difference between provide the basis for preparation of government budgeted and actual expenditures and revenue. financial statements. Similarly, while reforms Some expenditures are funded by budget carried in the management of revenue are progressing forward from earlier periods--these expenditures with clearer allocation rules and decentralized are not included in the original budget, but are responsibilities, bringing the classification of accounted for in the final outturns. In addition, revenue in line with international standards revenues may be underestimated, a particularly would further improve transparency. important factor for revenue from crude oil, which accounts for about 20 percent of total In some areas, however, standards are still revenue, and from land, which has also seen a lacking. Although there are positive controls in surge in prices. Another reason is related to the the government payroll system with segregation devolution of authority that is the central theme of personnel and payroll functions and of this VDR. User fees and charges of many maintenance of continuous employee records, service delivery units contribute to the lack of payroll is still calculated manually. Systematic clarity in the state budget coverage. Bringing and regular (monthly) reconciliations between these many factors under better control can help personnel staff records and payrolls would help add to the accuracy of budget forecasts and make ensure validity of payroll changes and early budgets more useful. detection of errors and fraud. In the longer term, implementation of modern computerized Although improving, the way that capital and personnel and payroll systems would help to recurrent expenditures are integrated into a single enhance the control of payroll expenditures budget remains one of the main weaknesses of which, after all, constitute a significant proportion 21 modern institutions of the government recurrent budget expenditures. Despite significant progress, there is still Indeed, broader application of information considerable room to improve transparency technology can improve transparency in other in public finance. Budget proposals are not ways: TABMIS, an integrated computerized disclosed until after the budget is adopted by financial management system rolled out in 2009, the legislature. This, together with the lack of will provide the capability to record and control a formal mechanism for public consultation on commitments, improve cash flow management the budget, limits public participation. Similarly, and arrears management, and strengthen although basic budget information is posted on expenditure management and controls and, the web fairly regularly, annual accounts and ultimately, improve the transparency of the audit reports are issued with a substantial lag, overall system. up to 18 months after year end. With such a lag, public oversight, essential in a devolving system With the devolution of authority in the enterprise such as Vietnam's, is made considerably more sector in Vietnam, the need to strengthen difficult. In addition, while data is ultimately accountability in new ways becomes more publicized, it is generally accompanied by only pressing. State owned enterprises, which remain very limited analysis. Impact assessment of significant in Vietnam, often do not publish budget implications of new policy initiatives audited annual financial statements and annual would help inform such decisions. reports. Strengthening accountability to the public, not only to the government but to taxpayers Monitoring and Oversight and investors, is a key goal of the public financial management system. Detailed annual reports are With a set of reforms as complex and technical standard mechanisms for understanding how as public financial management, it is easy to lose resources are being spent and how profitable track of the big picture. Many countries have and productive these entities are. Bringing these addressed this challenge through the rigorous reports in line with international standards, and adoption of concrete indicators of the quality of mandating annual audits would help bring into public financial management systems based on the light this sector of the economy that is so international standards. The Public Expenditure large, yet opaque. and Financial Accountability (PEFA) assessment provides a tool for identifying weaknesses in Among the most important reforms Vietnam the public financial management system and has undertaken in the area of public financial developing a coherent approach for addressing management are those supporting budget those weaknesses. Importantly, the PEFA exercise transparency. Currently, the Government is not an outsider's judgment, but a collaborative discloses annual budget documentation, in-year assessment by both the government and external budget execution reports, summaries of state experts. Recognizing these advantages, many audit reports, and contract information. Actual countries in East Asia have either already expenditures at the central, provincial and completed their first PEFA assessments (e.g. district levels are disclosed and the country's Thailand, Philippines, Lao PDR, Indonesia) or quarterly estimated budget execution reports are are currently conducting them (e.g. Cambodia). posted on the Ministry of Finance website within Worldwide, more than eighty countries or sub- a month of the end of the quarter. The collection national governments have already finalized a and use of contributions made by individuals public financial management assessment as part and organizations must also be publicized, as of PEFA. (Table 2.4.) well as several aspects of the finances of state- owned enterprises. Monitoring progress ex-post is fundamental, but it is equally important to have a strong system 22 central government Table 2.4. Economies that have finalized Public Financial Management assessments under PEFA Afghanistan Indonesia Rwanda Albania Iraq Samoa Armenia Jamaica Sao Tome and Principe Azerbaijan Jordan Senegal Bangladesh Kenya Serbia Benin Kosovo Sierra Leone Botswana Kyrgyz Republic Solomon Islands Burkina Faso Lao PDR South Africa Burundi Lesotho St. Kitts & Nevis Cape Verde Liberia St. Lucia Central African Republic Madagascar St. Vincent and the Grenadines Chad Malawi Swaziland Comoros Mali Switzerland (Lucerne Canton) Cote d'Ivoire Mauritania Syria Democratic Republic of Congo Mauritius Tajikistan Dominican Republic Moldova Tanzania El Salvador Montenegro Timor Leste Ethiopia Morocco Tonga Fiji Islands Mozambique Trinidad and Tobago FYR Macedonia Namibia Tuvalu Gabon Nepal Uganda Ghana Norway Ukraine Grenada Pakistan (several provinces) Vanuatu Guinea Papua New Guinea West Bank and Gaza Guinea Bissau Paraguay Yemen Haiti Peru Zambia India (Himachal Pradesh State) Republic of Congo Note: Table shows only countries (or sub-national governments) that have finalized their PFM assessments. For some countries there have been multiple assessments. Source: : "Status on applications of PEFA Performance Measurement Framework. Update by the PEFA Secretariat as at October 7, 2009." http://www.pefa.org 23 modern institutions of oversight during the execution of budgets. in 1994, SAV was transformed in 2005 into an At present, inspections are essentially input and independent institution reporting to the National compliance oriented with limited attention to Assembly and is now responsible for auditing all identification of systemic problems. Inspectorates agencies and organizations using state budget, report that their functions are hampered by the money and property, for detecting corruption lack of staff and resources and a lack of expertise cases, and for assisting the National Assembly in in sound auditing practices. budget oversight activities. Based on the latest available data, coverage has expanded although Some inspectorates are redefining and developing some key entities have not been audited for their inspectorate functions to move towards several years. In July of 2009 SAV released a an internal auditing model. With increased report stating that their audits of the 2008 budget decentralization of public financial management implementation identified 6.9 trillion VND of (see Chapter 3), implementing internal auditing mis-used public funds. is becoming more important. Although internal auditing has been recognized in the State Audit Improvements in the qualitative dimension of Law, there has been less progress in providing audits are also taking place. The SAV's audit implementation guidance. A whole new set approach to financial and compliance audits of skills is needed for the inspectorate system is being improved, and performance audits to perform this new responsibility of internal oriented towards examining the economy, auditing. efficiency and effectiveness of the budget have started to be incorporated in the regular audits There have also been improvements in external of the SAV. Nonetheless, there is still significant oversight. A separate finance and budget room for improvement. Financial audits suffer committee in the National Assembly was created from "audit exclusions," i.e. exclusion of certain in 2007 to improve the oversight of budget areas or accounting transaction groups from estimates and final accounts and the National audit examination, which limits the quality of Assembly conducts live televised discussions of audits. The results of the compliance audits the state budget. This is facilitating oversight of show non-compliance in the majority of cases, the budget processes by social organizations and but the impact and outcome of these ex-post unions, employees and people. To realize the full audits remain limited. potential of these mechanisms, however, the time reserved for scrutiny by the National Assembly, With its expanding mandate, SAV needs to be Provincial People's Councils and committees equipped to its job well. Despite improvements should be longer to provide adequate time for in the availability of auditors, the number is still quality budget scrutiny and discussion. Moreover, not commensurate with the task. To help fill better cooperation between committees and the gap, SAV has been allowed since 2003 to government oversight bodies would strengthen contract private sector auditors. In addition, SAV the quality of analysis and decision making. is entitled to two percent of the actual amount collected for the State Budget discovered by the Oversight by State Audit of Vietnam (SAV) SAV, providing incentive for vigorous auditing. has also strengthened. Originally established Other efforts to improve the work of SAV are summarized in Box 2.3. 24 central government Box 2.3. Extending the scope and quality of audits Despite considerable advances, State Audit of Vietnam recognizes that more can be done to perform its mandate thoroughly and professionally. The mismatch between the large number of entities that need to be audited and the capacity to carry out such audits is striking. An annual average of 40-50 percent of the consolidated budgets of localities are audited, with only about 30-40 percent of districts being audited. This is a difficulty that cannot be immediately overcome, since building such capacity will take time. To meet these challenges, SAV is focusing on six key tasks: i. Diversifying the types of audits in accordance with the Law on State Audit, focusing in the short term on audit of financial statements and compliance audits. ii. Implementing standardization, regularization and specialization in order to improve the quality and consistency of audits. Recognizing that in order to professionalize its activities and create public confidence in the audit results, SAV aims to make audit documents simpler, more user-friendly and practical. To encourage good practices, they intend to "annually select, commend and reward the gold- quality audits, to honor excellent and brave auditors, devoted and creative officers, as well." iii. Making activities of audits transparent and public. Ensuring the independence of auditors and in carrying out their tasks, SAV plans to closely cooperate with agencies of inspection, investigation, and journalism. iv. Enhancing decentralization while adhering to the principle that responsibility and authority are closely connected so there is no mis-match between accountability and authority. v. Strengthening the professional ethics of auditors. vi. Modernizing the organization and operation of the audit agencies, through promotion of scientific research and application of advanced technologies and audit methods. Source: "The State Audit to extend the scope and improve the quality of audit." August 8, 2008. Ministry of Finance website. http://www.mof.gov.vn. 25 3. LOCAL GOVERNANCE Devolving authorities to sub-national governments has been a key part of Vietnam's reforms in the past two decades. Both powers and accountability have increased, but not always in equal measure. While much of the devolved power has gone to the provinces, most of the new accountability mechanisms have centered on communes. The Grassroots Democracy Decree was a key milestone in improving accountability at the local level, but implementation remains uneven. Planning at the local level is more participatory than in the past, but is often pro forma. While competition among provinces is good in many ways, the existence of spillovers calls for better regional planning and suggests the need for a continued, but re-oriented, role of the central government. Vietnam's progress in creating property rights over land, for which local governments have considerable authority, is unmistakable. Yet, land-related disputes, primarily over the terms of resettlement and compensation for involuntary resettlements, have been increasing. Improving the mechanisms for estimating "market" prices for involuntary resettlement, as is being done in Ho Chi Minh City, may help reduce the number of disputes over compensation. Relying less on involuntary resettlements for projects that are essentially private would help even more. A key part of Vietnam's move from a highly The extent of devolution, both fiscal and centralized hierarchical state designed for administrative, from the national government central planning toward a more nimble set of to the provinces, is by any objective measure arrangements suited for markets has been the quite large. And as provincial and lower levels decentralization of some responsibilities and of governments were granted additional powers powers to lower levels of government. Arguably, and responsibilities, measures were also taken to the lower levels of government are "closer to the strengthen the manner and degree of potential people" and better able to provide the mix of oversight, through local elected bodies, the services that people in that area demand. At the People's Councils, enhanced transparency, same time, some functions of the state belong and greater participation. Most of the new at the central level, for reasons of efficiency, mechanisms of downward accountability, fairness, or practicality, or will involve some however, have taken place at the commune intermediary level of cooperation across the level, while much of the devolved power has newly empowered lower levels of government. gone to the provinces. One challenge, therefore, In some cases, capacity to implement certain is the misalignment of accountability with new policies in an efficient and transparent manner arrangements. may be weaker at lower levels of government. Decentralizing in the right way, coupled with A second challenge is, of course, implementation. relevant capacity building interventions, is a key Supplementing top-down models of administrative aspect of institutional reform. controls with downward accountability through 26 local governance participation and transparency requires a cultural and remittance tax, with the central government. shift that can not be achieved quickly. Vietnam's Districts and communes were similarly assigned framework for decentralized governance was some revenues, albeit relatively minor ones given firm legal footing with the passage of the such as the trade license tax, slaughter tax, Grassroots Democracy Decree, which recognized various other fees and charges, and "people's the importance of publicizing information and contributions." They also received a percentage including active participation of the citizenry in of provincial revenues predetermined by law. In making decisions. A decade after the Decree, 2002, with the issuance of new State Budget Law, however, there are limited results. While the the system of equalization transfers from the principles of greater participation and more central to the provincial level was advanced, and access to information are clear, the mechanisms provincial governments were allowed to borrow for participatory planning and for information for infrastructure investment. Importantly, the provision are less clear. provinces obtained significant discretion over the assignment of revenues to the lower levels. A third challenge is that the newly empowered provinces have less incentive to coordinate their On the expenditure side, starting in 1996 activities than when there was a guiding hand at spending powers over a wide range of activities the central level. To some extent, competition were assigned to provincial governments, among provinces is a good thing, especially and to a lesser extent to district and commune when they compete to create the most favorable governments. In 2002, provincial governments business environment. But when the decisions were given even more explicit powers to of one province have an effect on another, prioritize resources, including determining whether positive or negative, the lack of regional budget allocations to different sectors and to cooperation can lead to inefficiencies. the lower level governments. That same year, the share of expenditures decided at the sub- This chapter will explore the nature and national level was almost half of total public implications of Vietnam's geographical expenditure. According to a World Bank study, decentralization to provinces, districts, Vietnam was the most expenditure-decentralized and communes. The interface between the country in East Asia after China and Japan.15 By decentralized governments and the citizens and the simple measure of share of expenditures firms, participation in planning and budgeting, decided at the sub-national level, Vietnam is a information provision, and new tools for highly decentralized country. strengthening downward accountability will be running themes. The chapter will conclude with Despite the intention to decentralize to the a discussion of one of the most extraordinary lowest levels, many funds are still managed powers vested in the decentralized governments, by the provincial governments. There are the allocation of land. only a few programs (such as Program 135) where communes are assigned to be the budget Fiscal and Administrative Decentralization holders. The extent to which funds transferred to provinces for use by districts and communes A hallmark of Vietnam's reforms since Doi Moi are actually allocated down to those levels has been the process of fiscal decentralization. varies considerably. This situation is gradually On the revenue side, an increasing proportion of improving, although capacity of the lowest levels taxes have been assigned to local governments. to manage funds effectively remains a concern, In 1996, provincial governments were assigned as illustrated in Box 3.1. 100 percent of some taxes, namely those on land, housing, natural resources and various fees and The fiscal decentralization process in Vietnam charges, and were allowed to share other taxes, has been pro-poor--provinces with higher such as VAT, enterprise and personal income taxes poverty headcount ratios receive larger per 27 modern institutions Box 3.1. Obstacles for the decentralization to the lowest levels--the case of Bach Ninh and Ha Nam provinces A case study of Bach Ninh and Ha Nam provinces shows that there are several obstacles for the decentralization to districts and communes, mainly related to public financial management systems. Although training on public financial management has expanded, so have the capacity demands of districts and communes. Ha Nam has arranged part-time training courses in finance and accounting for staff from 116 communes, and chief accountants' training courses for financial staff at district and provincial levels. There remain, however, significant demands to increase public financial management capacity. Provinces currently do not have the power to transfer budget from revenue surplus to communes with budget deficits. The allocation of budget estimates to the lowest levels provides budget users too little time to allocate and assign budget estimates to their subordinate bodies, especially for the commune-level budgets. This causes difficulties in the accounting and managing of budget execution. Source: CFAA (2008) capita fiscal transfers from the central level.16 decentralization, but think that the tax sharing qualization transfers are given to all provinces system is too extractive, leaving inadequate based on budget allocation norms including resources for the more successful provinces criteria covering population, the poverty rate, to maintain their high growth rates. They also and whether the province is in a disadvantaged complain that the regular expenditure allocated location, among others. Since 2006, capital by the central government to education and expenditure transfers are allocated based on healthcare is based on the officially recorded these criteria and other pro-poor criteria such as population, and therefore they need to use their the presence of ethnic minorities, levels of local own resources for unrecorded migrants. revenue and the number of districts determined to be in disadvantaged locations. The National Significant administrative decentralization Targeted Programs (NTPs) also contribute to a has also taken place in the area of public pro-poor allocation of funds. The NTPs provide investment. In 1999, provincial governments exemptions of education fees to poor households, were empowered to decide on small and distribute free health insurance cards for medium investment projects, and district and disadvantaged people, and support communes commune governments were allowed to decide facing extreme difficulties. Finally, provinces on the same type of projects, if assigned by with expected revenues below their minimum the provincial government and authorized by expenditure needs are exempted from sharing the Provincial People's Council. Later in 2005, with the central government the proceeds from provincial governments were given the authority otherwise sharable taxes. to decide on the largest public investment projects out of a list set by the Prime Minister. The pro-poor approach to fiscal transfers is not Provincial governments have gained substantial popular among all provinces. Indeed, those that decision-making authority on private and foreign are net contributors to the state budget feel that investment, too. In 2005, provincial governments fiscal decentralization is excessively pro-poor. were given the authority to issue licenses for In-depth interviews conducted in 2007 with foreign investment and in 2006 to assess and officials from seven provincial governments17 approve ODA capital investment projects. found that net contributors highly appreciate 28 local governance Districts and commune governments have been Finally, planning processes and land use recipients of powers with regard to one specific decisions have been decentralized as well. The public investment program called Program nature of decentralization and the exercise of the 135. Originally established in the late 1990s decentralized responsibilities in these two areas as a targeted anti-poverty program, providing are explored separately in this chapter. supplemental funds for poor communes, Program 135 was expanded to 1,644 poor and Accountability at the Provincial Level mountainous communes in 2006. In 1998, with the launching of this Program, district Overall, provincial governments have been big governments were entitled to receive central- winners in the decentralization process, much level funds for infrastructure investment projects more than district and commune governments. in communes facing extreme difficulties. In Many of the strongest mechanisms of downward 2006, with the second phase of Program 135, accountability--responsiveness to citizens full authority was devolved to the commune through participation, enhanced transparency, governments to manage the investment projects oversight--have taken place at the commune of Program 135. level, under the overarching "grassroots democracy" regulations, which will be analyzed While these achievements are important, later in this section. But are the accountability implementation often does not match the more relationships in line to ensure that provincial ambitious goals of Program 135, such as full governments respond to local needs and desires commune "ownership" of the projects and in the best way? project selection. In one study, for example, 15 out of 20 infrastructure projects were owned by At the provincial level, important forms of the district, not the commune.18 Generally, the downward accountability have been advanced. In district provides a list of projects that could be 2004, regulations on public financial transparency funded, and the commune authority organizes required local governments to publicize the endorsement of the list. At best, the communes estimates and uses of annual state budgets, contribute to project design, for example by transfers received from the higher levels, and the influencing the location of the project, but they collection and use of "people's contributions," hold little sway over selection of the projects. a form of voluntary tax. But there are other mechanisms in place that can also enhance the Some degree of decentralization in human transparency of provincial governments, such as resource management has also been allowed. the mandatory income and asset declarations by Provincial governments have been given the high ranking local officials, and the obligation to power to plan staffing19 and to recruit, appoint, reply to requests for information to the people organize assignments, evaluate, inspect, and within 10 days. even increase the salary grades and allowances of civil servants in local governments, within One important milestone in the accountability bounds. Since 2009, district governments can also of provincial governments has been the undertake these management tasks, but only if empowerment of elected bodies, the Provincial assigned to do so by the provincial governments. People's Councils, to approve the assignment There has also been an important devolution of revenue sources and the allocation of the of power to the heads of units within all local budget among the three sub-national levels, the governments, who have become responsible norms and regimes on expenditure and budget for the performance of their staff and for their allocation, and the collection of fees, charges evaluation. and people's contributions. The oversight of the finances of provincial governments has also been 29 modern institutions strengthened through the establishment of the the success of provincial economic zones (Box State Audit of Vietnam, the mandate of which 3.2). The same study exhibits the willingness includes conducting external audits of all state to experiment on a small scale that epitomizes budget revenues and expenditures, including Vietnam's approach to reforms. those of the local governments. While provinces have some decision space over In contrast, there has been limited progress human resources, it has bounds. The management regarding direct public participation in decision- of human resources at the province level must making processes on the use of provincial adhere to the many standard rules and processes budgets. Since 2004, draft public consultations specified in the Law on Public Officials and Civil for provincial socio-economic development Servants, and to the many corruption prevention plans have been required, but specific and measures specified in the Law on Anticorruption. clear guidelines are still missing. As explained The plans on staffing must be approved by the elsewhere in this chapter, however, even if Provincial People's Councils and must meet strongly anchored to public consultations, the quotas and norms determined by the central these plans are still weakly linked to budget government. Salaries must also be in accordance allocations. the guidelines of the central government. Provincial governments are also subject to Available evidence shows that in practice the forms of upward accountability in their budget autonomy of provinces with regard to "key decisions. There are certain quotas and standards personnel" is substantially constrained. In- determined by central-level authorities that must depth interviews conducted in 2007 in seven be applied by provincial governments when provinces22 found that the degree of autonomy they allocate their budgets to ensure that certain of provincial governments in terms of selecting, development goals are met. For poorer provinces appointing and promoting "key personnel" like Quang Nam and Tien Giang, the proportion was quite limited, as the Party Committees at of pre-determined expenditures in local budgets provincial and higher levels play important roles can be as high as 80-90 percent. Even in some in making these decisions. better-off provinces like Khanh Hoa and Vinh Phuc, this pre-determined expenditure accounts Accountability at the Commune Level for more than half of the total budget.20 This situation limits the extent to which provincial Although somewhat less empowered than plans and budgets can respond to local needs. the province or district levels, the commune level has been the locus of considerable A 2008 public financial management assessment experimentation with downward accountability of Soc Trang province confirms that decisions systems. The Ordinance on Grassroots on allocations to different sectors and transfers Democracy, originally passed in 1998 and to lower levels are still subject to a number of strengthened in 2003 and 2007, focuses on the national directives and norms which ultimately commune level of government and outlines four limits the discretionary powers of the province.21 basic rights, drawing on Ho Chi Minh's famous The study found that this is even more the case dictum: the right to be informed, the right to be for districts and communes--they have been consulted, the right to decide, and the right to given management responsibilities and made supervise. These rights apply to a wide variety upwardly accountable but have limited influence of public activities at the commune level, such on priorities in resource allocation and service as the use of the commune budget and people's delivery targets. Another recent study shows that contributions, socioeconomic development the limited "decision space" of local officials can plans, public investment projects and plans, affect the attraction of foreign investment and land use management, legal documents, and administrative procedures, among others. 30 local governance Box 3.2. Innovation in exercising powers at the local level-The Chu Lai Open Economic Zone A recent paper examined the experience of one of Vietnam's experiments aimed at spurring rural development, an experiment that has lessons both for the limitations of decentralization and for understanding the conditions under which innovation can take place. High hopes were placed in the 27,000 hectare Chu Lai Open Economic Zone in Quang Nam Province when it was established in 2003. By decentralizing policy and fiscal authority to leaders in the Chu Lai Open Economic Zone, it was thought local officials would have the regulatory space and incentives to experiment with policies and institutions and ultimately spur development in that area. After three years, however, most felt that the results were not yet inspiring. Nevertheless, nine provinces have received permission to implement the Chu Lai Model. The researchers identified several key limitations that need to be addressed in order for such an approach to succeed. First, they argued that Chu Lai's exclusive focus on attracting foreign investment crowds out attention to domestic private sector development. While a sound regulatory environment is certainly one attraction to investors, it is not the only one--the paper argues that Chu Lai's problems attracting foreign investment in manufacturing and light industry are primarily a function of its location and investment incentives, rather than the quality of its regulatory environment. As a consequence, Chu Lai devoted scarce infrastructure resources to address perceived requirements of unlikely foreign investors (e.g., an international transshipment port), rather than the current needs of domestic private enterprises. Second, the researchers found that Chu Lai's legal design is incompatible with policy experimentation and institutional innovation. In response to the experience of the 1990s, during which rural industrial zones did not perform as well as their urban counterparts, policymakers aimed at what was perceived to be the reason for the uneven success, the absence of fiscal and policy decentralization to local officials. Chu Lai was intended, therefore, to give local leaders increased fiscal, policy, and legal authority. In reality, however, Chu Lai's legal framework divides fiscal and policy decision making authority in almost all important areas between local officials and the central government. As a result of the consensus decision making process, which includes ministries with conflicting interests in Chu Lai's experimentation and success, Chu Lai's attempts to innovate have stalled. Source: Eli Mazur, David Dapice, Vu Thanh Tu Anh. "The Chu Lai Open Economic Zone and Rural Development: Central Planning's Laboratory for Policy and Institutional Innovation." UNDP Policy Dialogue Paper 2008/2, Ha Noi, July 2008. Encompassing information, consultation, the households in Vietnam reported having no participation in decision making, and supervision information on commune budgets and plans. The on commune-level activities, these rights provide vast majority of the others have either very little a solid framework for examining the system or little information, and the majority of those of downward accountability at the commune with information report that the information level. In the decade since the experiments with does not meet their needs. Although those who grassroots democracy began, two key questions are interested in commune level budgets and are (i) how deeply and inclusively it has been plans generally say they have access to a little implemented, and (ii) what the effects have information, fewer than half say that they have been. The first question is easier to answer than information that meets their needs (Figure 3.1). the second. The reasons why information does not meet the The VHLSS Governance Module gives an needs are diverse. A small sample survey of 500 indication of how well people feel informed citizens undertaken in Ha Noi, Quang Binh, Ninh about commune level activities, and the results Thuan and An Giang in 2009 highlighted a range show room for improvement. Around half of of challenges to information provision at the 31 modern institutions local level.23 Some citizens face challenges due are deaf or cannot understand the language. If the to literacy or language issues, education, or the means of delivering the information is oral, such distance they need to travel to get the information. as through the loudspeakers, it may be difficult The means of delivery was reported by some to to recall the information when needed: multiple a problem--loudspeakers are still favored by dissemination channels are needed. Finally, beFigure 3.1. Information that meets households' needs on commune budgets and plans (among those with interest) some respondents, but are not helpful if placed some reported that the attitude and capacity of far away or not functioning well or if the citizens staff was not helpful. Use of the people's voluntary contributions at the commune level Use of the funds and subsidies from the Figure 3.1. Information that meets households' needs on commune budgets and plans (among those with interest) Government at the commune level Fees and charges collected by the commune government Use of the people's voluntary contributions at SEDP at the commune level the commune level Use of the funds and investment plans Community infrastructuresubsidies from the Government at the commune level at the commune level Resettlement and compensation schemes at Fees and charges collected by the commune the commune level government Land use plan at the commune level SEDP at the commune level Community infrastructure investment plans 0% 25% 50% 75% 100% at the commune level Has information that meets the respondents' needs Resettlement and compensation schemes at the commune level Land use plan at the commune level 0% 25% 50% 75% 100% Has information that meets the respondents' needs Source: Own estimates based on the 2008 VHLSS Governance Module Figure 3.2. Households who provided opinions on commune budgets and plans during the period 2006-2008 (among those with interest) Use of the people's voluntary contributions at the Figure 3.2. Households who provided opinions on commune budgets and plans during commune level the period 2006-2008 (among those with interest) Use of the funds and subsidies from the Government at the commune level Fees and charges collected by the commune government Use of the people's voluntary contributions at the SEDP at the commune level commune level Use of the funds and subsidies from the Community infrastructure investment plans at the commune level Government at the commune level Resettlement and compensation schemes at the Fees and charges collected by the commune commune level government SEDP at the commune level Land use plan at the commune level Community infrastructure investment plans at the commune level 0% 25% 50% 75% 100% Resettlement and compensation schemes at the commune level Source: Own estimates based on the 2008 VHLSS Governance Module Land use plan at the commune level 0% 25% 50% 75% 100% 32 local governance The second right established in the Ordinance and the right to supervise. These processes are on Grassroots Democracy was to the right to most deeply instituted in the areas of the country be consulted. The VHLSS Governance Module that are participated in Program-135. Under asked respondents about their involvement in the program, the general population in each various sorts of law making or policy making commune would participate in the selection of processes. The vast majority had not provided projects that best reflect their priorities. Program any opinions on commune budgets and plans, 135 is notable for simultaneously devolving and the most often cited reason was that the authority, and introducing new mechanisms of respondent had not been consulted. (Figure 3.2) downward accountability. It is difficult, however, to envision a model of consultation that would ensure that every citizen Due to its prominence as an anti-poverty program felt consulted, or to know what a reasonable and for the ambitious efforts at expanding baseline would be in this case. Other reasons participation, considerable attention has been people cited for not providing opinions on paid to studying the implementation of Program affairs of the commune include that it is too 135. The measures aimed at strengthening complicated, noted by 7-8 percent of those who participation have been implemented fairly had not provided opinions, or that their opinions thoroughly in some areas, but less thoroughly in would not be taken into consideration, cited by others. A 2009 survey Program 135 communes 10-13 percent of those who had not provided in four provinces found that participation opinions. in decision-making related to infrastructure projects is very high among those who are aware The other key rights established in the Ordinance of infrastructure work, but the involvement was on Grassroots Democracy were the right to decide primarily for selecting the sites for the projects. Table 3.1. Participation of households in decision-making and supervision of infrastructure works in P135-II communes in the provinces of Lai Chau, Lao Cai, Binh Phuoc, and Soc Trang Type of infrastructure Households Households Households Households Households work aware of providing participating participating participating infrastructure inputs to in work site in construction in supervision works (%) infrastructure selection, out of works, out of construction works,24 out of households of households works, out of of households providing providing households aware of works inputs (%) inputs (%) providing inputs (%) (%) Electricity works 54 67 88 21 2 Transportation works 74 50 86 13 11 Schools 71 33 97 8 5 Water supply works 73 41 92 43 0 Health stations 61 17 93 13 0 Markets 87 27 100 0 0 Communal houses 78 26 100 0 0 Irrigation works 85 50 88 52 10 Average 73 39 93 19 4 Source: Report on Results of Citizen's Report Card Survey on People's Satisfaction with P135-II (Quyen et al, 2009) 33 modern institutions Participation in decision-making during the takes responsibility for implementation and construction of works was not as high, and supervision.25 participation in supervision was very weak (Table 3.1). Using the guidelines set up for Program 135 as a baseline, the study examined two projects While the level of participation in Program 135 in each of 25 different communes, five each projects seems high, an understanding of how in Lai Châu, Cao Bang, Quang Binh, Gia Lai, this mechanism is really producing downward and Soc Trang. The findings were mixed. The accountability requires answering two additional commune's involvement in project management questions: what is the baseline against which to has undeniably increased with the second measure participation, and just how does the phase of Program 135, and the relationships participation work in practice? between commune and district authorities in projects implementation has intensified. These To answer the first question, one study set up a are important achievements. At the same time, counterfactual, asking not only about Program the commune's role and capacity has often not 135 projects with participation and monitoring by reached the level needed for full transfer of the people, but also at other projects in the same responsibility and ownership. Confirming the communes. The results, which are presented in findings of other studies, project selection in Table 3.2, show that these other projects also have particular remains at the level of the district. fairly high degrees of participation in selecting Some of the new mechanisms of accountability projects, and also are usually monitored by the have also not taken hold as strongly as hoped. people. However, for both cases, the frequency Participation has in many places not been of participation and monitoring is somewhat integrated in the decision-making progress, as higher for projects financed under Program 135. local authorities associate participation with risk (of lack of control) rather than with opportunity Answering the second question, how (of better implementation). participation actually works, calls for a different form of analysis. A study undertaken in early While the importance of Grassroots Democracy 2009 used semi-structured interviews with a for Vietnam's step-by-step approach to range of district and commune officials, Program devolution and accountability is undeniable, 135 Management Boards and Supervision and there have been concrete achievements, the Boards, village leaders, representatives of mass studies of Program 135 and data from the VHLSS organizations and citizens to examine the balance Governance Module both show that some of the of power between district and commune authority new mechanisms of downward accountability in project selection, and which level ultimately are still taking root. Table 3.3 outlines some decides which projects are to be funded, and of the difficulties as reported by two other Table 3.2. Participation in decision-making and supervision of commune-level infrastructure projects; communes in the provinces of Lai Chau, Lao Cai, Binh Phuoc, and Soc Trang Projects under Projects implemented at P135-II P135-II communes but financed by other programs Percent of projects having participatory meetings 86.6 80.0 to select project Percent of projects being monitored by people 81.9 72.4 Source: Report on Results of Citizen's Report Card Survey on People's Satisfaction with P135-II (Quyen et al, 2009) 34 local governance Table 3.3. The voices of citizens and commune-level officials: What are the difficulties with the implementation of "grassroots democracy"? Difficulties Related To Government Difficulties Related To People 8 Communes · Commune governments do not understand · People's awareness on the in Thai Binh well the importance of democracy in contents of grassroots democracy Province discussions and decisions. regulations is not perfect. · Most commune government leaders do not · People have little interest in the have enough professional qualifications, and right to know and the right to lack the incentives to organize discussion discuss and decide. meetings with people. · People are busy "earning their · Officials are not active in facilitating bread" and they have more of their and empowering people to participate in own issues to be paid attention discussions and decisions. than to community issues. · Some contents are brought to discussion with · People concentrate on the people just formalistically to comply with the regulations related to their law, and some other contents are not brought economic benefits, and put no to discussion. interest on regulations serving · The contents of the publicized information the general development of the are not suitable for the locality, and the forms locality of publicity are rarely applied or applied · People have low educational insufficiently. qualifications, preventing them to · Some officials do not want people to know understand well issues. more, or to empower people to supervise · People are afraid that the meeting them. will be organized to ask them for · Sometimes people are not invited to their contributions in cash or in- supervise or the government does not let kind, and hence very few attend. them participate in supervision. · In meetings with few participants, · Commune governments do not widely people are hesitant to show their mobilize, trust and empower CSOs to viewpoints. participate in providing information to the people and exercising supervision. 4 Communes · Commune authorities have a weak · In richer communes people in Son La, understanding of the strategic objective of are mostly interested in their Thai Binh, grassroots democracy, and they perceive personal economic matters and Gia Lai, and democracy as a sensitive issue. less interested in public matters. Tra Vinh · Officials are afraid that by empowering · In communes with lower sense Provinces people they will lose power and authority of community, less people are · Low dedication of officials to the grassroots attracted to the meetings. democracy regulation · In poorer communes and · Lack of specific funding for the communes with few migrants, implementation of grassroots democracy people are less active in the · Salaries of officials are minimal, failing to discussions and tend to agree with attract capable candidates and motivate them everything presented to them. to devote to public matters such as grassroots democracy. · Commune governments are subject to very low degree of upwards accountability on grassroots democracy activities. Source: Survey on Grassroots Democracy Regulation ­ Implementation Situation and Organization Capacity of Social Organizations in Thai Binh Province (DOHA and VUSTA of Thai Binh Province, 2009); Mobilizing Rural Institutions for Sustainable Livelihoods and Equitable Development, Governance Institution - the case of the Grassroots Democracy Steering Committee (CAP, IPSARD, 2008) 35 modern institutions important surveys on the implementation of of community driven development in the Grassroots Democracy. These difficulties do not management of commune-level investment only have to do with the implementation of the projects has been shown to have positive effects regulations by the commune government, but on development outcomes (Box 3.3). also by factors related to the people, such as their limited interest, low technical qualifications and Raising the awareness of commune officials, even reluctance to express their viewpoints. building skills, and increasing financial support for grassroots democracy could help improve With challenges for grassroots democracy implementation. As seen in Table 3.3 the limited ranging from awareness to organizational culture, awareness of officials on the strategic importance from weak capacity to practical challenges, of grassroots democracy is a core constraining the progress that has been made despite these factor. In addition, officials might be more challenges is remarkable. Indeed, the application proactive in consulting people if they were Box 3.3. The development impact of participation Vietnam offers a natural experiment that comes as close as possible to a "clean" assessment of the consequences of participation. This natural experiment took place between the late 1990s and 2005, as a large number of communities throughout the country had access to both Community Driven Development- type (CDD) programs and similar programs involving limited participation. Because both types of projects were implemented in the same communities, controls for "the social and cultural context within which beneficiaries live and organize themselves" can be included. Both types of programs were run by the Vietnamese government, both involved a similar menu of subprojects and both mobilized a similar volume of resources per community. But the CDD variant had been promoted by development practitioners who strongly believed in the virtues of participation, and wanted to create a demonstration effect. The CDD variant therefore included clear protocols to consult and gather the views of the involved communities at several stages in the process, from the selection of subprojects to their physical implementation to their financial oversight. The experiment ended in 2005, as the government became convinced that the participatory variant was indeed superior, and adopted it for the next phase of its nationwide program for local development. Since then, local communities in Vietnam continue to have access to multiple local development programs, but all of them are of the CDD type. This paper used Vietnam's natural experiment to assess the ways in which participation modifies development outcomes at local levels. The assessment focuses on 24 communities which had been exposed to both types of programs, and had implemented a total of 162 subprojects under both CDD-type and less participatory approaches. From a methodological point of view, the assessment relies on a combination of statistical and participatory approaches. On the statistical side, detailed information was gathered on the characteristics of the communities, the nature of the subprojects, the expenditures incurred and the profile of the persons in charge of implementation. On the participatory side, focus groups of villagers and local officials were gathered (separately) to collect their views on the features and impacts of subprojects implemented under the two programs. Not surprisingly, the findings fall somewhere in between the upbeat beliefs of development practitioners and the healthy skepticism of academics. On the other hand, there are no major differences between the assessments of the villagers and those of local officials. After controlling for the observable characteristics of communities, of subprojects and of the persons in charge of their implementation, it appears that participatory projects lead to better outcomes overall. But they do not accomplish miracles across the board. The gap between the two types of programs is statistically significant for some outcomes, and not for others. Source: "What a Difference Does Participation Make? Evidence from Communities with Multiple Programs in Vietnam" (Quang Hong Doan and Martin Rama, 2009) 36 local governance provided the financial resources to implement The changing role of the plan in a market-oriented the grassroots democracy activities, and if they economy is not consistently understood by all had a better understanding themselves of the of the relevant parties. A case study26 focusing requirements of grassroots democracy. on Dien Bien, Dong Thap and Ninh Thuan provinces found that planning work was seen as Another set of solutions is to enhance the sole responsibility of the planning sections the motivation of the people to engage in and units rather than the work of all officials. This participation and supervision at the grassroots has minimized inputs from technical units who level. This, of course, requires outreach to play important roles in setting up more realistic ensure that all citizens know their grassroots targets. Nevertheless, the former top-down democracy rights. But that is not sufficient. As approach to planning in general has changed seen earlier, a significant percentage of citizens fundamentally with Doi Moi. In 1989, decisions do not engage in discussions in the commune on the socioeconomic development plans of the because they think that their opinions would local levels were decentralized, and later in 2003 not be considered. To improve this situation, the local governments of all levels gained more feedback from the consultations should reach the responsibilities in the co-ordination, budget authorities making decisions which are often not allocation and finalization of the socioeconomic the commune governments, and the outcomes development plans in their respective localities. of the consultations and supervisions should be The central authorities, the Ministry of Planning reported back to the people. and Investment and the Ministry of Finance, now only provide the general development Planning Processes orientation and the budget constraints (first step), and planning agents (provinces, line ministries) The planning process in Vietnam has a long prepare their detailed plans and submit to the history, emanating from the days of central Ministry of Planning and Investment (second planning, in which the plan specified in great detail step). In that sense, the planning process is what all of society, including firms and farmers, much less top-down than in the past. But by were expected to contribute. As Vietnam has some accounts, the balance of power between increasingly devolved powers to those firms and each successive level of government and the one farmers to make their own decisions, and enjoy above it remains uneven. rewards or suffer consequences based on their decisions, the role of the plan has shifted. While And yet, the vision of the role of planning varies plans still include targets, it is increasingly, if not from one extreme in which old methods of universally, understood that these are just targets. planning are continued out of habit, to the other And while the ultimate rate of growth of the extreme in which planning is viewed as obsolete, economy or of certain sectors can not be achieved no longer useful in a market-oriented economy. simply by virtue of that fact that it is in plan, The truth lies somewhere in between: while the foundations for reaching those targets can be some aspects of the old methods of planning may laid through careful planning of infrastructure be obsolete, particularly with regard to economic and investment, based on a clear understanding output targets, other aspects of planning are even of the needs and desires of citizens and firms. more important for a decentralized economy. As responsibilities for provision of services and the means to finance them have been devolved By most accounts the planning process in to lower levels of government, and as some of provinces is indeed somewhat participatory, the responsibilities for investment planning have although the vision of full participation may not also been devolved, some evaluation of how the be reaching its potential. A case study of local accountability relationships have shifted is also planning in Hoa Binh province27, for example, in order. found relatively little active participation of 37 modern institutions local people in the planning process, although lower levels tempers enthusiasm for the new they are recently improving on this front very mechanisms of accountability. One role of the progressively. The targets set in the plan tended central government in a devolving system is to to be allocated from the provincial level, and help build the capacity of local governments and were not really discussed at the local level or to expand communications channels so they can grounded in realistic analysis. Moreover, targets learn from each other. themselves tended to concentrate on input and outputs of the whole economy, as was the That consultations take place is not in doubt--the tradition under central planning, rather than policy set down by the Prime Minister requires accepting these as outcomes of institutional and consultations during the 5 year Provincial SEDP other factors as in a market-oriented economy. planning process. Lack of participation in the Planning in a market economy is more oriented planning process comes from several sources. toward equipping society to perform, rather than Various initiatives in local planning reform by directing their performance. UN agencies in different provinces have shown that institutional setup is an important constraint Another case study of the provinces of Da Nang to making participatory planning a reality at the and Bach Ninh28 found limited stakeholder district and commune levels. Planning agencies involvement in the formulation of master plans are well set up at national and provincial in capital construction. Although the internal levels, but they become very thin at district planning process has become increasingly and commune levels. At the district level, there transparent, information sharing within the is a planning and finance section whose main government system itself is not always extensive. role is to carry out only financial management Despite legal provisions29 mandating community with little attention given to planning. At the participation during the formulation of detailed commune level there are no full time planning investment master plans, consultation with the staff--during planning season, the planning task public is limited, mostly taking place in areas is done by whoever is assigned the task by the deemed to significantly affect the public. Part of commune People's Committee, for example the the reason may be weaknesses in the information commune statistician or commune secretary. In systems that support the planning process. These addition, time is very short because provinces systems continue to favor the administrative have less than two months to prepare plans reporting system and tend to be better oriented for and submit to the Ministry of Planning and the old style of planning. There is no systematic Investment; communes usually have around collection of data at the village and commune 10 days for preparing their annual commune levels. development plans. Time constraints, shortage of skills and even lack of full time planning staff The degree to which lower levels of government have all contributed to the lack of participatory are willing to invest in new capacity for planning at the grassroots level. participation and information provision will depend in part on how much authority they have There is also a misconception among some about to exercise these approaches. If higher levels people's participation in the field of development. of government are reluctant to decentralize Some officials think that people would have planning power to lower levels, or if the level little understanding about development plans, of decentralized budget allocation is low, then and genuine consultations are costly in terms of the pay-off to local officials for engaging in both time and budget. On the other side, many participatory approaches will be low. While people simply may not be so interested. In the the degree of decentralization to the provincial VHLSS Governance Module, only one in three level has been substantial, the relatively lower respondents expressed interest in the commune degree of authority and budget granted to level SEDPs and infrastructure investment plans. 38 local governance Yet, even a small number of interested citizens planning and budgetary allocation, and in turn could potentially help make consultations a between the plans for investment and recurrent success. expenditures. The fact that different programs have different reporting requirements makes it Participation and consultation can be both harder than it needs to be for local governments. vertical, as between planners and local people, Moreover, there is little communication between and horizontal, as across agencies and the latter investment budget planners, the Ministry of form of consultations are also weak. At sub- Planning and Investment and provincial level national levels, people tend to work in their Departments of Planning and Investment, comfort zones, rather than in a cross-sectoral and those that plan the recurrent budgets, the setting, leading to duplications and limited joint Ministry of Finance and provincial Departments effort to address common issues. UNICEF's of Finance, leading to little linkage between the experience in promoting cross-sectoral planning two types of budgetary allocation. The result in selected provinces to tackle children's issues is that, at the present, local planning generates comprehensively has shown that that it is not a wish list, rather than a strategy vision for easy to reach a consensus on a common issue management. that needs collective action. Lack of skills and incentives combined with absence of any formal Understanding how well devolution and the mechanism for joint work is a major challenge new mechanisms of accountability are working to establishing and strengthening horizontal in a systematic way would be enhanced by a linkages across agencies. It is important to note monitoring and evaluation process for local that the current practice of one annual SEDP planning and budgeting, but at present these planning meeting at the provincial level is not processes are not well developed at the local enough to identify problems and reach consensus level. The Hoa Binh case study, for example, on tackling it using a cross-sectoral approach. found little practical use of monitoring and Furthermore, limited skills of Departments of evaluation, and as a result the evaluation of Planning & Investment and People's Committee past planning exercises could not help inform that are mandated to coordinate developmental future exercises. In some cases this was due to works at the local level is another constraint a lack of understanding of both the role and the towards establishing inter-sectoral linkages. process of monitoring and evaluation, leading to inappropriate selection of indicators, especially Capacity issues are also apparent in the link the focus on input indicators such as numbers of between planning and budgeting, both recurrent schools built or number of pigs raised, rather than and capital, and ensuring that sectoral plans are outcome indicators. Indeed, the understanding in line with relevant policies. While provinces of planning inherited from the old system may are given the autonomy to plan their own SEDP, be contributing to the lack of integration of there is not much support from the central level monitoring and evaluation in the budget process. to make it evidence-based and to ensure that There is still a tendency to consider targets as the plan is realistic in terms of resources. Other goals in themselves, rather than as outcomes challenges include a lack of clarity on the annual generated by policy and therefore as indicators planning guidelines and the short time frame for monitoring progress and adjusting policy. given to provinces to prepare and submit plans. Finally, the case study identified the lack of good data on outcomes at the district and commune The case study in Hoa Binh provides some useful level for realistic and evidence-based planning lessons about the proliferation of parties that as a key constraint. don't necessarily coordinate. While Hoa Binh is strongly committed to reforms with support form The large interest of donors in strengthening donors, there is a fairly weak linkage between participatory planning and budgeting at the 39 modern institutions Box 3.4. Consultative planning and budgeting in Hoa Binh Hoa Binh province is very committed to planning reform and with support from JICA and SDC has started to show positive progress in the way they undertake planning and budgeting. Hoa Binh started to streamline planning process by drafting "planning guidelines" at the commune level and district levels, which includes several aspects of better planning practice, such as participation of local people in the process of planning, emphasis on the evidence-based situation analysis, as well as prioritization of policy intervention, and active consultation activities for their 5 year SEDP (2006-2010). A case study of these planning reforms identified four key elements of success: Clear framework. Reform of planning at the local level requires a clear decentralized planning framework and clear political willingness to delegate power. Management tool. Understanding of the Plan as a management tool, with indicators to monitor and adjust policy, is key to reforming the planning exercise. Transparent communication. Success in reforming local planning calls for closer and more transparent communications and consultations. This includes horizontal communication (among different sector departments) and vertical communication (two-way communication between the grassroots peoples and higher administrative levels). Stronger capacity. The capacity of local authorities to undertake participatory approaches may be weak, but can be strengthened through direct training. In the longer run, the incentive to invest in capacity for participatory approaches will be higher if decentralized budget allocations are higher. Source: Japan International Cooperation Agency and Swiss Development Cooperation local level could have unintended consequences, corruption. (The local level People's Inspections if not managed properly. As described above, Boards also play important roles here, as will be many programs supported by both government discussed in chapter 6.) and donors are directed at exactly those areas that tend to have the weakest capacity to Regional Planning implement. This makes sense since these are the areas with the highest rates of poverty, but in the The previous section examined the devolution absence of careful coordination local officials of authority to lower levels of government could find themselves inundated with not and attempts to institute new mechanisms of only responsibilities, but with multiple sets of accountability through greater participation and instructions on how to implement their policies. transparency. These mechanisms help to make In the Hoa Binh case study, for example, donors the newly empowered sub-national governments endeavor to harmonize approaches for local responsive to their constituents. As provinces planning reform, to share closely information recognize the draw that an unobtrusive business and activities between two implementation environment can have on investment, the agencies. autonomy to make policies friendly to growth can engender some positive competition between Finally, the mechanisms of downward provinces. The annual launch of the Provincial accountability that have been put in place, Competitiveness Index, a ranking of provinces especially at the commune level, are also based on the competitiveness of the business important for another purpose. Corruption is environment, attracts more attention every more difficult to hide in an open transparent year--everyone wants to improve their rankings environment, so preventive measures such as and no one wants to be near the bottom. these can also help to control some forms of 40 local governance In this respect competition between provinces, Regional planning, therefore, calls for a 20 or as it is between enterprises, is healthy. Yet, 30 year outlook. The infrastructure and trade competition between provinces is not always logistics support that are needed will vary beneficial. Indeed, the devolution of authority to depending on the sort of development that is lower levels of government raises new challenges, envisioned down the road. At the same time, since decisions in one province can have important decisions being made now often have important impacts, positive or negative, on others. When environmental and social consequences.Although there are such "spillovers", then some degree many policy makers think in terms of a trade- of cooperation is called for. For example, the off between fast growth and sustainable growth, power to license FDI has been decentralized to this is a fallacy since fast growth that does not provinces and with the benefits of FDI in mind, account for environmental costs is illusory. If the provinces often aim single-mindedly at bringing objective of public policy is multi-dimensional, in new investors. The increased local revenue such as increasing income, improving quality and jobs that industrialization are thought to of life, and preserving the environment, then bring are clear and nearly immediate, while some of the rapid growth in income may give the longer-term environmental consequences the illusion that things are rapidly improving, and often opaque and cross-border. Indeed, the while environmental degradation countermands cross-border nature of many environmental this fact. Regional planning will not address all problems are what generate the spillovers that of these challenges, but can help to maximize make independent planning, by each province positive spillovers and minimize negative in isolation, inefficient. The water consumed in spillovers across provinces. one province may include run-off or industrial pollution from another province. In such a Concerns about what are perceived to be negative case, development planning spanning multiple impacts of decentralization have led some policy provinces would be needed both to achieve makers to question whether decentralization the most efficient outcome, and to ensure fair has moved too far too fast. Yet, the benefits allocation of the costs of planning decisions. of devolving authority can be achieved while minimizing the costs if regional planning were There are also positive spillovers. Growth to become the norm. But in a decentralized in one province could be beneficial to its system, how can provinces be encouraged to neighbors, if the proper infrastructure is in plan collectively? There are many answers, but place. Infrastructure planning is another clear the one that makes sense depends on the types of case where regional planning can help improve inefficiencies that regional planning is expected outcomes--roads that dead-end at the province to address. border don't benefit either province. For major roads projects organized by the Ministry of When the benefits of regional planning are Transportation such planning is already routine, mutually beneficial, provinces may be expected but many major infrastructure projects are to work together of their own volition. This is launched independently, leading to duplication particularly the case with positive spillovers. If of efforts. Often a single province will not have a group of provinces can agree where the port the critical mass of population or economic should go and how the road network should activity to sustain its own port, for example, be organized, then all benefit. The role of the but if groups of coastal provinces cooperated national government in such a situation can be to they could sustain one. Similarly, a seaport or facilitate the regional plan, even if not directing airport in one province, without roads leading to it. In some countries this is done by providing neighboring provinces, misses an opportunity to matching funds for multi-province initiatives. benefit both. 41 modern institutions When the costs and benefits are asymmetric, further advance in 2007 came with a decree that however, then the role of the national government provided concrete conditions for recognizing land can be much stronger. For example, if industrial use rights of current land users even if they lack development in one province pollutes the water legal documents. While previously recognized of another province, it is not likely that the two in the law, the 2007 decree added detail making will reach agreement on a fair solution. National it easier to interpret. The decree also stipulated standards for industrial pollution may be part of public and transparent procedures to perform the solution, but there is also scope for national involuntary land conversions. Several other key intervention to encourage regional planning. milestones have been reached in formalizing For example, policies that require regional what was previously a very informal system of plans for sub-groups of provinces that share the property rights, and in strengthening due process, same watershed areas can help to ensure that transferability, control and protection. development goes in the right way. These improvements in land rights seem to be Land Use recognized by the enterprises that participated in the PCI survey. Figure 3.3 shows the average Given the paucity of property rights over land assessments of property rights over the period two decades ago--there was no market for land from 2006 to 2008. Three overlapping panels all and land prices were not recognized by law-- tell the same story: firms felt much less risk of the episodic bursts of significant reforms during losing land to expropriation in 2008 than they those decades have improved property rights did in 2006. greatly. Successive revisions of the land law introduced prices in 1993, strengthened rights Strong property rights convey many benefits. for investors (but not small-holders) in 1998, Owners of property have an incentive to and finally in 2003 established that market prices maintain the property and to invest in it to earn should be used and laid out detailed rights and the maximum return possible. A system that obligations of both land users and state bodies. A ensures that the behavior of others does not Figure 3.3. Confidence in land property rights 5=very 5 low risk of expropriation 4 3 1=very high risk 2 of expropriation 1 2006 2007 2008 panel 2006-7 panel 2007-8 panel 2006-8 Source: : Own estimates based on the VNCI and VCCI, Provincial Competitiveness Survey, Overlapping Panels. 42 local governance Box 3.5. Leveling the gender playing field with joint land titling When the 1993 Land Law established private use of land, land use rights certificates (LURCs) issued to households only contained enough space for one name. Typically, the man's name was used which seriously jeopardized women's rights to land, and in turn limited their ability to gain credit or hold on to assets upon dissolution of the family. In 2000 the Family and Marriage Law opened the door to joint titling of all kinds of registered assets, including land and houses, but these provisions could not be implemented until the Land Law of 2003called for recording of both the names of the husband and the wife on the LURC. While this may be true for new or updated LURCs, it is not true for the majority. According to the 2008 VHLSS only 35 percent of land titles include the woman's name. Nevertheless, introducing joint land titling provides a good example of a reform that supports stronger institutions such as property rights while also supporting another of society's goals, gender equity. In October 2009 the Government issued Decree 88, on issuing certificates of land use rights, housing and other assets that are attached to the land. The guiding circular, issued by the Ministry of Nature and the Environment calls for one name as the household representative to be registered in the certificate for the household's land. This provision would have the effect of limiting opportunities for women to have their name in the certificate, since the husbands are typically chosen as the household representatives. This circular, which will not take effect until December 10, 2009, may yet be amended in order to include both the names of the husband and the wife on these certificates. Such an amendment would help ensure that joint land titling, a significant mechanism for securing property rights for half of the population, will not be adversely affected. Source: The World Bank. 2008. "Vietnam: Analysis of the Impact of Land Tenure Certificates with Both Names of Wife and Husband."; Tran, Thi Que, 2001. "Land Reform and Women's Property Rights in Vietnam." Center for Gender, Environment and Sustainable Development, Hanoi, Vietnam. diminish the value of one's property without In any system, there will be cases where an fair compensation provides a disincentive for individual's or firm's property needs to be welfare-destroying externalities. A fluid market taken for public use because the public benefit for property, allowing property to be transferred outweighs the private loss. Such situations are to others, ensures that property will be used often referred to as "takings." In most countries for the purpose that generates the maximum property can be taken for public use only after economic benefit. A considerable body of paying fair compensation to the owners or right- research points to strong property rights as a holders. Such a process can still be consistent fundamental contributor to long-term economic with strong property rights if the definition of growth. Ability to take advantage of the benefits "public use" is clear and properly circumscribed, of property is also key to equity in society, as if there is a clear and proper understanding of explained in Box 3.5. "fair compensation", and if the system allows the owner to contest the decision. The improvements in property rights described above are, therefore, potentially extraordinarily In Vietnam, land issues cut across the devolution important. As Vietnam's economic system process in many ways. The authority to decide on comes to increasingly rely on devolved decision the use and management of land was devolved making, with arms-length transactions made to the local authorities. The Provincial People's between firms, confidence in property right Committees, especially, have gained significant will become even more important in a firm's powers on land-use management. They can now investment decision calculus. make decisions on land recovery, allocation, 43 modern institutions Figure 3.4. Informal payments by firms for Figure 3.5. Opinion on level of corruption in issuance Land Use Rights Certificates in 2006 of Land Use Rights Certificates (among those who used the service since 2006) Very serious Gift or corruption informal 4% Don't know payment 34% Gift or expected Serious informal 14% corruption payment 15% not Average expected corruption 86% 20% No corruption Slight 11% corruption 16% Source: Own estimates based on the GSO Note: Based on the subset of respondents who used the Enterprise Survey 2006 service since 2006. The number of observations was 1,352. Source: Own estimates based on the VHLSS Governance Module 2008 conversion and lease to organizations, religious not emerge in a balanced way. In this conversion establishments, overseas Vietnamese and foreign processes, provincial governments officials have organizations and individuals. Their district- strong incentives to favor investors. As provincial level counterparts can decide on the same issues governments gained more revenue sources and but for households, individuals and groups of more authority over how their revenues could be citizens. The Commune People's Committees used, the incentive to favor tax-paying investors have almost negligible powers in this regard became stronger.30 Indeed, in the early 1990s as they can only decide on the lease of land when land prices were first defined, they were belonging to the agricultural land fund for use in determined to be 10 to 30 percent of the price the public interest. in the land transfer market. With such a wedge between prices, rent seeking by investors was The process of decentralized land-use inevitable, and even today corruption in land management has coincided with a vigorous issues is viewed by many to be rife. (Figure 3.4) conversion of agricultural land into non- agricultural land such as industrial zones, Among the leading causes of concern raised export processing zones, urban areas, tourist in the Vietnam Fatherland Front's report to the and commercial areas. The goals of accelerated National Assembly, cited in the opening chapter, industrialization and urbanization and increased was the concern over allocation of land and foreign investment have helped to drive this resettlement once land has been re-designated shift. for a new purpose. Indeed, dissatisfaction of land users dominates the league tables of complaints. The shifting of land use from one purpose to Depending on the source of information, from another, or from one land-holder to another, did 70 to 90 percent of complaints involve land.31 44 local governance Figure 3.6. Formal complaints related to land issues 14000 12000 10000 8000 6000 4000 2000 0 2003 2004 2005 2006 2007 Source: MONRE Moreover, the number of formally registered aspects of land conversions: whether to convert complaints on land disputes has increased land from one use to another, how to change land significantly over time, more than doubling in use fairly and efficiently, and the accountability five years. (Figure 3.6). People have not only systems that can help ensure that the system complained through formal submission of works as designed. complaints, but even by going to the residences of party leaders and the state, and to the sessions It is important to note that just because a project of the National Assembly and central agencies is worthwhile, this does not necessarily mean during the elections of the National Assembly that any involuntary procedure needs to be used. and People's Councils. In one case in the summer Given a high enough price, many land owners of 2007, a demonstration took place in front of would voluntarily sell their rights to use land. the Ho Chi Minh City People's Council, where Indeed, a test for whether the land is being a few hundred peasants from the Mekong River allocated to its most efficient use is whether Delta demonstrated for 27 days. voluntary trades have been exhausted. In some sense, it is not surprising that land issues Two problems increase the likelihood of needing would generate complaints. As a rapidly growing special mechanisms for obtaining land in some country in the process of shifting from a primarily circumstances. First, a large project such as a agricultural to a primarily industrial system, it is road will cover many different pieces of land, inevitable that land will be reallocated among and to be viable an agreement would need to be uses. Indeed, a devolved system with regional reached with all of the land owners. With this specialization calls for development of certain fact in mind, some may hold out until the last types of infrastructure, notably a road network, minute for an exorbitant sum. Second, a land that ultimately requires redirection of land from owner who is knowledgeable of the plans for private to public uses. the public investment may hold out for a very high price. Such rent seeking distorts incentives To shed some light on the reasons for the and ultimately benefits those with the best dissatisfaction, this section will address three connections and the best information. For both 45 modern institutions of these reasons, a reliance on wholly voluntary parks, hi-tech parks, urban development or transfers may not yield the best outcome when it rural residential areas, tourism, areas and comes to public investment projects. cattle-breeding farms · Investment projects for economic The set of circumstances that define when land development funded by domestic capital or can be taken by the state in Vietnam include not domestic-foreign joint venture capital with only cases that would traditionally be interpreted investment amount in the highest amount as for the public good, such as the building of group (so-called Class A project). a road, but also cases where the benefits are arguably private. The 2007 decree specifies that Taking land for public investment will generally land can be involuntarily taken in the following satisfy the "public benefit" criteria, since circumstances: public investment projects such as roads are public goods. But it is unclear why involuntary · Land converted to use for the purpose of resettlement is an option for some of the national defense, security, and national, initiatives, simply because they involve foreign public interest investment or are large projects. And indeed, · Projects invested by official development it is the latter type of involuntary conversion assistance funds of foreign governments or that generates the most controversy. A former international organizations official from the Ministry of Natural Resources and the Environment analyzed many complaints · Projects invested 100 percent by foreign and lawsuits and found that nearly all cases of direct investment disputes are related to investment projects that · Investment projects of infrastructure bring commercial benefits, while the number construction for industrial zones, economic related to public, non-commercial, uses such as Figure 3.7. Administrative complaints against land compensation and resettlement for land recovered by the State, breakdown by cause Complaints that no resettlement place was provided, Complaints against Claims for although all unfair compensation for residential land had compensation and land recovered by been recovered resettlement which the State in the past 3% reveals legal without violations or compensation corruption 6% 1% Land user received compensation by the State according Complaints that the to former land compensation value policies, but wanted was too low compensation compared to the based on the new market price of land price land 20% 70% Source: MONRE (2005) 46 local governance public buildings, defense and security works, commune in Hung Yen Province, people think were negligible. The inequity of forcibly giving that the compensation price is 30 to 40 percent up one's land so that another can profit does not of the market value.33 Similarly, while firms go unnoticed. reported less risk of the expropriation of land (Figure 3.3), they did not report any less concern If there is a justified and legal need for a public that compensation would be fair. taking of land (involuntary conversion), a new set of questions arise regarding how to go about it Setting the prices administratively, even if meant and what the level of compensation should be. An to be based on market prices, raises several analysis of the causes of land-related complaints new conundrums. First, the "market" has been published by the Ministry of Natural Resources very thin, and volatile at that, so estimating and the Environment a few years ago shows market prices is no easy task. Second, there that the most important cause of dissatisfaction is asymmetric information. Farmers do not is the low compensation to land users for the know the value of the land for their livelihood land which is recovered. (Figure 3.7). Another or the value of land going forward. This is study, based on a survey of land users in three particularly a problem when land is converted provinces whose land was recovered, found from agricultural to industrial use--asymmetric similar results--there may be other annoyances, information about land prices means asymmetric but insufficient compensation leads the league. bargaining power. (Table 3.4) The 2003 Land Law allowed direct land price Although the 2003 Land Law requires negotiation between the investor and the land compensation payments to be based on a land user for voluntary land conversion, which price framework close to the market value, the applies to investment projects other than those reality is that compensations are often below for national and public interest, defense and market prices. In 2005 price differences between security purposes or economic development the administrative price of land and market projects of great importance. One of the main prices in Hanoi could range anywhere between strengths of voluntary land conversion is that 10 and 100 percent of the market price.32 it creates the opportunity for a more equal Group discussions in a Yen Kiem commune of sharing of benefits between the investor and the Ho Chi Minh City in 2007 suggested that the land-user, as the latter is empowered, resulting compensation price is normally equal to 20 to in fewer complaints. It also speeds up the 30 percent of the market value. In the Dinh Du execution of the land conversion, as procedures Table 3.4. Complaints in land recovery (percent of land users whose land was recovered) Survey areas Causes Low compensation Improper Lack of job, "Suspended" Others price resettlement decrease of project income All three survey areas 95.1 47.3 31.2 42.5 43.2 H Chí Minh city 89.2 35.4 23.0 25.1 23.3 Hng Yên 99.2 55.4 43.0 45.1 63.3 Thái Bình 100.0 57.6 20.5 83.3 42.5 Source: Conflict Resolution in Urbanized Rural Areas: Empowering Civil Social Organizations. Land Use and Environment Pollution (VUSTA and VIDS, 2008) 47 modern institutions Box 3.6. Land-users' discontent with resettlement areas Focus group discussions and in-depth interviews with affected land-users in Ho Chi Minh City, Hung Yen and Thai Binh provinces reveal that most of the households that still have agricultural land do not want to live in the resettlement areas and thus resettlement flats were usually re-sold.. Those land-users who have opted to live in the flat, are not content either, as the design of the resettlement flats is not consistent with their customs because there is no surrounding garden land. The price for land and flats in the resettlement areas tends to also be high and people feel the support levels for movement and resettlement do not meet the minimum demands of the people whose land has been revoked. In some cases, people were forced to move even in the absence of resettlement areas, phenomena that have occurred with some land acquisition projects in Ho Chi Minh City and Hung Yen province. Source: Conflict Resolution in Urbanized Rural Areas: Empowering Civil Social Organizations. Land Use and Environment Pollution (VUSTA and VIDS, 2008) Table 3.5. Percentage of households lacking production resources after agricultural land acquisition (%) Project sites Lack of production land Lack of capital Lack of laborers In 3 project sites 83.8 66.6 54.3 Ho Chi Minh city 59.5 44.9 49.5 Hng Yên 94.7 68.8 46.6 Thái Bình 97.2 86.1 66.7 Source: Conflict Resolution in Urbanized Rural Areas: Empowering Civil Social Organizations. Land Use and Environment Pollution (VUSTA and VIDS, 2008) are very simple. In the view of some, a key state, many people lack the necessary physical problem is that there are no regulations yet for and human capital to continue generating income cases in which land-users demand unaffordable (Table 3.5). This is even more of a problem if the prices, thereby constraining access to land by land-user spends compensation money for non- investors. Because of this, most investors prefer productive uses. In the study in three provinces, compulsory land recovery. Arguably, however, if nearly a third of compensation was spent on the investor is not willing to pay the price asked daily consumption. This problem is naturally by the seller, then the productivity of the land for closely linked to that of compensation prices. If the seller is higher, and the land should not be a farmer's human capital is tied to the land, the taken involuntarily. value of the land to that farmer will be more than just the market value. Another major source of discontent among land-users is inappropriate resettlement and Many of these issues are on track for support policies (Table 3.4). One set of problems improvement. In August, the Government issued have to do with the resettlement areas and the a decree on Land Use Planning, Recovery, and resettlement processes (Box 3.6). Compensation.34 The Decree strengthens both compensation and assistance for parties affected Perhaps a more serious problem is that after their by land recovery, especially by requiring main source of income (land) is recovered by the 48 local governance Table 3.6. Evaluation of participatory approaches on land acquisition activities in Ho Chi Minh City, Hung Yen, and Thai Binh provinces (% of people) Activities Evaluation level Good Middle Bad Fixing prices for land, property and support 0.0 2.7 97.3 Deployment for each household 0.0 60.4 39.6 Public finance and organization 0.0 33.4 53.3 Financial transparency 0.0 36.3 63.7 Source: Conflict Resolution in Urbanized Rural Areas: Empowering Civil Social Organizations. Land Use and Environment Pollution (VUSTA and VIDS, 2008) compensation to be aligned with the market for some activities shows mainly negative price at the time of the land recovery decision. results (Table 3.6). The Decree also calls for the establishment of Land Development Funds at provincial and The 2008 VHLSS provides national level data district levels. They will play an important role for the commune level on the level of awareness in land recovery, clearance, compensation and and participation of citizens in land-use plans and resettlement. resettlement and compensation schemes. Only around one out of three citizens who said they While the devolution of rights over land to were interested in resettlement and compensation farmers and investors, and the devolution of plans reported that they have information that authority to the provinces, have all expanded, meets their needs (Figure 3.1), and only one in accountability measures have generally been seven have provided opinions on such schemes adopted well after the devolution of power (Figure 3.2). to provincial governments. Some important accountability measures, such as anchoring If involved in a land-related dispute with an compensation to current market prices, administrative agency, citizens face major participatory urban planning, participation in impediments. The current system to settle draft plans on compensation and resettlement, administrative complaints suffers from lack of have not been introduced until recently. Other impartiality, as administrative complaints are first important accountability measures, such as settled by the chairman of the local government participation in the preparation of land-use plans against which the complaint is lodged. Other of provincial governments, remain missing. major impediments are the restrictions on the jurisdiction of the courts on land-related Focus group discussions and in-depth interviews administrative cases, and the limited powers of in three provinces with affected land-users National Assembly and the People's Councils, show that people are also discontented with the which at most can urge government authorities very weak participatory approaches applied to to settle the complaints (Box 3.7). the planning of land-use, the setting prices for compensation, the decisions on resettlement The lack of impartiality in the settlement of arrangements, support for job training and complaints may explain the fact that settlement job change, etc. Decisions follow normally decisions usually favor the position of the local the top-down approach. A survey evaluating government. The case study of Ho Chi Minh participatory approaches in these three provinces City, Hung Yen and Thai Binh shows that local 49 modern institutions Box 3.7. The current system of settling land-related administrative complaints The current system used to settle administrative complaints is regulated by the 1998 Law on Complaints and Denunciations, amended in 2004 and 2005. Under this law, individuals and organizations are entitled to lodge complaints against administrative decisions of all levels of government. Complaints are settled by the chairperson of the local government against which the complaint is lodged. After the first settlement, the complainant can further lodge the complaint to higher level government authorities--including heads of ministerial units and ministers--or initiate a lawsuit at court. The Prime Minister provides direction to the settlement of complaints, and retains the power to re-examine the final settlement decisions. The Government Inspectorate provides assistance and advice to all the government authorities in charge of settling the complaints. The Law on Complaints and Denunciations mandates strict time limits for the settlement of complaints and the 2004 implementing guidelines of the Land Law requires local governments to publicize the decisions on the settlement of land-related complaints, and to notify those decisions to the concerned complainants. The 2003 Land Law restricts the right of complainants to lodge land-related complaints to the courts, by making second-settlement decisions by chairpersons of Provincial People's Committees final. This restriction was also incorporated in the 2006 amendment of the Ordinance on the Procedures for the Settlement of Administrative Cases, in apparent contradiction of the Law on Complaints and Denunciations, which since 2005 allows judicial review after the complaint has been dealt by any administrative agency. The National Assembly and People's Councils have the mandate to monitor the settlement of complaints by the government. Complainants are entitled to send their complaints to the National Assembly and People's Councils, but these institutions can only urge competent government authorities to quickly settle the complaints. Source: Law on Complaints and Denunciations (1998, amended in 2004 and 2005);Land Law (2003) and its implementing Decree 181 (2004); Ordinance on the Procedures for the Settlement of Administrative Cases (1996, amended in 1998 and 2006) governments provide responses to most land- usually transfer complaints to the Commune related complaints. However, the responses People's Committee and the land acquisition are mainly to explain and convince the people project management board. Conflicts of interest to implement the decisions adopted by local abound. governments, but decisions are hardly ever adjusted to people's requests (Table 3.7). This As a whole, the government has made significant strong orientation towards the position of local efforts to improve accountability measures governments might be partly explained by the lack in land-use management. However, the lag of impartiality of the settlement system. Other between devolving authorities to provincial reasons might have to do with the fact that some People's Committees and establishing new of the agencies dealing with complaints such as accountability measures arguably led to the District and Commune People's Committees avoidable consequences. Plans to revise the Land hardly have any power to change decisions on Law in 2009 and the Law on Complaints and land use management and consequently have Denunciations offer opportunities to strengthen no choice but persuasion. The case study found accountability further. out that Provincial People's Committees usually transfer complaints to the District People's Aligning compensation with market prices, a Committee and the land acquisition management process already improved with the Decree of board, and that District People's Committees August 2009, is encouraging, but more can be 50 local governance done to strengthen accountability. Improving compensation, site clearance and resettlement regulations on voluntary conversions and can help to avoid many problems. Finally, extending these mechanisms to more types of moving towards a more objective and impartial land used for commercial purposes can avoid system on complaint settlement can not only many complaints of land-users, as they are make for a more efficient system, but build empowered to negotiate compensation. Similarly, citizens' awareness about the procedures along although policies supporting job changes have the way. improved in the laws, it becomes essential to ensure effective provision of vocational training Finally, the seeming incongruence between and job-change support in practice. Many land improvements in property rights over time and an users lose the necessary capital to sustain their expanding number of complaints related to land livelihoods once they are involuntarily resettled. and resettlement is at first blush a puzzle. While there are undoubtedly many factors at work, Improving the legal framework and policies on this is consistent with a feature of economic participatory land-use planning of provincial development that is emphasized throughout and district People's Committees can also this VDR: citizens are becoming increasingly strengthen downward accountability. Moreover, demanding of better services and decision making strengthening the implementation of existing that is more transparent and accountable to them, policies on participatory decision making on not only to higher administrative authorities. Table 3.7. Percentage of households having received feedback to their complaints on land recovery and types of feedbacks received (Ho Chi Minh City, Hung Yen and Thai Binh provinces) Percentage Methods of giving feedback receiving Organizations/Areas Adjust as Explain Coerce feedback to per people's and complaints request persuade Commune People's Committee 79.5 1.9 76.7 0.9 Land Acquisition Project Management Board 93.8 2.0 91.9 n/a District People's Committee 20.8 1.9 17.0 1.9 Farmer Union 80.0 n\a 80.0 n/a Other CSOs 1.7 n\a 1.7 n/a Source: Conflict Resolution in Urbanized Rural Areas: Empowering Civil Social Organizations. Land use and environment pollution (VUSTA and VIDS, 2008) 51 4. ADMINISTRATIVE AND DIRECT SERVICES Delegation of responsibilities along functional lines, to providers of administrative services, such as civil registrations, and providers of services, such as health care and education, has been a key part of Vietnam's devolution. One stop shops have been widely implemented to ease access to administrative services, and they are largely successful. An ambitious program of administrative simplification, known as Project 30, is very promising and is receiving top-level political support--the business community has been instrumental in making the benefits of this effort understood to policy makers. As a whole, the system of administrative services is improving, although the pace of progress appears to be faster in richer provinces. There has been considerable devolution of authority to service providers, although the tension between autonomy and the need for standards makes this devolution particularly complex. Information asymmetries are pervasive, and there is a need for strong systems of upward accountability through national standards in order to ensure quality. Misaligned incentives lead to overspending on drugs and some procedures. The entry of non-state providers of services is generally positive, but raises new issues of quality control. Mechanisms of downward accountability, particularly through the use of surveys such as the VHLSS and Citizen's Report Cards, can complement systems of upward accountability. As a whole, surveys tend to show improvement, but also show that citizens are becoming more demanding over time. An increased reliance on self-financing raises concerns about the impact of devolution on the poor and disadvantaged. And the perception of corruption, particularly in health care, raises further concerns over equity. While decentralization is often thought of in autonomy and accountability has been a feature geographic terms, powers and responsibilities of Vietnam's development experience for some of various sorts have also been delegated time. along functional lines. Without foreswearing the state's responsibility to handle certain This chapter examines two different types of functions or deliver certain services, step-by- functional delegation for which devolution works step reorganization of the way that these services in very different ways. The first is the delegation are provided and governed can help improve of responsibilities to administrative units, often outcomes in some respects. At the same time, the under local government or local affiliates of tension between autonomous service provision central ministries. While the previous chapter and the desire for uniform standards of quality dealt with the setting of policies at the local level, accessible to the whole population presents a through planning processes, this section focuses challenge for which there is no magic formula. on the devolved responsibility to implement some Exploring the mechanisms for balancing of those policies. Administrative units, which 52 administrative and direct services provide services such as civil registrations and an ongoing program aimed at simplifying, official documents, are not autonomous in the publicizing and improving consultation regarding same way as some of the other bodies discussed administrative procedures, is also receiving high in this VDR. Delegation of responsibilities to level political support. these units nevertheless has begun to reshape the interface between the state and the population, One Stop Shops and begun to re-orient accountability to citizens and firms. The first set of reforms sought simply to make it easier for citizens and firms to deal with the The second type of functional delegation covered state through the introduction of One Stop in this chapter is the delegation of responsibilities Shops. As the name suggests, the idea was to to service delivery units, such as health care save citizens and firms from having to visit providers and schools. Consistent standards of multitudes of agencies for their administrative quality have traditionally been ensured by direct tasks, from notarizing documents to registering provision of these services. But to improve land to business registration. The first one stop flexibility of financing, and to take advantage shop was piloted with donor support in 1996 in of competition, responsibilities have been Ho Chi Minh City, covering a range of services: delegated to increasingly autonomous service business registration, construction permits, providers. The tension between autonomy and land use right and house ownership certificates, accountability is especially important for such a cultural activity licenses, notarization, legal vital set of services; a vacuum in accountability counseling and advice, citizens complaints and would undermine quality and challenge society's denunciations, and social affairs. In the late concept of fairness for the provision of these 1990s and early 2000s, additional pilots were services. established in Quang Binh, Quang Tri, and Ninh Binh provinces. By 2003, the concept had taken Administrative Services off. In that year, the Prime Minister issued a decision to make one stop shops compulsory in In 2001, administrative units gained considerable all 11,000 districts and communes of Vietnam, decision-making power over a block grant from covering four departments at the province level, the government for administrative expenditures six procedures at the district level and four and staff costs. In addition, they were allowed to procedures at the commune level. Later in 2007, use cost savings to increase staff remuneration the one stop shop initiative was scaled-up to all within certain limits. In 2005 these powers were departments and procedures at local levels and further enhanced. was made mandatory for the central-level too. Importantly, the 2007 regulations allowed and Although power has been delegated to encouraged the introduction of "inter-linkage" administrative units to handle certain functions one stop shop initiatives, which link different and to manage aspects of their operations, in administrative levels and sectors, thereby many cases the central government has moved further simplifying procedures for citizens and in the opposite direction, imposing centrally enterprises. mandated mechanisms aimed at improving efficiency. Chief among these efforts is the Implementation has steadily improved: by 2006, process underway to reform administrative two out of three departments at the province procedures with citizens and enterprises. Those level had established their one stop shops, and by reforms started in the 1990s and received a very October 2009 this had risen to 84 percent. At the strong push from top government authorities lowest administrative levels the implementation more recently in 2006, when Vietnam was about of the one stop shop is nearly complete. As of to join the World Trade Organization. Presently, October 2009, nearly 99 percent of departments 53 modern institutions Box 4.1. The implementation of One Stop Shops in Dak Lak To understand better how the One Stop Shop model is perceived by citizens in Dak Lak Province, the People's Committee and the Embassy of Denmark organized a user satisfaction survey of One Stop Shops in 14 districts and 30 communes. Based on 1,825 questionnaires and an additional set of in-depth interviews and group discussions with some 300 citizens in the spring of 2009, the research design also included a control group of communes that were outside of the project area. The study provides a valuable snapshot into the operation of the one stop shop in this central highlands province. As a whole, the results were encouraging. Eighty percent of respondents were happy with the changes in public administration in their communes, especially the one stop shop model. Services such as issuing ordinary papers were appreciated by respondents and the researchers found that this had helped restore trust in the local government in rural communities, and especially among ethnic minorities. According to one respondent, "The attitude has much changed. Previously, they never answered any question and many ethnic people departed immediately if they were not answered. But now the officers are much nicer." Nevertheless, the study also found room for improvement in many communes regarding the sense of responsibility, competency, morality and attitude of the officers serving the one stop shop. The convenience and simplicity of the one stop shop saved people from having to go through many "doors" as in the past and among other benefits enabled the poor and those who do not speak the Kinh language to access administrative services themselves, without having to pay for the help of others. Despite clear improvements in this respect compared to 2006, the study also found that 20 percent of respondents needed help from others to complete paperwork, and one in ten users of the one stop shop had employed "middle- men". A small proportion, 5 to 6 percent, also paid an extra "fee", beyond the customary fees. While the one stop shop model potentially saves citizens time, the experience in practice ultimately depends on the complexity of the task, with land transactions taking the longest, as illustrated by the story of one respondent. "Our family has several slots of land and when our children went to college, we decided to sell some slots of land for college fees and living costs. However, to complete the procedure for land transfer, one stop shop officers at both commune and district asked me for many kinds of papers such as Certificate of Origin of Land and other kinds of certifications. I had to travel many times and spend months for this--at least two to four months. So in fact, in some cases, after we fulfilled the requirements, no more buyers could wait." Problems can be compounded when one stop shop staff work part-time or do not keep to their posted hours. Describing an attempt to get a birth certificate for a new baby, one respondent said "I had to come there five times from Monday to Thursday but could not see them a single day so I stayed home on Friday. On the following Monday, I came for a regular weekly meeting at the commune and saw them and the paper was completed at once." As a whole, however, the improvements are unmistakable. While only 60 percent of respondents were satisfied with the convenience of the one stop shop when they were first established in 2006, nearly 80 percent were satisfied in 2009. Source: Viet Insight. "Public Opinion Survey on the Effectiveness of Commune and District One-Stop Shops in 14 Districts and 30 Communes of Dak Lak Province." Dak Lak People's Committee Department of Home Affairs and Danish International Development Agency. June 2009. at the district level and 96 percent of departments stop for undertaking related administrative at the commune level had applied the one stop procedures--business registration, tax shop model. registration and seal registration--under the responsibility of different departments: planning One example of an inter-linkage one stop shop, and investment, finance, and public security. laid out in a 2007 circular, is that of a single In Binh Thuan and Kien Giang provinces, for 54 administrative and direct services example, these initiatives helped businesses with is only one stop, for complex administrative registration. Several other localities have also procedures the burden can still be formidable. deployed the inter-linkage one stop shop model Especially in the poorer rural communes, in other fields: Ho Chi Minh City, Ha Noi, Da facilities are often inadequate and the lack Nang city, Hai Phong city, Dong Thap province, of full-time staff can still lead to delays and and Phu Tho province implemented the inter- frustrations. In the survey of one stop shop users linkage one stop shop for granting certificates in Dak Lak, most reported that the procedures of land use rights and construction permits; were completed, but many reported that they Quang Ninh province organized an inter-linkage were not able to complete the procedures on one stop shop in resolving files, administrative time. (Figure 4.1) In the case of land papers, procedures with investors in the province, etc. more than half of respondents said procedures The ability to select the mix of administrative were not completed on time, and more than half services by different localities is a key element of those said it took at least three more visits in of devolution. order to complete the procedures. By most accounts, the one stop shops are Information Technology successful.35 For citizens and firms, the prospect of long lines and unanswered questions are less Another major on-going reform contributing to of a concern than they had been in the past, as the transparency and efficiency of administrative illustrated by one large sample survey of users procedures is the application of technology of one stop shops in Dak Lak province in 2009. in public administration. The 2006 Law (Box 4.1) In the Binh Thuan and Kien Giang on Information Technology requires state examples, the time for business start ups reduced agencies to publicize on their websites all their from 26 days to 15 days, and from 15 days to 5-7 administrative procedures, among other sorts days, respectively. of information. By now, all the 63 provincial governments have their own official websites From the citizen's perspective, the improvements operating very well. A 2009 Prime Minister resulting from the adoption of the one stop shop Decision requires that by 2010, 100 percent of do come with caveats. One is that even if there ministries, central-level agencies and provincial Figure 4.1. On-time performance at One-Stop Shops in Dak Lak Land Papers Land Papers Licensing Licensing Admin Verification Admin Verification Social Policy Social Policy Notary Notary 0% 50% 100% 0% 20% 40% 60% 80% Percent On Time If not on time, percent needing 3+ additional visits Source: Viet Insight. "Public Opinion Survey on the Effectiveness of Commune and District One-Stop Shops in 14 Districts and 30 Communes of Dak Lak Province." Dak Lak People's Committee Department of Home Affairs and Danish International Development Agency. June 2009. 55 modern institutions governments publicize through their websites governments have included the introduction of all the information specified in the Law on different on-line administrative services in their Information Technology. ICT plans for 2010, although the percentage varies depending on the type of service (Table 4.1). The provision of on-line public services is also progressing rapidly. In 2006, only 2 percent While the widespread application of e-government of provincial governments were offering on- is laudable, its impact will be constrained by the line services for businesses, but by 2008 the limited use of internet in Vietnam. At the end of percentage had risen to 13 percent. The 2009 2006, only 17 percent of Vietnam's inhabitants Prime Minister Decision also set ambitious were internet users, mainly concentrated in targets in terms of provision of on-line services. cities, towns and industrial clusters. Many in By 2010, 80 percent of ministries, central- rural areas are still unfamiliar with the internet. level agencies and provincial governments and On the positive side, the number of internet all centrally-run cities are required to provide users is increasing rapidly, having more than some form of online public services to citizens doubled since 2003. Since internet was officially and enterprises. Moreover, during 2009 and introduced in the country in 1997, the number 2010 all of these agencies are required to of internet users has annually increased by 30- prioritize certain online public services, such 40 percent on average. Nevertheless, there will as granting of business registration certificates, always be a need to provide means of access that granting of investment licenses, granting of work for all, even those without access to the permits for the establishment of branches and internet. representative offices, settlement of complaints and denunciations, granting of house ownership Systematically Streamlining Administrative and land use right certificates, granting of Procedures construction permits, etc. The application of one stop shops and A 2009 study conducted by the World Bank e-government in administrative services aims on the application of ICT in local governments to improve the interaction between government shows that a large percentage of provincial bodies and the population, both firms and Table 4.1. Percentage of provinces planning on-line administrative services for 2010, out of 36 surveyed provinces Percentage of provinces Registering and granting business licenses through the internet 75 Registering and granting construction licenses through the internet 72 Registering births and deaths 33 Registration of declarations and post-customs clearances 22 Providing online tax declaration service 67 Providing information about kinds of files, procedures, and handling letters of denunciation 69 Providing information about land procedure, land use plan and registering for land use right 53 certificates Source: ICT Development in Local Governments in Vietnam (IVTECH Consultant and World Bank, 2009) 56 administrative and direct services citizens, focusing on the manner in which existing the systematic and continuous application administrative procedures are applied. This of the principles of efficiency, transparency addresses part of the problem. A second aspect and consultation in the development of new of Vietnam's efforts to streamline administrative administrative procedures and in the revision procedures focuses on the procedures themselves. of existing ones. The draft Decree requires all This is the goal of Project 30. new administrative procedures of ministries and provinces to be developed in a consultative The first phase of Project 30 required all manner and to be time- and cost-efficient and ministries and local governments to gather easily understood by individuals, organizations statistics on paperwork. This phase, which closed and government agencies. Ex-ante impact on August 15th 2009, is now being followed assessments will be mandatory during the by a second phase, in which ministries and development of all new administrative local governments review their administrative procedures, and all existing administrative procedures to identify a plan for simplification. procedures will have to be reviewed ex-post on As part of the second phase, a new on-line an annual basis by ministries and provinces. The national database on administrative procedures review will have to incorporate the feedback was launched in October 2009. The database is an received from organizations and individuals on electronic registry of over 5,700 administrative administrative procedures. Importantly, the draft procedures implemented at all four levels of Decree requires the continuous publication of all the administration, 9,000 legal documents and new and existing administrative procedures in 100,000 dossiers with administrative procedures, the new on-line national database. templates and forms. Publication of this database constitutes a major advance for Vietnam. In the Another relatively recent innovation strengthens final phase of Project 30, which will run from downward accountability in a different way. May to December 2010, ministries and local Decree 20 of 2008 regulates the provision of governments will have to simplify administrative feedback by organizations and individuals on procedures based on the results of the work done existing administrative procedures. The Office of under the first two phases. the Government, ministries and provinces must publicize the contact information for receiving Project 30's success is important for two reasons. such feedback and assign civil servants to receive The immediate effect is to simplify procedures, the feedback. Public comments are explicitly opening space for firms to concentrate on the required to be studied and handled, including business of generating value added rather by amending the administrative procedure. than filling out forms and waiting in lines. As The results on the handling of comments must Vietnam strives to compete with its middle- be publicized on the website of the agency and income neighbors, it will need to be sure its through other means. firms are not tied up in red tape. The second reason that success in Project 30 is important Strengthening Downward Accountability is for the impact it will have on the process of generating new administrative procedures going Both the one stop shops and Project 30 aim to ease forward. There is a risk that after much progress the administrative burden on citizens and firms in cutting red tape, creating more space for firms and improve relationships between government and citizens alike, new procedures could quickly bodies and the population. In the devolution be put in place to fill that space.36 paradigm that is the theme of this VDR, both of these efforts essentially focus on improving the A forthcoming Decree on the Oversight of efficiency of the administrative services units, to Administrative Procedures is expected to help whom some powers have been assigned, while control this tendency. The Decree will ensure allowing the business community and citizens 57 modern institutions public feedback from users is the foundation of Box 4.2. Innovation in associations downward accountability. Businessbuilding downward accountability at the local level-- Citizens identifying have also been quite vocal in Report Cards in Ho Chi Minh City bottlenecks and arguing, convincingly, that the In 2004, four cities received donor support to conduct surveys of citizens about their satisfaction with state provided services. Ho for firms is higher than administrative burden Chi Minh City stands out as the only one to repeat the exercise--at its own initiative and expense. The value media and society for necessary. Treating the of this new mechanismas accountability was recognized by the city's People's Council, who then problems is a useful way allies in identifyingmobilized the funds to repeat the surveys. This model, whereby the locally elected leverage society's resources to make things to body sees the value in understanding performance from the perspective of users, shows how downward accountability for results and upward accountability for compliance with the rules, can work in tandem to help us understand the importance and challenges of administrative procedures reform. Beyond the simple scoring of services by users, those behind the Ho Chi Minh City "Survey on Citizen's Satisfaction with Public Services", as they were renamed, went to great efforts to see that the results were used constructively. The surveys themselves--which collected information on difficulties and problems with using services, levels of satisfaction and dissatisfaction, levels of transparency and access to information, and feedback mechanisms--initially faced some challenges. The initial hesitancy, generated by concern about coming into conflict with other government bodies, was overcome by a plan to work closely with those bodies, holding consultations during planning to be sure that the questionnaires were right, and workshops afterward to ensure the results were properly understood. Concern about how the media would report the results was also handled proactively, with a press conference to make clear what the results did and did not say. Source: Report on the Results of Citizens' Satisfaction Index Survey 2008 for Public Services in Ho Chi Minh City. to focus on more important issues. But what citizen's report cards are gaining prominence mechanisms have evolved, and need to further as a mechanism for downward accountability. evolve, to strengthen downward accountability? Institutionalizing such efforts would help make accountability the rule rather than the exception. One is the increasing use of feedback While it is understandable that poorer areas will mechanisms discussed throughout this chapter, have difficulty carrying out such studies without the surveys of citizens and firms that provide a donor support, it is unclear why other large cities snapshot of how administrative procedures are beyond Ho Chi Minh City have followed this being implemented in practice. Both the VHLSS model. Governance Module and the PCI Survey were implemented by donors and Vietnamese A second mechanism for downward institutions working together, the General accountability is the integration of civil society Statistics Office and Ministry of Planning and and media into the process of administrative Investment in the case of the VHLSS, and the procedures reform. Project 30 is notable not Vietnam Chamber of Commerce and Industry only for the ambitiousness of its goals, but for in the case of the PCI Survey.37 The Citizen's the manner in which the objectives are being Report Cards carried out in Ho Chi Minh City advanced by the media and civil society. One in 2006 and 2008 provide an excellent model for of the largest online media organizations, feedback--demanded and paid for by the elected VietnamNet, launched an online discussion of People's Council and implemented by local think the topic in September 2009, allowing visitors to tanks and statistical offices. (Box 4.2) Elsewhere, the web site to provide their opinions on the key Citizen's Report Cards are being carried out with problems of administrative reform--hundreds of the support of INGOs in rural provinces of Ha readers wrote in the very first day with not only Tinh, Dak Lak, and Lai Chau.38 As one element complaints, but constructive suggestions for how of what is referred to as a "social audit", the to improve matters. Encouraging unvarnished 58 administrative and direct services better. Chapter 6 will explore these issues in the procedures--was cited by nearly half of more detail. respondents as the reasons for the problems. (Figure 4.3). Views of Citizens Being able to obtain information on the National level studies suggest that streamlining procedures would clearly ease frustrations of and simplifying administrative procedures has some of those who had difficulties. Citizens had a positive effect. Citizens responding to the were asked how easy or difficult it was to find VHLSS Governance Module report low levels of necessary guidance information. The same two difficulty when dealing with most administrative services that were highlighted for the numbers procedures, although more than one in four of users who experienced difficulties, house respondents reported trouble related to land and ownership rights and land use rights certificates, housing procedures. (Figure 4.2). were also those for which citizens found it relatively more difficult to obtain necessary The types of difficulties encountered are indicative guidance information. (Figure 4.4.) of the remaining challenges for improving administrative services. For applications for The VHLSS Governance Module also included a house ownership rights and Land Use Rights direct question on trends related to administrative Certificates, the two administrative services with procedures. Among those who had actually used the highest proportion of users who experience administrative services since 2006, (and even difficulties, the time spent was the single most among those who hadn't), the overwhelming often cited reason for the problems. For both view was that these procedures had gotten land use rights and house ownership rights, easier. (Figure 4.5). While this sentiment was complaints about the procedures themselves-- less strongly held in the case of land use rights their complexity, opacity, or simply not knowing certificates and house ownership rights than for Figure 4.2. Households that experienced difficulty when dealing with administrative services Certification of documents by notary Registration of household business Registration of household residence Application for repair/construction of house Application for Land Use Right Certificate Application for House Ownership Right 0 25 50 75 100 Percent of citizens reporting having had difficulty with administrative services Note: Based on the sub-set of respondents who had used the service since 2006. Number of observations used for the chart ranged from 312 to 4,112. Source: Own estimates based on 2008 VHLSS Governance Module 59 modern institutions Figure 4.3. Difficulties when applying for Land-Use Rights Certificates Figure 4.3. Difficulties when applying for Land-Use Rights Certificates Complex Complex and and lengthy lengthy procedures Unclear procedures Other Unclear Other 4% 4% 3% regs 3% regs Didn't 3% Didn't 3% know know procedure procedure Serving Serving 35% 35% attitude of attitude of officials officials 11% 11% Time- Time- Shortage consuming Shortage consuming of officials of officials 43% 43% 1% 1% Note: The chart depict the responses of only those respondents who encountered problems. The number of observations was 360. Source: Own estimates based on VHLSS Governance Module 2008 Figure 4.4. Level of difficulty for households to find guidance information on administrative procedures Figure 4.4. Level of difficulty for households to find guidance information on administrative procedure Certification of documents by notary -2% 67% Certification of documents by notary -2% 67 Registration of household residence -4% 61% Registration of household residence -4% 61% Registration of household business -3% 54% Registration Application for repair/construction of residential of household business -3% 54% -9% 44% house Application for repair/construction of residential -9% 44% Application for Land UseRight Certificate -20% house 34% Application for Land UseRight Certificate -20% 34% Application for House Ownership Right -24% 34% Application for House Ownership Right -24% 34% -50% -25% 0% 25% 50% 75% Difficult or very difficult Simple or very simple -50% -25% 0% 25% 50% 75% Difficult or very difficult Simple or very simple Note: Chart shows the percentage of respondents saying information on procedures were simple or very simple to obtain, and the percentage saying information on procedures were difficult or very difficult to obtain. Those providing a neutral answer are not shown. Based on the sub-set of respondents who used the service. The number of observations ranged from 215 to 4,112. Source: Own estimates based on 2008 VHLSS Governance Module 60 administrative and direct services Figure 4.5. Administrative procedures are getting easier, according to households (2006-2008) 100% 88% 87% 93% 78% 73% 75% 68% 50% 25% Easier 0% - 4% - 4% - 2% More -11% difficult -25% -14% -16% Application for Application for Application for Registration of Registration of Certification of LURC House repair or household household documents by Ownership construction of residence business notary Right house Note: Includes only respondents who had used the service since 2006. Chart shows the percentage of respondents saying procedures were easier than before 2006, and the percentage saying procedures were more difficult. Those saying there was no change are not shown. The number of observations ranged from 213 to 3,988. Source: Own estimates based on 2008 VHLSS Governance Module other administrative services, even for these encountering difficulty with finding guidance services at least two thirds of those who had used information about these two services, more the service said that things had improved. respondents facing difficulties and, perhaps not surprisingly, were less positive about the degree While the view that administrative procedures of improvement. People in poorer provinces had improved was widespread--in every were also less likely to avail themselves of province there were more reporting improvement administrative services in the first place. than worsening--the degree of improvement was stronger in the richer provinces. This was Extrapolating these patterns into the future as particularly true for certification of documents by Vietnam and its citizens become wealthier, it notaries and registration of household residence. is clear that the pressure to further improve Poorer provinces had more respondents these services will not ease. As wages and Table 4.2. Satisfaction of citizens with a selection of administrative services in Ho Chi Minh City, 2006 and 2008 Construction Permit Land-Use Right Public Notary Business Tax Issuance Certificate Issuance 2006 2008 2006 2008 2006 2008 2006 2008 Satisfactory 74.1 57.4 59.3 39.2 78.2 60.2 54.5 37.6 Neutral 9.4 34.3 7.8 41.4 10.6 36.9 17.7 46.9 Not satisfactory 16.6 8.3 32.9 19.4 11.1 2.9 27.7 15.5 Source: "Report On The Results Of Citizens' Satisfaction Index Survey 2008 for Public Services In Ho Chi Minh City" 61 modern institutions salaries increase, so will the value of time and progress over the two years; but if the objective is consequently the cost of waiting. As Vietnam to increase satisfaction, the current reform has not progresses in strengthening property rights, in reached the expected objective." If satisfaction the form of house ownership and land use right is a moving target, if people are becoming more certificates, citizens will increasingly utilize demanding, then absolute improvements may administrative services. A growing demand still fall short of the increasing expectations of for more administrative services, and more the citizens. efficient administrative services, will be a fact of Vietnam's development in the next decade. Views of Firms That citizens are becoming increasingly The business community also generally reported demanding is evident from another source, improvements in the business environment as well. Ho Chi Minh City's Citizen's Report stemming from administrative reforms. By Cards provide an example. The target sample 2008, nearly 90 percent of respondents to the group has not always been the same, since the PCI survey said that the one stop shop model objectives may be different from year to year. In had been implemented locally, and nearly as both 2006 and 2008, however, the sampling and many agreed that the provincial implementation approach were the same. The survey covered of one stop shops is very efficient and beneficial citizen satisfaction with several administrative to business. Two thirds of firms said that services and makes it possible to examine how administrative procedures reforms to facilitate citizen satisfaction is changing over time. (Table business procedures had been implemented 4.2.) For each of the services the conclusion moderately well. The panel data also suggests was the same: fewer people were dis-satisfied improvement. When asked about access to a than in the past, but fewer were satisfied as well. wide range of documents, from local budgets As the report concluded, "if the objective is to planning documents, to tax and business reduction of dis-satisfaction, it can be said that registration data, firms reported easier access the administrative reform has achieved a certain and less need for personal relationships with Figure 4.6. Getting information without a relationship with provincial officials 5 5=never need a relationship 4 3 1=always 2 need a relationship 1 2006 2007 2008 panel 2006-7 panel 2007-8 panel 2006-8 Source: Own estimates based on VNCI and VCCI, Provincial Competitiveness Survey, Overlapping Panels. 62 administrative and direct services officials in order to get the documents. (Figure respects, beginning with financial autonomy. 4.6.) (Although the trend is favorable, the levels Service delivery units were given powers to are still very high.) generate revenues, by charging user fees on core services, setting fees within a band for non- Miroring the findings for citizens, the firm level core and on-demand services, and borrowing PCI survey also shows that the improvement from commercial banks, among others. They is felt somewhat more strongly in the richer have also been given significant authority over provinces. Compared to the poorer third of the use of their financial resources, both their provinces, firms in the richer third were more self-generated resources and the state block likely to report improvements in paperwork, grants. Three types of service delivery units with costs, numbers of visits required, and friendliness financial autonomy have been stipulated in the of staff. Perhaps as a consequence, firms in the law: fully self-financed, partially self-financed provinces with lower poverty rates also were and fully state-financed, depending on whether more likely to report that informal charges they recover full, part or none of their recurrent had reduced. It should be noted however, that expenditures. even generally positive about the trajectory of administrative procedures reform, albeit less so The reforms undertaken since Doi Moi have than in the richer provinces. provided service delivery units not only with more autonomy on financial issues, but also Direct Services for Citizens--Health and on other aspects of their management. Heads Education of service delivery units have gained some degree of freedom to raise staff remuneration, Among the core functions of the state, provision and considerable control over human resources of services to the population is fundamental. and the organizational structure of the service Health and education are where government and delivery unit. In the health sector, service the people interact most frequently and most delivery units have been allowed to engage with directly. Providing such services efficiently is the private sector to establish joint ventures and not only a matter of fairness and the sense of business collaborations and to develop "elective" society's responsibility to its constituents, it is services for those paying additional fees. also a matter of direct economic importance since such services help ensure a healthy, productive, Nearly all service delivery units in the health and satisfied population. sector have now implemented the new autonomy policies. In 2007, 100 percent of public health As in many countries, maintaining and services at central level and 88 percent at local improving the quality of services for a young, levels had been granted autonomy under both growing population, while operating within the 2002 and 2006 regulations. At local levels, a budget constraint, has been a key challenge especially at district level, the "autonomization" for Vietnam. The twin objectives of ensuring of service delivery units has moved relatively adequate funding and developing governance more slowly due to insufficient equipment and mechanisms that ensure accountability have human resources, and limitations in revenues as shaped the evolution of institutional reforms in well as financial and management capacity. the education and health sectors, both of which have been the subject of considerable devolution The rationale for the adoption of the autonomy of responsibilities, and the source of emerging policy was to improve service quality through challenges in ensuring accountability.39 increased revenues, larger savings and stronger incentives for good performance. The case Since the late 1980s and especially in 2002 and of the health sector shows that some positive 2006, service delivery units in the public sector effects have indeed taken place. Service have achieved substantial autonomy in several 63 modern institutions Box 4.3. Decision space in health care How much devolution has there been in health care and what have the impacts been? One recent study went beyond the word written in the law, and sought to understand how things are working on the ground. Using a "decision space" approach, the authors used surveys of health officials to identify the de facto degree of devolution along a range of decisions, from personnel policies to financial management, in an effort to better understand both capacities and accountability in Vietnam's decentralizing system. Their preliminary findings include: Self-revenues can have an important impact on decision space. Since revenues received in the form of transfers from the central government come with restrictions regarding how they can be spent, provinces with a greater share of total revenue coming in the form of state (central) budget reported lower levels of decision space across the administrative functions analyzed. And since richer provinces tend to be less reliant on transfers from the central budget, richer provinces also tend to have more decision space. When examining the impact on capacities, however, they found virtually no correlation between the share of revenues from the central budget and the composite indicator on capacities. While there is moderate decision space over financial management decisions, there is relatively less room to maneuver when it comes to organizational issues. The need for the Department of Health's approval to reorganize departments within a hospital was cited by one respondent as an example of the lack of autonomy. Institutionalized norms and standards, rather than performance, tend to determine a large majority of health sector budgetary allocation. The authors also found that a combination of resource capacity constraints and rigid administrative norms restricted decision space and were the main drivers of dissatisfaction with administrative arrangements. In analyzing the use of data for decision making, the authors found that while there is great emphasis on collecting timely data, the use of that data for setting priorities, planning and monitoring is less well established. In addition, supervision of data quality is weak. Source: Thomas J. Bossert, Andrew Mitchell, Nathan Blanchet. "Governance and Decentralization of Health Systems in Vietnam: Analysis of Provincial Organization, Decision Space/Accountability and Capacity." Draft for discussion. August 31, 2009. delivery units in the health sector have cut can constrain "decision space" for managers of administrative costs by eliminating unnecessary health care facilities, as illustrated by one recent expenditures and allocating a fixed expenditure study. (Box 4.3.) budget to separate departments. Managers have become more dynamic and entrepreneurial, Some of the most important positive effects organizational structures have been enhanced have taken place unevenly, benefiting certain and existing human resources have been used facilities. In most central-level and provincial- more efficiently.40 Moreover, the quality of level hospitals, the amount and varieties of recruitment and appointment of key personnel revenues have increased. In contrast, the trend is has improved, and competitiveness among not so clear for district-level health facilities. A health service providers for quality, price and 2008 study41 found that revenues are increasing customer service has increased. For all of in half of district hospitals and decreasing in these improvements, however, the extent to the other half. Revenues from health insurance which benefits can be realized depends in part are increasing at the district level, but user on the extent to which autonomy truly exists. fee revenues are declining and revenues from A range of factors, from features of the laws "elective" services are limited. and supervision to organizational momentum 64 administrative and direct services Uneven patterns can also be observed in the root, at least in the health sector: one capable mobilization of private investment and in the of offering high quality services and attracting increase of salaries of staff in service delivery and motivating qualified staff, and another one units. In the health sector, central facilities and much less capable. Migration of qualified staff to those located in large provinces and cities tend to the locations with better-performing and higher- mobilize more private funds to upgrade facilities paying service delivery units could make the and equipment than hospitals in districts, two-tier system even more pronounced. uplands, remote and disadvantaged areas. Large income-generating hospitals can significantly While autonomy and the ability to spend own expand upon the basic salary by a factor of 1.5 revenues somewhat more freely can generate to 2.5 times, while many other hospitals are positive incentives for health care facilities, they facing huge difficulties in generating additional can also generate undesirable incentives. Because revenues to increase salaries.42 A case study of the generation of revenues can result in higher the Ha Tay province43 shows that after one year remuneration, there are strong incentives to over- of implementing the financial autonomy policy, provide services, particularly when payments 19 out of 21 hospitals have been able to add to providers are based on fee for service, and between 1 to 20 percent to basic staff salaries. to focus on providing those services that are Only two big hospitals, the Ha Tay General more profitable. In the health sector, overuse Hospital and the Ba Vi Hospital, managed to add of diagnostic tests, expensive technologies and 46 and 55 percent, respectively. drugs is apparent. The result of these changes is that a two-tier These incentives are generated for other reasons, system of service delivery seems to be taking as well. First, profit-sharing arrangements with Box 4.4. Competition and rent-seeking in pharmaceuticals Although total spending on health care in Vietnam is typical for countries at its level of development, out-of- pocket spending is much higher. While some of this is attributed to spending on hospitals visits, especially the official fees and informal payments, the impact of out-of-pocket spending on medicines has been largely neglected. Out-of-pocket spending on medicines are large and regressive. For the poorest quintile of the population, nearly 15 percent of non-food expenditures go for medicines. As with other sectors, free entry is typically assumed to help ensure that profit margins are low. However, the market for drugs is not a standard commodity market, for three main reasons. First, there is a large information asymmetry, leading consumers to rely entirely on the advice of doctors, who often rely in turn on the marketing of sellers. Second, reimbursement rules from social insurance can distort the incentives faced by buyers. Finally, for both of these reasons, corruption in key steps of the value chain, including customs and hospital procurement, further distorts prices. The first reason is common to all countries, the second varies by country, the third one is serious in Vietnam. Taken together, the impact of these three market "imperfections" can be sizeable. With issues this complex, it would be naïve to think that market entry is enough to remove distortions. The right policy mix entails a combination of measures. First, stronger information systems to avoid fraud include social security modernization to monitor doctors' prescriptions, and customs modernization for more effective monitoring of shipments. Second, improvements in social insurance reimbursement rules entail stronger enforcement of referrals (i.e., requiring visits to lower-level hospitals first), and removing the bias toward imported medicines. Third, improving hospital procurement can be achieved by ensuring that winning bids be technically better or cheaper, whereas now they are often neither, and disclosing all bids, not only the winning bids. Source: Nga Nguyet Nguyen and Martin Rama, forthcoming. "Competition in Vietnam's Pharmaceutical Market." 65 modern institutions private providers for medical equipment and patients and the Government, considering that higher rates of regulated fees for the newer approximately half of total health expenditure technologies create incentives to overprescribe relates to pharmaceuticals. While competition services that require such equipment. In some can help ensure reasonable costs for many items, public hospitals, medical staff working in the systemic distortions caused by information hospital have a direct and strong incentive to asymmetries and health insurance reimbursement inappropriately refer patients for tests or other rules can neutralize the impact of competition. services from which they will personally profit. (Box 4.4). Second, the possibility to provide "elective" services for those patients paying additional Despite the powerful incentives to generate fees creates incentives to become heavily profit- revenues and increase remuneration, in many driven. cases the current system is proving to be insufficient to reward performance. In reality, few Inappropriate incentives from drug distributors public health facilities have sufficient income to to health facility staff may lead them to prescribe greatly increase pay. In addition, many facilities the more expensive drugs, or multiple drugs, have set up internal spending regulations so that or excessive quantities, even if unnecessary or the amount of additional payments to staff are inappropriate. Even if the drugs are appropriately more or less proportional to the combination prescribed, there is also some evidence that of salary coefficient and supplement rates, bidding and procurement processes, now rather than using the opportunity to create real undertaken at the facility level, do not always incentives for better performance as allowed in lead to the cheapest drugs being available for the 2002 regulations. A recent analysis by the patients. This is a significant issue, for both Ministry of Health on the remuneration system concludes that while official salaries ensure a Box 4.5. Self-financed public schools and kindergartens in Ho Chi Minh City In 2008 the Fatherland Front Committee, in collaboration with relevant local government departments, undertook a study to analyze the effects of the policies of autonomy and socialization in the education sector in Ho Chi Minh City. In District 3 and Go Vap District, two secondary public schools and two public kindergartens under the self-financed modality were surveyed. The findings included: All of the four surveyed units reported problems due to low income of teachers or low level of regulated fees. All of them directly or indirectly suggested that the low level of fees was a key underlying cause of their problems. One kindergarten reported that fees and salaries had been unchanged since 2002. Several serious consequences were reported. The four units were suffering from high-turnover of teachers, excessive use of temporary teachers and resignations of teachers, clearly affecting the quality of teaching. Two units were found to be admitting pupils too easily, and as a result they had many students with low educational qualifications. One of the secondary schools, which had previously been public and then semi- public, saw a drop in the number of enrolled students after changing to the self-financed modality. The surveyed schools and kindergartens made various recommendations for improvement. All of them requested more state financial support. Two units even proposed to consider eliminating self-financing public schools and kindergartens, especially those with a small number of children, and convert them to publicly financed schools. One secondary school suggested that an alternative could be to raise the tuition fees of some types of schools and reduce the tuition fees of other schools so that the fee level is the same for all types of public schools, regardless of the method of financing. Source: Vietnam Fatherland Front in Ho Chi Minh City. 2008. "Overview of the Survey Results of the Socialization of Education in District 3 and Go Vap District" 66 administrative and direct services stable minimum living for health workers, they User fees and insurance reimbursements at the do not encourage health workers to fully exploit levels currently regulated probably contribute to their professional qualifications to protect the the fact (or at least the widely held belief) that health of the people. The study finds that the total remuneration of staff in service delivery current remuneration system in some cases does units is low. The practices of simultaneously not appropriately reward people for their level working in the private sector and demanding of productivity.44 Part of the explanation for or accepting bribes and "envelope payments" difficulties in adequately remunerating staff has from service users in order to obtain additional to do with the regulations on user fees. The user income are reported to be very common among fee scheme established in 1994 has not yet been the staff in the health and education sectors. revised and many fees were set without proper Both practices, however, have downsides. The costing or regular updating. All this has led to a former reduces the time and effort of staff in the gradual erosion of the surplus of revenues over public sector, and the latter results in inequalities expenditures required to cover the increases in and unethical behavior. (Box 4.6) Regulations official remuneration for autonomous public explicitly prohibit health professionals from service delivery units, including almost all public asking for bribes or gifts, but these regulations hospitals and preventive medicine centers. are not strongly enforced. There are also recent regulations explicitly prohibiting public health In the education sector, the picture appears quite professionals from establishing or participating similar. A recent study by the Fatherland Front in the management of private enterprises such Committee in four districts of Ho Chi Minh City as private hospitals. Nevertheless, working after has found that the income of teachers in self- hours in private health facilities is currently financed public schools and kindergartens has allowed and encouraged. increased, but not in line with their efforts and applicable policies.45 The low levels of regulated Non-State Providers tuition fees are reported to be a key cause, and consequences include high turnover of teachers, Devolution in health and education extends easy admissions, and loss of students. Some not only to public service facilities, but to non- schools and kindergartens are even proposing to state providers, as well, including the private eliminate the self-financed modality. sector and civil society organizations (CSOs). Box 4.6. The downsides of "envelope payments" in the health sector The current policy on health insurance for the poor does not cover the cost of envelope payments which are common in Vietnam. Patients unable to make envelope payments may be underserved, receiving inadequate treatments or treatment of poor service quality. The "culture of envelopes" also leads to unethical behavior among medical personnel. Families with hospitalized members suffer intense anxiety about when to make payments, how much the payments should be, and to whom the payments should be made. News articles confirm the existence and the magnitude of envelope payments. Anecdotes tell about doctors demanding payments of more than 1.5 billion VND before surgery; patients having to bribe the anesthesia team 200,000 to 500,000 VND, nurses allegedly giving poor care because the patient (or the patient's parent in the case of children) did not provide and envelope of 10,000 or 20,000 VND; the elderly father abandoning treatment because of the number of envelope payments his family had to make; doctors requesting 100,000 VND for each member of the surgical team; requiring bribes for safe delivery or for care of newborn; delaying admission to the hospital or delaying a clear diagnosis and treatment until bribes were paid. Source: Sarah Bales, 2008. "Human Resource Financing Issues in Health Sector". 67 modern institutions Participation of the private sector in the delivery profits to their capital-contributing members. of health and education services has been allowed since 1993 and 1994, respectively, and has Recently, the preferential policies for non-state steadily expanded. A policy of "socialization" establishments have been made stronger, for of public services was launched in 1999, aiming example with a tax holiday for four years. The at promoting the role of non-state actors in new regulations have purportedly extended delivering health, education and other services. the preferential policies to private enterprises This policy was upgraded in 2006, by granting although there remains ambiguity about which some preferential policies to non-state service types of CSOs can benefit from the preferential delivery establishments such as reductions or policies. exemptions in taxes and fees, and preferential conditions for state credit, land use and land The number of private enterprises and CSOs lease. In addition to these preferential policies, engaged in the provision of public services has non-state establishments were allowed to raise significantly increased over time. The number revenues from various sources and distribute of private clinics recognized by the Ministry of Health reached 30,000 by June 2004. The Box 4.7. Role of civil society organizations in improving access to health and education CSOs can play a positive role in improving access to services and broadening the variety of services, as several examples illustrate. The NMBC (Nourishing Mind and Body Center) is a health-related CSO. Using exercises and other physical activities (DSTT methods) involving no medicines, members treat their illnesses and pains. Because learning and practicing DSTT methods is inexpensive, the center is particularly eager to reach poor people with ailments that can be alleviated or cured by the techniques. The center and its affiliated groups do not demand a fee; people wanting to use DSTT methods contribute nothing or whatever they can afford. Today, clubs and associations of practitioners and their trainers exist in more than 32 provinces and cities throughout Vietnam and practitioners number more than 130,000, including local authorities and Party members. The spread of DSTT indicates that people are benefiting, and the organization, through its numerous publications, has reached many more people. In the education sector, the Disabled People Mutual Assistance Association (DPMA) provides another example. This CSO started in 1995 as a mutual assistance group for people with disabilities in Xuân Lc district, ng Nai province. In 2001, the association established a facility for teaching vocational skills, fine arts, and other endeavors, and became one of the founding members of a national association of disabled people's enterprises. In 2006, it started an informatics training center in which disabled people are charged lower fees than other students. The association has established other mutual assistance programs for disabled people and their families, such as a credit system to establish small businesses or go to school. DPMA also assists association members to find employment. DPMA now has seven chapters with 226 members. Government agencies have bestowed numerous awards on the association and its founder. CSOs also play an important role in the response to HIV and AIDS in many ways: prevention, treatment, care and support, behavioral change communication, counseling and testing, harm reduction, and to a lesser extent, policy development processes. Local NGOs and HIV self-help have increased in the last years, with over 60 groups and 4,000 members in self-help groups. Informal networks are numerous and many members from community based organizations are participating in policy development processes and fighting stigma and discrimination towards people living with HIV. Key populations at higher risk, including injecting drug users, sex workers and men who have sex with men are more involved in delivery of services and referrals to vulnerable populations and to those in need of care and treatment for HIV. Source: "Forms of Engagement between State Agencies & Civil Society Organizations in Vietnam" (VUFO- NGO Resource Center, DFID and Embassy of Finland, 2008). "Third Country Report on Following up the Implementation to the Declaration of commitment on HIV and AIDS" (Ministry of Health, 2008). 68 administrative and direct services number of non-public facilities is much lower in allocated land, but instead they are offered land the education sector than in the health sector. In for lease. Often those who lease land to non- the school year 2005-2006 there were a total of state schools are not the original land-users, 747 non-state schools, out of which 81 percent but individuals or organizations leasing land were upper secondary schools. In the same themselves from the land-users, which makes year, there were only 16 private universities and tenure risky. A 2008 World Bank study on higher colleges, capturing a modest seven percent of the education found that the regulations on the entry total number of students enrolled in universities of private and foreign universities are restrictive and colleges. The number of social and charity and opaque. Licensing provisions for establishing funds--the CSOs that are most focused on social non-public higher education institutions are still service delivery--reached around 200 in 2005. unclear and at times contradictory. Allowing and encouraging service delivery by By their nature, private providers have a strong non-state actors can generate positive results, profit orientation. While the quest for profits helps such as increased outreach to the population and drive economic growth, this does not always lead a wider variety of services. Importantly, it can to optimal results. Most private health facilities create competition for public sector services, in Vietnam only offer services for which costs and provide a measure of accountability along are easy to recover, including lucrative tests and the way. In Vietnam, many of these positive clinical imaging services. In many cases, they outcomes are evident. The private health overuse high-level technologies and expensive care sector has absorbed a large proportion medicines. They are typically located in areas of outpatients, relieving the overcrowding in with rich patients, such as large cities and public facilities and providing more convenient better-off regions. There are a large number conditions for the public in need of health of unlicensed private practitioners, and public care. Some private hospitals have invested in doctors providing private services account for advanced technologies, which allow patients to about 70 percent of the total number of private obtain more sophisticated treatments in Vietnam. doctors. The engagement of CSOs in service delivery has significantly contributed to improving access Lack of compliance with rules by private to health and education services, especially for providers does not seem to be a widespread the poor and disadvantaged groups. It has also problem in the education sector. In the private helped expand the range of services, as described schools and kindergartens in Ho Chi Minh City in Box 4.7. surveyed by the Fatherland Front Committee, the teaching staff was deemed to meet professional Despite their positive contributions, private standards and was teaching the appropriate health facilities face important constraints for subjects as regulated by the Ministry of their establishment and operation: the high tax Education and Training. In education, the impact rate, the lack of convenient location for their of profit-making incentives was mainly in terms development, the administrative procedures of very high tuition fees, far above those in the involved in the construction of private hospitals, public sector. However, this was not reported to and the shortage of adequate human resources.46 be a problem, as tuition fees were determined in accordance with the financial situation of the There are also constraints for non-state actors in majority of the parents. the education sector. The study by the Fatherland Front Committee in Ho Chi Minh City found a Incentives to increase profits can also take scarcity of funds for allocating land to non-state place among CSOs--nominally not-for-profit schools and for undertaking land clearance and organizations--because the current regulations compensation. Many non-state schools are not allow them to generate revenues from various 69 modern institutions Table 4.3. Government and household expenditure in the health sector 2002 2004 2006 Government Expenditure (VND billion) 11,932 14,260 24,578 Household Expenditure (VND billion) 15,576 25,251 38,107 Government Expenditure (% over total) 43.4 36.1 39.2 Household Expenditure (% over total) 56.6 63.9 60.8 Source: 2008 National Health Accounts, MOH sources, including from bank deposits and households with low income. With the growing bonds, joint ventures or partnerships, and the reliance of public service delivery units on provision of non-core goods and services, generating their own revenues and with the and to distribute the profits among the capital proliferation of for-profit private providers, the contributing members. In addition, the current financial strain on service users becomes more incentive structure can result in the abuse of the acute. Because the first regulation granting broad very generous preferential policies granted by autonomy of public providers (Decree 10) was the government to non-state providers. issued in 2002, and because several milestones in both autonomy and socialization happened Financial Burden on Users after that, 2002 serves as a reasonable starting point for examining the evolution of the financial One potential effect of the policies of autonomy burden on service users. and socialization together is the increase in the financial burden on service users, possibly In the health sector, the overall expenditure limiting access to services, especially for those of households has increased by almost 150 Table 4.4. Household expenditure on health and education out of total household expenditure 2002 2004 2006 2008 Health expenditure All households 5.22 6.14 5.67 5.92 Urban areas 4.19 5.47 5.04 5.07 Rural areas 5.55 6.39 6.14 6.52 Poor households 4.37 4.80 3.88 4.72 Non-poor households 5.51 6.42 5.77 5.98 Education expenditure All households 4.48 4.65 5.64 5.36 Urban areas 5.38 5.19 5.82 5.37 Rural areas 4.19 4.46 5.51 5.35 Poor households 3.69 3.72 3.87 3.74 Non-poor households 4.75 4.48 5.74 5.44 Source: Own estimates based on VHLSS 70 administrative and direct services percent between 2002 and 2006, and household the vulnerable groups48, and poor provinces are expenditure represents a very high percentage of in a weaker position to adequately finance the total expenditure in the health sector (61 percent 25 percent of the program not covered by the in 2006). Government expenditure in the health central budget. sector has also increased, but not at the same pace as household expenditure, except during the In the education sector, there are programs 2004-2006 period. (Table 4.3). The percentage of designed to help poor children stay in school, poor covered by government-subsidized health consisting of exemption from and reduction of insurance jumped from about 10 percent in 2004 fees and contributions, provision of textbooks to almost 40 percent in 2006.47 and notebooks and scholarships for very poor pupils. The components vary in terms of financing The VHLSS can provide additional insights on and coverage. Exemptions from school fees and the financial burden on households. For both contributions have received more funding and education and health services, the VHLSS cover a larger share of the population than other shows that household expenditure on these components. However, as of 2005 the coverage services relative to their total expenditure has rate of children benefiting from exemption increased since 2002. Poor households bear mechanism remained quite low among the a lower financial burden relative to their total poorest and near poorest households, especially expenditure than non-poor households, for both for primary school.49 In 2008 measures were health and education services, although as a share adopted to further protect the poor. A related of non-food expenditure the poor may pay more. measure was the establishment of concessional Households in rural areas bear a significantly loans for students, to be implemented by Vietnam higher burden than their urban counterparts Bank of Social Policies. As of April 2008, around for health services. For education services, the 600,000 students had received credit, for a total burden borne by rural households was initially of 4.5 trillion VND. lower than that of the urban households but by now it is about the same. (Table 4.4) Support to poor households is necessary but not sufficient. As explained earlier, there is a clear The fact that expenditures on health and divide between urban and rural areas and between education relative to total household expenditure central and local levels. Households in rural are lower for poor households may be partly due areas and at local levels--even if they are not to government support policies for the poor and officially poor--suffer from a higher and more other disadvantaged groups. In the health sector, rapidly growing financial burden. One reform Health Care Funds for the Poor (HCFPs) play avenue that is currently being considered in this an important role in supporting poor households regard is targeted support for facilities in highly with their expenditures on health services. disadvantaged areas. For health curative care, Provincial HCFPs were created in 2002 to cover the government is planning to make subsidies the costs incurred by the poor, ethnic minorities to facilities based on the rule that the lower the and other disadvantaged groups. In 2005 HCFPs level or most disadvantaged the facility, the were used to purchase health insurance cards higher the subsidy, so as to compensate for the for the disadvantaged groups instead of being lower capacity for cost-recovery of the facility. used for directly reimbursing public health care providers. Since then, the number and Adequate regulation of user fees levels can also percentage of poor people covered by a health avoid placing excessive burden on households insurance has grown substantially. Resources of and ensure access to services. As explained the HCPF are relatively well targeted towards earlier in this chapter, the levels of the regulated the intended beneficiaries, with modest leakage. user fees are generally low, even posing financial However the program has not yet covered all difficulties for the self-financed public providers. 71 modern institutions Box 4.8. Reforms in education user fees In June 2009, the National Assembly adopted Resolution 35 introducing several reforms on education financing. Some of the provisions of Resolution 35 aim at reforming user fees: For public preschool and general education, school fees must suit economic conditions of each area and the actual contribution capacity of people. To continue free primary education. For preschools, secondary schools and continuing education centers, school fees will be exempted for pupils who are children of' people with meritorious services to the country, policy beneficiaries and poor households will be exempt from user fees, and will children of near-poor households will have fees reduced. For public vocational training and tertiary education, school fees shall be collected on the basis of sharing of training costs between the State and trainees. In the initial years, total school fees of public training institutions will account for a maximum of 40 percent of total regular expenditures, which will incrementally increase in subsequent years in line with the school fee policy renewal roadmap. School fees will be exempted and reduced for pupils who are children of people with meritorious services to the country and policy beneficiaries, and will be reduced by 50 percent for students who have completed lower secondary education to attend vocational training. The State will grant school fee subsidies for preschool, general education, vocational training and tertiary education institutions admitting pupils and students entitled to fee reduction and exemption. To grant school fee subsidies for children of people with meritorious services to the country and policy beneficiaries to learn at non-public schools and general education schools. Education and training institutions will be allowed to implement high-quality programs and collect corresponding school fees to cover training costs. Source: National Assembly Resolution No. 35, June 19 2009, "On Guidelines and Orientations for Renewing Some Financial Mechanisms in Education and Training From the 2010-2011 School Year to the 2014-2015 School Year" The concern lies more in the fact that several of the autonomy and socialization policies. One fees are largely unregulated. Public providers of them is the prohibition on charging fees at can decide freely on fees for "elective" services, the primary level. However, in reality, parents and can set fees on non-core and on-demand do pay fees in addition to other "voluntary" services within a given band. Private providers, contributions, which are levied per child and on the other hand, are quite free to set fees to vary little with ability to pay. Tuition fees at the the levels that maximize their profits. A survey secondary level are to be revised to better reflect conducted by the Health Strategy and Policy market conditions and differentiate the fee levels Institute in 14 provincial and district hospitals depending on the contribution capacity of the found that there are usually two different user people. (Box 4.8). fee schedules, one for normal services and one for "elective" services, and fees for such services Finding a balance between setting fees that vary substantially across hospitals. While this are reasonable and affordable for the majority can help boost the revenues of providers, it can of service users and ensuring the financial also have important financial repercussions for sustainability of service providers is clearly service users. an important challenge for the coming years. Better adjusting and differentiating fees could In the education sector, some reform of the be considered for the health sector, mirroring the levels of user fees have been adopted to mitigate recent reforms in the education sector. A more the financial impact on students and their parents careful evaluation of the impacts of unregulated 72 administrative and direct services fees, an expansion of policies to protect the poor, The Ministry of Education and Training recently and the development of policies to directly or issued criteria to evaluate the principals of indirectly support households in rural areas and schools at the secondary level. A total of 23 local levels also deserve due consideration. sub-criteria will evaluate the political quality, professional ethics, professional skills and Accountability Through Standards school management abilities of the principals. The criteria describe a "good" principal as one The increased autonomy gained by service who is "decisive, innovative, able to make proper delivery units and the prominent role of non- decisions and responsible for his/her decisions". state providers in health and education, has The evaluations will be made by the principals arguably led to some positive results. But themselves, their deputies, other school officials, the tension between delegated power and the teachers, and the head of the government agency need to maintain standards calls for shifts in that directly manages the principal. Importantly, the accountability mechanisms to fit the new the evaluations will be used for decisions on arrangements, both upward accountability promotion, dismissal and other actions. for compliance with national standards and downward accountability to users. In tertiary education, improving external quality assurance and accreditation in tertiary education Indeed, new mechanisms for upward is a major goal of the government. A new accountability have been introduced in parallel to department of Assessment and Accreditation, the autonomy policy. Heads of service delivery established within the Ministry of Education and units have been made responsible for decisions Training, initiated a self-accreditation process on financial and human resource management. for select universities. While these are important Furthermore, to ensure that revenues are used steps in developing a quality assurance system to improve services, the central government has in Vietnam, accreditation is still a relatively imposed caps on staff salaries and has required new concept and not yet fully implemented. all service delivery units to set aside 25 percent Strengthening quality control will be particularly of their net revenues to invest in service quality important in the context of increasing access before making additional payments to staff. given to private universities. Some progress has also taken place in the Quality control over non-state schools is adoption of national quality standards for staff particularly weak. The study by the Fatherland and facilities, which constitute an important Front Committee in Ho Chi Minh City argued form of upward accountability. In 2004, that private-owned and community-owned minimum quality standards for primary schools secondary schools had not been fully managed nationwide were adopted, covering a wide range by the district governments and controlled by of aspects: physical infrastructure, teaching the Ho Chi Minh City government, and that staff, school organization and management, assessments had not been conducted to evaluate social participation in education, education whether non-state schools were in accordance activities and quality, and expected education with the law. outcomes. The standards did not only guide resource allocation, but also served as a lever An even more fundamental problem of to facilitate monitoring, both at the central and asymmetric information exists in the provision the provincial levels. In 2007, performance of health care. Most patients do not have the standards for teachers in primary education were knowledge to determine whether the clinical extended nationwide. The implementation of advice or treatment they receive is appropriate these standards was required to provide evidence- or of suitable quality, or what alternatives might based assessment of teacher performance, as be available to them and at what risk. This is opposed to diplomas and seniority. particularly so when faced with an acute illness 73 modern institutions or serious injury--second opinions can rarely that match local preferences, some functions be sought and trust in the facility and the health are best maintained at the national level. In the care provider are paramount. Mistakes by case of certification of health care practitioners, health practitioners can cause lifelong disability international experience suggests that sub- or premature death. In order to protect the national systems tend to have problems with public, some upward accountability is in order. consistency and in ensuring mobility of health A sound system of certifying not only health workers. Centrally developed standards and care facilities, but the people providing health processes being applied in exactly the same way services, can help ensure that those practicing in each province would help to minimize this medicine are qualified and competent, and to problem. This would mean that provinces would discipline those who significantly breach ethical operate as if they were branch offices of a central and clinical standards of care. organization, with no autonomy in the way they developed or operated the certification process. A system of certification is necessary for all Moreover, Vietnam's international commitments types of providers, including private ones. At also call for a system with a clear national (not present, many private services are not registered sub-national) standards. Among other things, with the appropriate organizations to facilitate the ASEAN Mutual Recognition Arrangements management of professional standards, and require that the "National Regulatory Authority" there are a large number of unlicensed private (the Ministry of Health in the case of Vietnam) practitioners. Collection of information on the certify to other countries that a Vietnamese private health sector and the management and practitioner has not violated any professional or supervision of quality of care in private health ethical standards while practicing in Vietnam. facilities faces multiple challenges. While foreign-trained practitioners and staff of central-level facilities will be the responsibility of The Law on Examination and Treatment was the Ministry of Health, the new Law establishes approved at the fall 2009 session of the National a largely provincial system for other facilities. It Assembly. Among other tasks, the Law outlines will be very difficult for the National Regulatory how Vietnam's system of certifying health care Authority to provide this certification to other practitioners will be handled. In the preparation countries without taking a lot of time to check with of the Law, several options were put forward each individual province unless a high-quality, that illustrate clearly how devolution in different centralized information system is established and spheres can clash, and why central supervision consistent standards and processes are applied in remains essential. all provinces. Each province would also need to maintain records of violations for the practicing One of the central issues debated regarding lifetime of a practitioner. the new Law was the level of authority that should certify health care practitioners. While An effective system of upwards accountability it may be expedient to delegate this task to the for health care practitioners will also require provinces, there are strong reasons why this task a complaints investigation and disciplinary would be better handled nationally, although system that is clearly linked to the certification relevant functions can be undertaken by regional system, although more minor complaints can be implementation centers under the direct authority referred back to employers or local authorities. and oversight of the national body. Again, the interplay between geographical devolution and functional devolution suggests As discussed in the previous chapter, while that a national approach would be better in this devolving powers and responsibilities to case. If someone is practicing in more than one provinces and lower levels of government can province at the same time, and one complaint empower them to select the mix of services is received, will one province have authority to 74 administrative and direct services investigate the care provided by that practitioner including internal auditing, internal controls in other provinces? Even if there is coordination over expenditures, and standard bidding and between provinces to investigate, if other cases procurement processes. The other risk, bribing for are discovered what authority will one province licenses, can be found in any government body have to proceed with a disciplinary case on issuing licenses, and can never be completely behalf of all other involved provinces? If the erased. Risk can be minimized, however, by practitioner holds a national practice certificate ensuring complete transparency in certification issued by another province, which province will requirements, time frames for decision making, act on the complaint? and official fees. Separating functions of those entering applicants' information from those International agreements play a role here, as making the ultimate decision, and allowing well. The ASEAN agreements described earlier review of applications by experts in other require the National Regulatory Authority to regions from the applicant, can also reduce the monitor and assess foreign practitioners' practice risk of informal personal contacts influencing the and conduct in accordance with the professional decisions--this can be achieved more readily in and ethical codes of conduct and standards of a national organization that can distribute these practice while practicing in Vietnam, and to take functions to different centers. And for cases necessary actions if a problem occurs. Meeting where applications are inappropriately denied, this requirement calls for an effective complaints an independent appeals process would also be and disciplinary system directly connected to the necessary. certification system. Finally, there is the formidable challenge of While creating a compulsory certification establishing a culture of ethics. Establishing requirement for all health practitioners, without clear policies of dismissal for any staff members which they cannot practice, can help to address asking for favors or additional payments from the information problem described above, it also applicants, and providing training of how to deal generates significant opportunities for corruption with offers from applicants is necessary, but not and for this reason it is important that measures sufficient, for building an ethical culture. In the to prevent corruption are specifically and actively end, strong implementation of such policies, designed and built into any system for certifying with clear signals from the top, is essential. healthcare professionals. Accountability to Users Corruption could potentially occur in several ways. First, funds of the regulators (i.e., When quality is difficult to observe directly, provincial departments of health or the central as in the case of health care, mechanisms of Ministry of Health) could be used inappropriately. upward accountability, such as the standards Second, staff could abuse their power to require and regulations described earlier, are essential. additional payments in order to agree to process At the same time, some aspects of publicly an application for certification. This will provided services are observable, and ultimately significantly affect the fairness and transparency the population are the consumers of health of the system from the practitioners' perspective. and education services. Systems of downward Third, people who do not meet the requirements accountability to citizens are clearly needed. necessary for certification could attempt to bribe These systems are emerging in Vietnam, with staff so that they can get a certificate. This could the introduction of surveys of users of services affect the safety of the public, as untrained people about their experiences. Indeed, one of the could provide services for patients. landmark pieces of legislation for the devolution of authority to service providers, Decree 43 Addressing the risk of misuse of funds calls of 2006, mandated the collection of feedback for sound financial management practices, from users. There is, however, no regulation so 75 modern institutions far requiring feedback from users of services Surveys can also be used to track changes provided by the private sector or CSOs. over time. As the VHLSS Governance Module was implemented for the first time in 2008, The 2008 round of the VHLSS collected the approach to estimating changes over time information on a variety of governance issues, was to pose a retrospective question, asking among them satisfaction with services such as respondents simply whether things are getting health and education. Overall, the results were better or worse. The vast majority of households more positive than negative. A relatively small think that health and education services have fraction of households said they were dissatisfied improved since 2006. (Figure 4.8). On average, with these services, yet the fact that only about men tend to be slightly more positive than half of users stated affirmatively that they were women about the improvements for health and satisfied shows clear room for improvement. secondary education, although the differences (Figure 4.7). are very slight. Interestingly, those with higher incomes were less positive about improvements There was some variation in satisfaction for in local health services, and urban residents were different subclasses of respondents--everything less positive across the board. else being equal, men were slightly more positive than women in assessing education, Although most people nationwide reported that urban respondents were slightly less positive health and education services were improving, about education and locally run health services there is scattered evidence that the fraction of the than their rural counterparts, and ethnic population that is satisfied has declined. The Ho minorities were slightly more positive about Chi Minh City Citizen's Report Cards, discussed locally provided health care and primary earlier in this chapter, are a case in point. While education, but less positive about central level 78 percent of respondents reported being satisfied health services. But while these factors explain in 2006, this had fallen to 69 percent two years some of the differences across respondents in later. Similarly, comparing the results of each levels of satisfaction, more of the variation is of the cities that implemented the Citizen's explained simply by the particular place where Report Cards in 2004 (Ho Chi Minh City, Hai a person lives. Phong, Nam Dinh, and Da Nang), with similar Figure 4.7. Overall satisfaction with health and education services at the national level Central health services -9.4 53.3 Local health services -9.6 41.7 Public university/college education -3.3 51.7 Public vocational training -4.2 46.7 Public secondary education -2.7 54.3 Public primary education -3.4 57.1 -25 02 25 50 75 low or very low high or very high Note: Includes only respondents who had used the service since 2006. The number of observations ranged from 213 to 3,988. All educational levels refer to public education. Chart shows the percentage of respondents saying that their overall level of satisfaction was high or very high, or low or very low. Those saying "neither high nor low" are not shown. Responses of "don't know" are not shown. Source: Own estimates based on 2008 VHLSS Governance Module 76 administrative and direct services Figure 4.8. Health and education services are improving, according to households (2006-2008) Percent of respondents saying getting worse, compared to 100% services were improving or 80% 81% 77% 72% 71% 72% 75% 2006 50% 25% Improved 0% -1% -1% -2% -2% -2% -2% Deteriorated -25% Primary educ. Secondary Vocational Public Local health Central health educ. training university educ services services Note: Includes only respondents who had used the service since 2006. Number of observations ranged from 745 to 6,304. All educational levels refer to public education. Chart shows the percentage of respondents saying that the service had improved or deteriorated since 2006. Those saying there was no change are not shown. Responses of "don't know" are not shown. Source: Own estimates based on 2008 VHLSS Governance Module questions on health and education in the VHLSS condemned this as corruption outright. Eighteen Governance Module, the percentage saying they percent said it is difficult to say, and 37 percent were satisfied generally declined. This was not so of respondents said this was not corruption. much the result of negative responses in 2008, as Anecdotally, many Vietnamese say that it would it was very positive responses four years earlier. simply feel very strange not to pay something extra when receiving certain services, especially Finally, user feedback surveys such as the VHLSS health care. Tackling unofficial payments is Governance Module can help generate downward clearly a challenge. On a positive note, an accountability even for sensitive topics such as approach that seems to have had some success corruption. The survey asked respondents their in other countries is to formalize the unofficial opinions on the levels of corruption in a range payments through official user fees, just as of services. The majority of households think Vietnam has done. (Box 4.10) that there is corruption in health and education services, with more than one in four of those with There are more households that think that opinions saying corruption was very serious for corruption has been reduced than think that central health facilities. corruption has increased in health and education services, except for central health services for The primary form of corruption in the direct which the two groups of opinions represent interaction between citizens and health care approximately the same percentages of the providers comes in the form of unofficial sample. For all services, however, the majority payments. Part of the challenge in tackling of respondents indicated that there has been no unofficial payments is that it is often unclear how change in the levels of corruption for health and these payments are perceived. When citizens were education services since 2006. The very positive asked whether "a government official receives a trends reported in service quality (Figure 4.8) small gift/sum of money after delivering public are not matched when it comes to corruption services or settling administrative procedures" (Figure 4.9). is corruption, fewer than half (45 percent) 77 modern institutions Box 4.9. International experience in reducing unofficial payments Although policy options for discouraging informal payments in health systems are not well understood, some country experiences suggest that the introduction of formal user fees may help under certain conditions. Combining incentives and accountability seems to be the best medicine for reducing informal payments in health care. Since informal payments usually benefit individual staff rather than the institution, increasing user fees alone will have little impact on informal payments. If the users fee provide supplementary compensation to staff, and if other incentives and disincentives are in place, then informal payments can be reduced. In a Cambodian referral hospital, the formalization of fees resulted in the near elimination of informal payments, as well as more predictable fees for patients and an increase in hospital revenue. Several features were critical to success: a transparent fee system designed to generate additional income for staff, staffing levels based on demand for services, and the establishment of a hospital management committee with staff representation. In the Kyrgyz Republic, a pilot program formalizing fees also had lessons. The fee reforms were part of a larger program which also introduced administrative sanctions for poor performance and provided information on fees to patients and providers. The combination of measures helped bring down the prevalence of informal fees from 60 percent to 38 percent in the pilot regions. In Georgia, the Children's Hospital in the capital city was autonomous and was therefore able to set fees and supplement the fixed wages of physicians. Nonetheless, physicians continued charging informally and did not share the revenue with the hospital. In response, management instituted a combination of additional measures. Supervision of staff increased and physician contracts were shortened from three years to six months, with criteria for renewal linked to official fee generation. Official fees were publicly posted throughout the hospital. The combination of transparently tying earnings to activity, sanctions for improper behavior, and expansion of professional opportunities improved the performance of the hospital. Sources: Barber, Bonnet and Bekedam (2004); Kutzin, Maeimanaliev, Ibraimova, Cashin, and O'Dougherty (2003); Lewis and Pettersson (2009); Garcia-Prado (2005). As discussed earlier in this chapter, however, User feedback surveys such as the VHLSS corruption takes many forms and not all are Governance Module can provide valuable insights directly connected to the interaction between on service delivery at national, regional and even providers and consumers. In the case of the provincial levels, but not at the facility level. health sector, the bidding and procurement for Yet, monitoring service delivery at the facility pharmaceuticals at health facilities directly level is becoming increasingly important, since determines what drugs are available for patients, the facilities have received significant autonomy. and therefore what patients pay. If the cheapest With this idea in mind, the National Pediatric drugs that meet quality standards are not chosen Hospital in Hanoi submitted a proposal for user to be available in the hospital pharmacy because feedback surveys to Vietnam Innovation Day of direct or indirect industry influences, this can 2009--More Accountability and Transparency, significantly affect the overall costs of care-- Less Corruption. If successful, the effort may considering that approximately 50 percent of provide a model for other hospitals in Vietnam total health expenditure is on pharmaceuticals, interested in improving their responsiveness to this has serious implications for not only patients patients and their families. but also the viability of the social health insurance fund and the overall health system. 78 administrative and direct services Figure 4.9. Trends in corruption in health and education services, according to households (2006-2008) 50% Percent of respondents saying 22% corruption increased or 25% 16% 15% 9% 11% 13% decreased Got worse 0% Got better -25% -22% -27% -26% -24% -27% -29% -50% Primary Secondary Vocational Public Local health Central health educ. educ. training university educ services services Note: Includes only respondents who had used the service since 2006. The number of observations ranged from 745 to 6304. All educational levels refer to public education. Chart shows the percentage of respondents saying that the service had improved or deteriorated since 2006. Those saying there was no change are not shown. Responses of "don't know" are not shown. Source: Own estimates based on 2008 VHLSS Governance Module. Box 4.10. User feedback from patients at the National Hospital of Pediatrics The National Hospital of Pediatrics (NHP), the largest pediatric hospital in the Northern Vietnam, is in charge of healthcare treatment for patients for all Northern provinces. It has 850 beds and 1,322 staff. Every day, the hospital receives around 2,000 patients, 80 percent of them newborn to six years old. There are another 2,500 parents accompanying the children. While the actual duration of the interaction between patients and medical staff is about 40 minutes, patients normally have to wait for at least three to four hours to complete the whole process (examination, consultation, testing, getting the result and prescription etc.). At least 55 percent of parents or care-givers of patients were not satisfied with the behavior of the medical staff. Recognizing the importance of making patients and their parents happy with their treatment, NHP sought to improve their understanding of the reasons for dissatisfaction, proposing a mini-project to gather parents' feedback to Vietnam Innovation Day 2009. The projects' ultimate objective is to improve quality of healthcare services by improving communication between hospital staff and patients' parents. The Board of Management hopes that the survey results will help them identify the kinds of interventions that are necessary to improve the situation. The project is progressing well. A questionnaire was developed with technical support from experts from the Public Health University, and interviews with parents are being carried out by volunteer students from the Public Health University. In the first phase, 6,000 questionnaires are expected to be gathered by the end of November 2009 and will be used as a baseline of parent's satisfaction. Initial reporting to the hospital management made by the surveyors during the survey process showed that even compared to the first days when the surveyors started interviewing the patients, there are noticeable improvements in terms of the service attitude of doctors and nurses towards their patients. While the project is currently aimed at outpatient areas, there are plans to expand this initiative to inpatient and other areas of the hospital in the future. This is part of the hospital development plan to become a "Friendly Hospital" for children in Vietnam. 79 5. LEGAL AND JUDICIAL SYSTEMS The legal and judicial system plays an enhanced role in a devolved economic and governance system. A legal framework that is consistent, implementable, and well understood by the public and by those who enforce it can help prevent and resolve many disputes. Publicizing drafts of laws has been a clear advance in recent years, but more consultation and analysis in the preparatory phase would help to minimize inconsistent or unclear legislative language. Although all of society benefits from clear legislation, individuals firms or citizens may have little incentive to undertake the costs of actively checking drafts. Business associations can help overcome this fundamental contradiction. The issue has clear economic importance since firms are more likely to invest and grow when the legal framework in which they operate is clear and predictable. Although not used in Vietnam to the same extent as in many countries, the judiciary will become increasingly important with the expansion of arms-length transactions that define a devolved economy. The tension between independence and accountability makes judicial reforms particularly challenging, but independence is essential for credible dispute resolution. Independence will be especially important for disputes involving government bodies. Legal awareness is important for protecting both individual rights and for advancing many of society's goals, including fighting corruption. Legal aid has expanded in the past decade, but the market for private legal services, particularly in disadvantaged regions, is at an early stage of development. The increasing reliance on decentralized Vietnam's high rate of economic growth economic production has been one of the attests to the strengths of a devolved, market- hallmarks of the changes in the last few decades. oriented, system for producing economic value. Rather than producing and making decisions Competition among firms in both output and based on a central planner's understanding of input markets rewards efficiency and innovation what should be produced, using which inputs, and discourages sloth. At the same time, and sold at which price, firms--and farmers and competition among firms without some consistent household producers--have begun to make these understanding of the rules of competition, and decisions themselves based on the profit motive. without some arbiter of disputes would be akin Not all are winners. The nature of the market- to a football match with each team making their oriented system is one whereby some firms do own rules and without a referee. The legal and well at producing value added and grow, while judicial system is what provides that common others fail. On average, however, the dynamism understanding of the rules and fair settlement of the system generates more positive than of disagreements. Moreover, legal and judicial negative results.50 80 legal and judicial systems institutions serve the complementary purpose better understanding of the law on the part of of protecting those who are most vulnerable, the citizenry, can help stop some disputes before and thereby supporting and facilitating social they happen. And citizens' active participation in development. the law making process can help ensure that new laws have the support of the populace. Vietnam's progress in reforming its legal and judicial system was pushed along by the process These challenges are well understood in Vietnam. of acceding to the World Trade Organization The SEDP 2006-2010 notes that the legal (WTO). The requirement to take stock of the framework does not currently protect the full legal framework for business provided a clear rights of free enterprise, and two key Politburo anchor for many forms of reform, as well as resolutions in 2005 on legal development and strong incentive to move in the right direction. judicial reform laid out an ambitious strategy for Accession to the WTO, however, did not ease the reform. Yet, the problems are not waning, but pressure to reform the legal and judicial system. seem to be increasing in importance. In its address On the contrary, as Vietnam approaches middle- to the opening of the National Assembly in the income status, as firms continue to branch out spring session of 2009, the Vietnam Fatherland into increasingly complex forms of production Front noted the dissatisfaction that many citizens and as citizens become ever more demanding have with the process of legal development. The of services and legal rights, the pressure for government has likewise acknowledged the improving the legal and judicial system will severity of the problem as a human rights issues only increase. Even countries that have had in its response to the Universal Periodic Review market systems for centuries have to continually in May 2009. adapt to new challenges, and consistently strive to provide the right set of rules and the best This chapter will examine how the devolved mechanisms for settling disputes. economy is generating new pressures on Vietnam's legal and judicial system, and how priorities for The effort to renovate the legal system to be more reform might be identified. The chapter will in line with a market economy has been truly begin by examining how legal reform efforts are ambitious. In the case of legal reform, however, shaping the institutional environment in which progress begets more work, not less. Thousands firms and society in general operate, and what of new laws and regulations at all levels of challenges might lie ahead. Next, the chapter government have been generated to address will explore the mechanisms for resolving the the changing landscape of Vietnam's economy. disputes that inevitably arise and how Vietnam's The changes in the legal framework ultimately effort to reform its judicial system is progressing, generates uncertainty for firms, households, including the judicial settling of administrative and the government officials who must enforce complaints. Finally, we will examine the state those laws. The challenge now is no longer to be of legal awareness, exploring how Vietnam can sure that there are the right laws to cover every make sure that people are aware of the law and issue, but to ensure that the legal framework of their rights and responsibilities. is internally consistent, implementable, and is well understood by the public and by those who Legal Development enforce it. Indeed, the three central topics of this chapter, legal development, the judicial system, Legal development is a subject of great interest to and legal knowledge are closely linked. Laws lawyers and judges, but should also be of interest that are clear and consistent are much easier to to economists and business leaders since it can understand and interpret, so judicial performance have profound economic implications. A stable improves when legal development improves. and predictable set of implementable laws can Importantly, well drafted laws, together with a give firms the confidence they need to undertake costly investments. 81 modern institutions Figure 5.1. Provinces with more predictable laws have more firms willing to invest 5.75 Index of plans to invest in the next 5.50 two years 5.25 5.00 4.75 4.50 2. 2.2 2.4 2.6 2.8 Index of predictability of laws Note: The dots represent the provincial averages of these two questions: "Which statement best characterizes your firm's investment plans over the next 2 years? 1=Plan to close, 2=Plan to reduce size of operations considerably, 3=Plan to reduce size of operations, 4=Plan to stay at present size, 5=Plan to increase size, 6=Plan to increase size considerably." And "How predictable are changes in economic and financial laws at central level affecting your business? 1=Never, 2=Seldom, 3=Sometimes, 4=Usually, 5=Always" Source: Own estimates based on the VCCI-VNCI Provincial Competitiveness Index Survey 2008. A good place to start an assessment of the predictability of laws were more likely to say state of the legal environment is to consider they were planning investments in the next two the perspective of firms. The severity of years. Figure 5.1 shows that provinces where inconsistencies in the legal framework in firms feel more confident in the predictability Vietnam is made clear with data from the PCI of laws also have more firms planning to invest. survey. Firms that responded to the survey were It is likely that firms were reflecting more on very negative about the predictability of both the implementing regulations than the laws national and provincial laws and regulations, themselves, since the legislative calendar of the but especially about the national level. In 2008, National Assembly is known well in advance. for example, only 13 percent of firms said that The implementing regulations and circulars, changes in economic and financial laws at the however, are somewhat less easy to predict. central level that affect their business were usually or always predictable, while 23 percent Four features can help to make for a predictable, said such changes were never predictable. high quality system of laws. First, the development of a law should be founded on a The economic implications of inconsistency clear understanding of what problem the law is in the legal framework can also be illustrated expected to address. Second, the draft should with data from the same survey. In general, take into account other related legal documents, firms that find central level laws affecting them aiming to avoid inconsistencies that generate to be predictable tended to be more profitable problems in implementation. Third, the draft than those describing the laws as unpredictable. should take into consideration the impact it will More importantly, firms with confidence in the have on citizens and firms, ensuring that the 82 legal and judicial systems benefits outweigh the costs. Finally, potential making and, only then, actual drafting. Indeed, problems in implementing the law should be in many countries dedicated legislative drafters, identified and the draft revised accordingly. A specialized in translating policy into legislation, law drafter's objective is simply to put together help to minimize inconsistent or unclear a law that addresses the problem it seeks to legislative language. address, without generating too many additional problems in the process. While it is too early to assess the impact of the Law on Laws, the degree and manner through While the objective may be straightforward, which citizens and firms participate in the law the implementation is often not. Understanding making process can be examined through the the costs and impacts of a law that does not VHLSS Governance Module and the PCI survey, yet exist may require information and analysis respectively. Both of these sources illustrate that the drafter does not have. Fortunately, the how the imbalance between the narrow costs introduction of some modern tools can help of participation, borne by individuals, and the provide such information. widely dissipated benefits that affect even those who do not participate, pose a fundamental A key milestone was reached in 2008 when the challenge to broad-based participation. Law on the Promulgation of Legal Normative Documents ("Law on Laws") was passed by Very few respondents to the VHLSS--only three the National Assembly, and in January of 2009 percent--indicated that they had provided any when the law took effect. The Law made two opinion on any draft legal document since 2006. key advances in support of a law-making system This is not surprising since the time it would take geared toward predictable, high quality laws: to become acquainted with the issues and voice mandating public disclosure of drafts of all a persuasive opinion to policy makers would legal normative documents 60 days before being typically outweigh the benefit to that individual. passed, allowing public comment to be taken Indeed, when asked why they had not provided into consideration and requiring Regulatory any opinions, only one in twenty expressed Impact Assessments for all laws. Even before the the pessimism that they would be ignored; the Law on Laws took effect, the practice of posting primary responses were that they were not asked drafts of all laws on the agenda of the National or were simply not interested. When citizens do Assembly on the internet was well-established endeavor to voice an opinion, it is likely to be and had attained full compliance. The websites one of local significance, such as a resolution or of the ministries are likewise used for such decree by the provincial authorities, and even in consultative processes. the age of the internet, the most popular form of participation remains the meetings organized by Publicizing drafts of laws is a clear advance; districts and communes. it reduces uncertainty on the part of the public about what laws will say, and provides some The contradiction between diffuse benefits and opportunity for feedback about the draft's likely concentrated costs of participation does have effects. However, focusing consultation on solutions. The Vietnam Chamber of Commerce existing drafts runs the risk of focusing debate and Industry (VCCI) has been instrumental on details in the draft, even trivial ones, rather in arguing for an active voice of the business than the fundamental upstream questions of community, especially through organized what the law is intended to achieve. Separating business associations. Indeed, collective action the function of policy-making from technical is especially important for making the business drafting, could help reduce this risk, with more community's concerns known to policy makers. consultation--direct, indirect or informal-- Since the benefits of any positive lobbying--for and preparatory research feeding into policy- example preventing features of a law that would 83 modern institutions Figure 5.2. Methods of providing opinions on legal Figure 5.3. Reasons for not providing opinions on documents (among those participating) legal documents Think comments Other Other will not be 6% taken into Via political organization consideration or civil organization 5% Meetings held by commune or district authority Wasn't asked Attending meetings held 55% by NA or PC Website or email Not interested 34% 0% 25% 50% 75% 100% Used Didn't use Note: For the chart on the left, more than one response was allowed. The question was only posed to those who said they had provided an opinion. The number of observations was 306. The chart on the right was only posed who had not provided any opinions on legal document. The number of observations was 8,882. Source: Own estimates based on the VHLSS Governance Module 2008. increase their burden without being effective-- A system whereby the drafters systematically would be shared by a large number of firms in examine the costs and benefits of a given draft the same industry or locality, few firms would ex ante provides a needed complement to public find it worthwhile to invest the time or energy participation. Indeed, the Law on Laws requires in making their opinions known. By forming that Regulatory Impact Assessments (RIAs) be business associations, both the costs and the conducted for every draft law. Three types of benefits could be spread among the firms, RIAs are envisioned under the law: a pre-RIA increasing the likelihood that law drafters and when the legislative proposal is made, a RIA policy makers receive the information they need. during drafting, and a post-RIA after the law is Moreover, business associations can also help in force for several years. address certain issues that would pose large risks for individual firms: many individual enterprises, While the decision to conduct RIAs is laudable, particularly smaller ones, are reluctant to make and the approach is fairly comprehensive, trouble for the very offices that issue their there are several challenges in implementation. licenses and permits, conduct inspections, etc. Understandably, some government counterparts Business associations can take on this advocacy have trepidations about committing to such role on behalf of the firms that may be less an exercise for every draft law. The financial willing to speak up. resources and methodological capacity among various officials are both lacking--although Public participation helps ensure that the views some research has shown that the benefits far of affected firms and citizens can be taken into outweigh the costs. Moreover, at this point RIAs account before a law in drafted, but this does not come too late in the process. Analysis should solve all problems. Some costs or impacts may be done before drafting even begins to identify not be known or understood by firms, and other what the key problems are the law is expected costs, such as those that fall on the state, may not to solve. be a central concern to the business community. 84 legal and judicial systems Even with the best set of laws clarifying business first place. These include clearly written laws, relationships and the balance of rights and as described in the previous section, but also responsibilities of the state and its constituents, institutions not generally placed in the bailiwick disputes are inevitable. The next section looks at of the law. For example, as many disputes involve the system for resolving those disputes. land, one set of institutions that would help to preclude the need for dispute resolution is a clear Dispute Resolution system of delineating property boundaries, rights, and ownership. (Since most issues surrounding Disputes are inevitable. Even with well written land and property rights are determined by laws, the life of business and the business of life local governments, these issues are discussed in inevitably lead to situations of disagreement. Chapter 3 on Local Governance.) This system Whereas many activities and responsibilities has progressed remarkably in Vietnam in the discussed in this VDR have been devolved--to past decades, yet the pace at which Vietnam is firms and farmers, to service delivery units urbanizing and developing, with the attendant and local governments--the links between resettlements, means that land-related issues devolution and the system of resolving disputes continue to generate a large number of disputes. is more complex. Devolving authority in most spheres increases the chance that disputes will A second example of institutions that help to arise and increases the demand for a system of preclude disputes can be found in the financial fair and efficient dispute resolution. In many sector. Credit information systems, which are cases, that system will also need a measure of still in the early stage of development in Vietnam, devolution of authority (i.e., independence) can help two parties to a transaction understand in order to perform that function well. At the the creditworthiness of the other, avoiding same time, there is a need for uniformity in business deals with hidden dispute risks, and at application of the law. Devolution of authority the same time allowing firms to take measured to the dispute-resolution system is needed, but risks they might otherwise avoid. Both of these within that system application of the law needs examples--cadastre and credit information to be uniform. systems--show how fundamental information is for helping to avoid disputes. There is clear evidence that the expansion of arms-length relationships in Vietnam's rapidly Once a dispute does occur, what options do growing economy is coinciding with a huge the parties have? The answer depends partly expansion in business disputes. According to the on who the parties are and the nature of the panel firms in the PCI survey, there was a large dispute. The Vietnamese system mandates in expansion in the proportion of firms that said some cases for formal attempts to settle the they had ever been in a business dispute between disputes amicably through a conciliation process 2006 and 2008. Not surprisingly, the firms most before going to court. Since the Ordinance on likely to encounter disputes were often the most Grassroots Conciliation came into force in 1998, dynamic. In both 2007 and 2008, the firms most great efforts have been made to strengthen likely to have business disputes were the firms conciliation, providing training for conciliators, that were planning to invest. contests and other encouragement, etc. The system has apparently achieved a measure of The center-piece of the system of resolving popularity--according to the Ministry of Justice, disputes is the judicial system. Yet, a complete more than 3.8 million cases were handled in this examination of dispute resolution would expand manner between 1999 and 2008, 80 percent of well beyond the court system, per se. A host which were successful.51 of other institutional arrangements can help to preclude some disputes from happening in the 85 modern institutions Observers of the conciliation system note several same problem as with land. However, a different problems. Although formally outside of the problem arises. The statute of limitations for formal judicial system, conciliators nevertheless filing a lawsuit related to labor expires six need a good understanding of the law in order months from the date of the problem (e.g., to advise the parties. The capacity to conciliate from date of termination), and the time spent in appropriately can be uneven. Similarly, the conciliation takes up some of this time. If one role of conciliators may not always be well began conciliation after five months, it could understood, even by the conciliators themselves, make it difficult to file suit in court. and sometimes conciliators impose their will rather than having parties accept the settlement One other clear problem concerns the structure voluntarily. and roles of conciliation councils. The commune- level conciliation council is headed by the This tension between a system aimed at amicable president or vice-president of the commune resolution of problems, and the distinctly non- People's Committee. If a citizen or firm has a amicable nature of many disputes, causes dispute against the state, for example against problems in application of conciliation when a decision for involuntary resettlement, the there is a fundamental imbalance of power conciliation council would have a conflict of between the parties. In divorce cases that involve interest. As the conciliation councils may also domestic violence, for example, requiring include "judicial officers, land administrators, conciliation between the parties may have the policemen and members of the Fatherland effect of reestablishing an abusive relationship. Front and its member organizations", it would A 2008 survey52 of a broad range of stakeholders also seem the risk of conflict of interest would found that most felt that there was little gender be high. This risk would be compounded if the bias in decisions--although one province stood dispute involved a conciliator. With more than out for having 24 percent of people who had 615,000 conciliators nationwide, this may not be been through conciliation indicate they believed an infrequent occurrence. there to be a gender bias--and little perception of bias in terms of ethnicity or income. In contrast, Notwithstanding the advantages and relatively more of the respondents (14 percent) disadvantages of conciliation, citizens and firms thought that ordinary people were disadvantaged may find themselves in disputes that can only in disputes with members of local administrative be settled by a higher authority. Settling these bodies of mass organizations. In one province, disputes efficiently and fairly, and in a way that 34 percent of respondents perceived such bias. guards against retribution, is the fundamental role of the judiciary. For disputes that must go through conciliation, some practical problems arise.53 In the case of The courts are not used in Vietnam to the land disputes, a lawsuit cannot be filed until extent that they are in other countries. In one conciliation has been attempted and failed, cross-country survey covering 34 countries, but if one party refuses to participate, then the mostly countries undergoing the transition from conciliation process is not recorded as having planned to market economies in central and been attempted. Therefore, a party wishing to eastern Europe and the former Soviet Union, delay indefinitely can simply refuse to participate Vietnam was among the handful of countries in in conciliation, making it impossible to file suit. which fewer than 10 percent of firms had been to court in the three years before the survey.54 A second problem is specific to labor disputes. Citizens are even less likely to use the courts. For these types of disputes, refusal to participate Among the more than 9,000 respondents to the in conciliation does not mean that an attempt for 2008 VHLSS Governance Module only one conciliation has not been made, so this is not the percent had made use of the courts in the two 86 legal and judicial systems Box 5.1. Culture and legal values A well-known saying goes, "the laws of the emperor give way to the customs of the village". The saying implies a sense of attitude, perception of the people toward (central) formal laws, and broadly a degree of hesitation and resistance to obedience of, and compliance with, law and use of formal dispute settlement (e.g. the court) in general. The "laws of the emperor", associated with the legal rules by foreign domination, over two thousand years have shaped attitudes, even in modern days.* Vietnamese culture is said to be a rich fabric of Confucianism and Buddhism. Most notably, Confucian values brought in from China exerted a profound influence on the way of thinking and practices of a large population. They advocated traditional moral principles (such as virtue and sentiment versus rule and reason) and hierarchical practices. Legal rules were subordinated to moral and pragmatic expediencies.** Pham Duy Nghia argues that Vietnam has a "farmer legal culture". For a long period of time the people were not expected to know the law, tried to avoid confrontation and interruption and acted according to what they deemed fit and appropriate for their aspirations. If a solution is needed, a decision needs to be made based on a (long) process of reaching a collective vote, a consensus. In Vietnam there still exists a high degree of social cohesiveness, strong cultural (village) traditions with a sense of cooperative connections. Source: * Nguyen Duc Lam, "Management by Law: Barriers from the People" (Quan ly bang phap luat: tro ngai tu phia nguoi dan) (Journal Nha Quan ly, no. 11, May 2004). **Pham Duy Nghia (2000) "Phap luat thuong mai Viet Nam truoc thach thuc cua qua trinh hoi nhap kinh te quoc te" (Commercial Law Faces the Challenges of International Economic Integration), Nha nuoc va Phap luat, (6):9. (From John Gillespie's "Extra-Constitutional Lawmaking: Vietnam's Unacknowledged Legislators", Conference paper, Vietnam Legal Culture Symposium, 2003) years before the survey. While the reasons are encounter and then to list the three most frequent complex, the influence of cultural norms may be methods they would use to resolve the disputes. part of the explanation, as suggested in Box 5.1. (Figure 5.5.) For business disputes, firms overwhelmingly say they negotiate, compromise While statistics on court suggest that courts and hope as their first strategy. Only 0.7 percent are not frequently used for settling many forms would appeal to court as their first strategy, even of disputes, from administrative disputes with less than the 1.1 percent who said "nothing, I am government bodies to commercial disputes, powerless." this does not mean that the courts should be a low priority for reform. On the contrary, Among this group of firms, the predominant in Vietnam's devolving system with citizens fall-back approach is to mediate through friends becoming more demanding of the government, or relatives. Only six percent would appeal with rapid growth and more and more arms- to courts, compared to 17 percent who would length economic activity, the pressure on the appeal to local governments. Finally, among courts to deliver justice fairly and efficiently those same firms, whose first two strategies were will grow. Indeed, court cases track economic to negotiate and then mediate through friends, growth much more than population growth., as the third approach is to mediate through a local illustrated in Figure 5.4. notable. Only nine percent said they would appeal to court, fewer than the 14 percent who If they do not make much use of the courts, how said they would do nothing. Overall, among do citizens and firms go about solving disputes firms whose most common form of dispute is when they encounter them? The PCI survey is a business dispute, only 12 percent said they instructive in this regard. The questionnaires asks would appeal to courts as any of the three most firms to name the most common disputes they common methods of resolving the disputes. 87 modern institutions Figure 5.4. Growing economy, growing pressure on the courts 180 160 Number of civil cases to be executed (2000=100) 140 Real GDP (2000=100) 120 Population (2000=100) 100 80 2000 2001 2002 2003 2004 2005 2006 2007 Source: Own estimates based on data from the Ministry of Justice and GSO. Figure 5.5. Strategies for dealing with business disputes First, negotiate and compromise If that doesn't work, mediate through If that doesn't work, mediate through a as much as possible and then let friends. (53% of those whose first local notable. (51% of those whose first the issue resolve itself. (95%) strategy was as described to the left.) two strategies were as described to the left.) let the issue mediate through mediation resolve itself local notable through friends nothing. I am nothing. I am powerless appeal to local gov powerless mediation mediate through through friends mediate through business local notable association appeal to local court appeal to local appeal to local court gov appeal to local gov mediate through business appeal to local mediate through association court local notable nothing. I am resolve through mediate through powerless media business association resolve through resolve through 0 25 50 75 100 media media 0 25 50 75 100 0 25 50 75 100 Source: Own estimates based on the VCCI-VNCI Provincial Competitiveness Survey 2008. 88 legal and judicial systems Why are the courts used so little by citizens and to court were significantly less positive about firms? It is tempting to surmise that this is due improvements. to a lack of faith in the system, and indeed this may be part of the explanation. On the one hand, In a nutshell, the courts have been used very when firms in the PCI survey were asked if they little and neither firms nor citizens seem to agreed that they were confident that the legal have the faith in the courts necessary for them system would uphold their contract and property to entrust their cases with the courts in large rights in business disputes, only about 20 percent numbers. An expansion of market-based disagreed. On the other hand, the fact that interactions, combined with a lack of clarity in, only about 10 percent gave the most favorable and knowledge of, the law is leading to rapid response, strongly agree, suggests that there is expansion of disputes. The challenges, therefore, much room for improvement. In addition, the are formidable: to strengthen confidence in the firms most negative about whether the system courts to resolve disputes independently and would uphold their rights were larger firms, efficiently, and to expand capacity to handle the perhaps owing to the more complex trading rising case loads. relationships of larger firms. Vietnam is certainly not the first country to face For citizens the story is somewhat more these challenges. Among transition countries, one complex, owing to the fact that so few have had of the most difficult sets of governance reforms experience with the courts. Among respondents has been the move to strengthen independence who indicated on the VHLSS Governance of the judiciary while simultaneously building Module that they would not use the courts even accountability. The reason the challenge is so if needed, the majority noted concerns about formidable is that independence by its nature quality. Among those that actually had been requires removing certain types of control by the to court, however, the number satisfied with executive. Severing the administrative controls the quality they received exceeded the number characteristic of the old system of accountability unsatisfied. As with the assessments of firms, is one thing; creating a new internal system of however, fewer than half of the citizens surveyed accountability to fill the void is another. Without indicated affirmatively that they were satisfied careful planning, gains in independence could with their experiences. Similarly, when asked be offset by the loss of accountability. Building about their level of trust in the courts, only about new systems of accountability to accompany the a third of respondents stated that they trusted the newfound independence is an essential element courts, while most were unsure. of judicial reform. A second reason to avoid complacency is that A UNDP-sponsored survey of judges undertaken the trends do not seem to be favorable. Focusing in 2007 shows how deep independence issues on the panel firms in the PCI survey, those that run in Vietnam. The survey showed that judges answered the survey in multiple years, there was often consult with higher courts and even with no improvement, and perhaps a slight worsening, local governments when deciding on a case. Two in the percentage asserting confidence that the thirds of respondents indicated that they consider system will uphold their rights. While citizens the opinions of superior courts or the heads of participating in the VHLSS were much more their own court when deciding cases, while 26 positive about their assessments of improvements percent said they consider the opinions of local in the courts--nearly three fourths reported there governments. was some improvement--optimism should be tempered with the reminder that only about one The links between Vietnam's devolving percent had any experience with the courts in the economic and administrative system and previous two years. Indeed, those who had been the judiciary is complex. On the one hand, 89 modern institutions Box 5.2. Independence with accountability--the experience of other transition countries Addressing the tension between the need for accountability and the need for courts to be independent to be credible arbiters of disputes is not easy, as argued in a study of judicial reforms in central and eastern Europe and the former Soviet Union. The judicial reforms that were the primary focus during the 1990s emphasized the structural issues needed to reinforce the role of the judiciary as an equal and independent branch of government, as laid out in the new or revised constitutions adopted throughout the region. Partially as a result of this focus, relatively more progress was made in the early years on independence issues than on more technical areas such as court management. Independence was enhanced through improvements in judicial immunity and guaranteed tenure, while management and transparency issues as maintaining trial records and publishing court decisions lagged. Aspects of management of the judiciary that have been the focus of reforms elsewhere in the world, such as systems of case and court management and human resources, were not initially the center of attention in transition countries. A hallmark of independent and impartial legal systems is the ability of people and firms to use courts to challenge actions and decisions of the government. During socialist times the judicial system was geared toward defending the rights of the state. At the beginning of transition, the idea of a court overturning a decision of government was simply outside the realm of possibility for many people. By the late 1990s, after a decade of reforms, the idea may have seemed less extraordinary, but in many countries there was still little confidence on the part of the public in the ability of citizens or courts to challenge the government through the legal process. Surveys suggest varying degrees of confidence in the ability of firms to challenge the state in courts. The average assessments of the impartiality of the legal system for challenging government actions tended to be better in the EU accession countries than in the non-EU accession countries. In other words, there is as yet no evidence of convergence or "catching up" of transition countries to EU practice along this dimension of court performance. Focusing on the formal structures and instruments that help to make a judiciary independent has apparently been perceived as only partially successful, and some judiciaries in transition countries still remain subject to political influence in the selection and disciplining of judges. Most have little influence over the allocation of budget to the judiciary and little control over how these funds are spent. The report argued that two types of actions are needed (i) actions to depoliticize the recruitment, appointment, and career progress or termination of judges (which is often within the purview of judicial councils); and (ii) actions to give judiciaries more influence over the use of court resources and autonomy over their administration. (For example, Macedonia's judges received power over their budget in early 2004). Establishing a judicial system that is free from politicization, capable of managing and administering its own human and capital resources, and able to minimize corruption in its ranks through self-regulation and effective prosecution will take more time, effort and resources. Source: James H. Anderson, David S. Bernstein, and Cheryl W. Gray. 2005. Judicial Systems in Transition Economies--Assessing the Past, Looking to the Future. The World Bank. devolution in economic decision making in procedures in a systematic manner for the first other spheres increases the work of the courts time and empowered the courts to settle cases as more disputes come before them. At the same lodged by individuals and legal persons on the time, the responsibility for resolving disputes is protection of their lawful rights and interests. also being gradually devolved from the central Over the years the jurisdiction of the courts has and local government bodies to the courts. also expanded to cover economic cases (1993), Since the beginning of Doi Moi, the courts have labor cases (1994), administrative cases (1998), gradually gained jurisdiction over many forms civil matters (2004), etc. Some of the devolution of cases. The 1989 Ordinance on Procedures to settle disputes has not been to the courts, for Settlement of Civil Cases defined civil but to other bodies, including arbitration, labor 90 legal and judicial systems cases, conciliation, etc. As a whole, however, The tension between devolution and the courts are not independent in the Western accountability is nowhere more evident than for sense. Under the Constitution, state power the judiciary. For accountability over the quality is unified, with division and collaboration of judgments a key role is played by the Supreme in the exercise of legislative, executive, and People's Procuracy, which has the right to be judicial powers. The emphasis is on division of present at all trials and hearings, and to appeal functional responsibilities, rather than checks the decisions of the court. As their opinions and balances. can have serious implication for the career of a judge, they are usually taken into consideration. Recognizing the need to "build an ethical, The JRS 2020 plans to study the transformation healthy, strong, democratic, strict, fair and of the Supreme People's Procuracy into an justice-protecting judiciary ..." the Politburo institution with procuracy functions only, which issued Resolution 49 in June 2005 laying could help reduce interference in the rulings of out the objectives, principles, and tasks of the judiciary. A second institution playing an an ambitious program of Judicial Reform oversight role is the National Assembly, which Strategy to 2020 (JRS 2020). The JRS 2020 can request reports and ask questions of the envisages, on the one hand, further devolution Chief Judge. The oversight role of the National of functions to the courts and the organization Assembly over the judiciary was strengthened in of a jurisdiction-based court system independent 2007 with the creation of a separate specialized from the administrative levels of government, committee on judicial affairs. continuing a trend established a few years earlier. Supervision of districts courts had already been Judges may also be personally disciplined transferred from the Ministry of Justice to the for judgments that are deemed to be off-base. Supreme People's Court in 2002. In addition, the Penalties may include removal from office, National Assembly is called upon to exercise a which cannot be appealed, or charges under the greater role in the supervision of the courts, and Criminal Code when a judge delivers an "illegal the creation of the Justice Committee is already decision." Moreover, a judge can be held playing this role. personally, financially liable for making a wrong judgment or decision--in criminal, civil and While the JRS 2020 generally recognizes the administrative procedures--that causes damage need to devolve supervision of the judiciary, it to a citizen. This risk may have contributed to also emphasizes the centralized leadership of the the increased incidence of "seeking guidance Party in supervising the work of the courts. Yet, from above" before issuing judgments.56 the attempt to maintain a matched relationship between the hierarchical structure of the Party, What would it take for the courts to establish and the re-organized court system can prove accountability mechanisms commensurate with unworkable. This point was made by Chief Justice independence? A running theme throughout this Truong Hoa Binh in a paper in the Vietnam Law VDR is the value of information for establishing and Legal Forum.55 In discussing whether to accountability, and the judiciary is no exception. have courts of appeals cover just one province While there has been some progress in making or multiple provinces, he wrote "If a court of case records public, this is so far limited to some appeals is established in the territory of some high-level judgments which were publicized provinces, human and material resources could on websites. In general, the transparency of be concentrated. However, it would be difficult judgments remains low, as does the transparency to determine which Party committee would lead of analysis leading to judgments. The JRS 2020, and direct and which provincial-level People's issued in 2005, outlined the intention to expand Council would supervise its operation." the publication of judgments and, indeed, this would strengthen accountability of the judiciary 91 modern institutions for producing fair and professional judgments. The JRS 2020 states a basic principle that Similarly, although the trials of civil and criminal "Judicial and judicial support organs must be put cases are officially public and open to everyone, under the oversight of the people-elected bodies except for some cases, the exceptions prove to and of the people." Without transparency of be numerous. judgments, trials, and court statistics, the people will face difficulty in carrying out this essential The publication of judgments could help oversight role. There are already positive moves highlight situations where judgments were in this direction--the Supreme People's Court faulty or not in line with normal practice, but in has now appointed an editorial board for the some cases judges may have little on which to publication of judgments, hopefully presaging a base their decisions. At present, there is no clear more systematic publication of court judgments. mechanism for adjudicating what the law means. Constitutional protection was approved at the Enhancing independence is easier said than done. Party Congress in 2006, and can be found in the But several steps could help move the courts in JRS 2020, and the need for more consistency in that direction. First, the length of judicial tenure legislation was also acknowledged in Vietnam's is now only five years. In many countries, life report in May 2009 to the Universal Periodic tenure is generally provided to judges in order Review of Human Rights. At the moment, courts to ensure their freedom to make judgments don't play any role in interpreting laws. Although according to the law--exceptions are carefully the Ministry of Justice has a role in post-checking circumscribed, and the appeals process provides laws--an unusual practice by international some protection against poor performance. standards--they can only check a small portion While life tenure may not be on the table now of laws. Many countries address the problem in Vietnam, some extension of tenure beyond of consistency by pre-adoption screening of the current five years could help strengthen draft legislation, as well as mechanisms to cure the credibility of the courts as an independent inconsistencies in legislation or suspend their arbiter. application after the fact. Second, court financing in many countries is Precedent can play an important role in helping provided directly by the legislature. This limits judges to interpret laws--although precedent is the ability of the executive to influence the more often associated with common law systems, courts by withholding budget. According to even in civil law systems the need to make the JRS 2020, the judicial budget is set to be judgments consistent with each other, across gradually increased. The mechanisms through space and time, means that precedent is not which that budget is determined could also use only a common law concept. Indeed, Supreme some scrutiny. People's Court resolutions are increasingly having an interpretative aspect, although framed Another issue for judicial reform, one that as application guidelines. involves all parties, is that of trial procedures. Shifting to an adversarial system is viewed as Accountability could also be strengthened having benefits. It is referred to in the JRS 2020 through a more transparent system of judicial as a "breakthrough." An adversarial system in data. Although courts collect and compile data, a civil law system would not necessarily have the data is not published. The difficulty obtaining the same meaning as in a common law system in even basic statistics makes it difficult for which the parties to a trial are wholly responsible external observers to examine the performance for presenting their own cases. In the Vietnamese of the courts, and within the court system itself it context, the move to an adversarial system can is unclear how court statistics are being used as be oriented toward strengthening human rights management tools. by making the judges more clearly arbiters, 92 legal and judicial systems rather than participants in the case, and thereby organizations determine what changes to make strengthening the presumption of innocence and to the current procedures for this purpose, there other basic human rights. may be a need to amend the relevant provisions in the Criminal Procedure Code. An adversarial system in civil procedures has been introduced by the Civil Procedure Code of Finally, the credibility of the courts rests not 2005 but the practice in the field level has not only on the perception that they reach decisions yet caught up with the provisions of the Code. fairly and efficiently, but also on how well those To better understand the challenges faced in decisions are enforced. In this area, real progress implementing these provisions a pilot study is is being made--recent reforms have made civil underway in Bac Ninh province. In terms of civil judgment execution more independent from procedures, the Supreme People's Court (SPC) local governments and more efficient. Despite and courts in Bac Ninh are working together the increasing number of judgments, the fraction with JICA and to identify the issues that judges that are enforced has been increasing in recent and participants are facing in putting the system years. The accountability of judgment execution into practice and advise on possible solutions. has been further enhanced in 2008 with the Apart from better guidance from the SPC to the Law on Civil Judgment Execution which courts, such solutions may include amendment strengthened the oversight and complaints of the relevant provisions in the Civil Procedure systems, improved procedures, and provided Code in the future. for payment of compensations violations. Importantly, the barriers for a more automatic Similar work is underway with respect to execution of judgments from courts have criminal procedures. The SPC and Supreme been reduced. While the system has clearly People's Procuracy (SPP), with support from been strengthened, providing some greater JICA, are examining how the participants, incentive to bailiffs to execute the judgments especially defendants, may play a greater role could increase the credibility of the courts even in the proceedings, thereby ensuring their right further in this regard. Indeed, the experiment to a fair trial by an impartial tribunal. How with "socialization" of judgment execution, i.e., adversarial the criminal procedures should be-- allowing some payment of fees for successful that is, to what extent the court should serve as performance, in Ho Chi Minh City is the kind of an impartial referee, is still under consideration innovation that can help show the value or limits by the relevant authorities. Once the SPP and of devolved responsibilities. Table 5.1. Execution of civil judgments 2006 2007 2008 Civil judgments subject to enforcement 602,059 648,266 664,047 Civil judgments meeting enforcement requirement 380,850 399,722 425,631 Civil judgments completely enforced 270,967 302,432 336,408 Percent of judgments completely enforced of those subject 45.0% 46.7% 50.7% to enforcement Percent of judgments completely enforced of those meeting 71.2% 75.7% 79.0% enforcement requirement Percent of judgments meeting enforcement requirement of 63.3% 61.7% 64.1% those subject to enforcement Source: Ministry of Justice 93 modern institutions Administrative Disputes are usually of high complexity, the adjudication capacity of many judges is still limited. During Closely linked to the issue of independence is the hearing of administrative cases, the court is the administrative complaints system. Although only allowed to judge upon the legitimacy, but not not as prevalent as business disputes, nontrivial the reasonableness, of administrative decisions numbers of firms encounter disputes with local and acts. In addition, administrative courts do government or government officials. In the PCI not have right to annul administrative decisions, survey in 2008, 31 percent of firms said disputes making it very difficult to render judgments on with local government or overzealous inspectors the administrative decisions which are regarded or other officials were among the three most as illegal. comment forms of dispute. More telling is the fact that firms are largely unwilling to appeal Data from the 2008 VHLSS Governance Module to the court system to resolve these disputes. shows that there are practical problems with the Among the 486 firms that said administrative current system of administrative complaints: one disputes were the most common form of dispute, in three respondents who dealt with administrative only 13 percent said that appealing to the court complaints found it very difficult or difficult to was one of their top three strategies for dealing find the necessary information on the procedures, with the problem. and nearly half encountered difficulties. Time was the main difficulty encountered, but citizens also The Court has had jurisdiction to settle had problems related to not knowing regulations administrative disputes since 1996 but the or finding the regulations unclear, and to a lesser number of administrative cases accepted and extent due to the serving attitude of officials. heard by the courts is still limited. In the first nine Because the current Law on Complaints and months of 2008, fewer than 7,000 administrative Denunciations already mandates strict time proceedings were handled by the courts limits for individual administrative agencies nationwide, and in many provinces there were to settle complaints, time difficulties are more fewer than ten. Thirty-five percent of the cases likely to be associated with other factors such as were in Ho Chi Minh City alone. This, however, the need to submit complaints to more than one represents a significant improvement with respect agency. A case study on land conflicts in Ho Chi to previous years--in 1998 the court system had Minh City, Hung Yen and Thai Binh58 shows that fewer than 300 administrative cases.57 two thirds of affected land-users had to lodge their complaints with two or more different state There are several reasons that explain the organizations or agencies. low number of cases heard by the courts. As described in Chapter 3, the courts can only settle Legal Awareness administrative cases after the first settlement of the case by administrative agencies. In addition, As described early on in this chapter, a key role not all administrative cases can be lodged with of the legal and judicial system is to stop disputes the courts and land-related cases cannot be before they occur. Improving the quality of legal lodged with the courts after second-settlement development can help in this regard, but equally decisions by provincial governments. All these important is to raise awareness on the part of the measures not only restrict access to the court, but citizenry and the business community about their also make the system to resolve administrative legal rights. Fast and fair justice institutions are cases less impartial. not effective if not widely accessible. A closely related topic is the access and understanding of Other limitations have to do with the capacity of legal information by society. Awareness about the court and the regulations on the settlement of laws empowers citizens and enterprises, enables administrative cases. While administrative cases 94 legal and judicial systems them to claim their rights, and helps them hold citizens' rights. A survey of 500 citizens in the government accountable. Ha Noi, Quang Binh, Ninh Thuan and An Giang aimed at understanding the key issues The need to improve citizens' awareness of surrounding access to information59 found that laws and their legal rights is neatly illustrated more than half of the respondents were unfamiliar by a recent initiative. In 2009, the Government with the Ordinance on Grassroots Democracy, Inspectorate and the World Bank, with support a fundamental piece of legislation establishing from several other donors, hosted Vietnam the rights of information and participation. The Innovation Day 2009--More Accountability and survey also found that while most interviewees Transparency, Less Corruption. After soliciting knew about some key laws, many did not know proposals from associations, government bodies, about other laws providing basic citizens' rights mass organizations and the private sector, VID and obligations, such as the Civil Law and the received about 150 proposals, 24 of which Law on Personal Income Tax. were ultimately selected, for innovative ways of reducing corruption. These proposals offer a Many business enterprises similarly express little glimpse into the question of what Vietnamese knowledge of the law. A survey of about 2,600 think are the problems that need to be addressed small and medium enterprises in 10 provinces60 in order to reduce corruption. Interestingly, a found a very high percentage of enterprises to large percentage of the proposals were aimed have poor or no knowledge of relevant laws and specifically at increasing legal awareness. regulations. (Figure 5.6.) Many sought specifically to provide legal information for those with disadvantages, The rapid pace of developing new legislation including the blind, those living in remote areas, in Vietnam makes the task of building citizens' or who only speak ethnic minority languages. and enterprises' legal awareness particularly Beyond the inspiring innovation of the proposals challenging. On the positive side, significant put forward, the proposals also provided an efforts have been made to enhance legal important lesson for building accountability dissemination and consultancy in Vietnam. systems and reducing corruption in Vietnam. Three different types of organizations have been given powers to play those roles: the Ministry Weak legal awareness of citizens is also a factor of Justice, civil society organizations and law- for other important regulations stipulating practicing organizations. In addition, various Figure 5.6. Legal awareness for fighting corruption 50% percent of proposals 40% 30% 20% 10% 0% provide raise feedback encourage information awareness mechanisms people to on rights and report laws corruption Source: Own calculations based on submissions to Vietnam Innovation Day 2009--More Accountability and Transparency, Less Corruption. 95 modern institutions on-line legal databases have been developed, legal talks on issues that are the concern of the making legal documents easily available to people. Through these talks, people can learn internet users. about their rights, recognize violations of their rights and ask for legal aid services. The Ministry of Justice's legal aid agency was established in 1997 with the objective of The number of legal aid cases handled by the providing free-of-charge legal advice to various legal aid agency has been steadily increasing, vulnerable groups including the poor. In 2006, although the number has declined somewhat since with the adoption of the Law on Legal Aid, the 2006, possibly due to changes in administrative legal aid agency was also allowed to represent handling of cases and the tightening of the and defend legal aid beneficiaries in legal eligibility criteria. (Figure 5.7). The Law on proceedings. At present, the legal aid agency has Legal Aid restricted legal aid beneficiaries 63 provincial centers, five offices specialized on from broad categories such a ethnic minorities women affairs, 127 district branches, and 928 and children, to narrower sets such as ethnic commune-level legal aid clubs61. Legal aid clubs minorities living in areas with exceptionally play an important role in disseminating new laws, difficult socio-economic conditions, and informing the population about the availability homeless children. In addition, the law does of legal aid, and collecting information on local not recognize as beneficiaries groups that were needs. previously receiving legal aid such as women victims of domestic violence and trafficking, Mobile legal aid clinics are becoming an juveniles, people affected by HIV\AIDS, and ex- increasingly common way of providing legal aid detainees. The Law did however increase access services, especially in rural and remote areas. In to legal aid for some groups, such as the single 2008, half of the total number of cases handled elderly and the disabled people63. by the legal aid agency nationwide were resolved through mobile clinics.62 Like the legal aid clubs, A core factor limiting the expansion of legal aid the mobile clinics offer a combination of legal services is the availability of funds. Contributions counseling and legal dissemination services. from the central and provincial governments to One useful activity organized by the clinics are the legal aid system are increasing and since Figure 5.7. Legal aid cases handled by the Legal Aid Agency 200,000 Number of legal aid cases 150,000 100,000 50,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: "Support to the National Legal Aid System in Vietnam 2005-2009. Mid-Term Review" (SIDA, SDC, Oxfam Novib and Save the Children, 2008); "Support to the Legal Aid System in Vietnam, 2005-2009. Annual Progress Report 2008" (SIDA, SDC, Oxfam Novib and Save the Children, 2008) 96 legal and judicial systems 2007 additional funds from two National Getting legal advice through the market, the Targeted Programs have been made available default option in most countries, faces challenges to disseminate legal documents, provide legal in many places in Vietnam. Indeed, there is a consultancy and organize legal aid clubs and fundamental contradiction at work: the lack mobile clinics in the disadvantaged communes of use of the courts limits the demand for legal covered under these Programs. However, the services, while the limited availability of legal heavy reliance on funds from international advice also makes the courts less attractive for donors, which have been supporting the Legal settling disputes. Whatever, the reasons, the Aid Agency since its establishment, and the number of lawyers in Vietnam is quite low, with availability of funds for legal aid in the poorer only one lawyer per 21,000 inhabitants.65 This provinces both raise concerns going forward. average, however, masks wide variation between urban and lowland areas and rural and highland The engagement of civil society organizations areas (Box 5.3). (CSOs) in the provision of legal counseling and dissemination can help address this tension. Since The legal framework for lawyers improved with 2003, the government has promoted the role of the adoption of the Law on Lawyers in 2006, CSOs in legal counseling, by allowing them to which provided more scope for lawyers to work establish legal consultancy centers, recognizing individually and collectively. Notably, the Law them as providers of legal aid, and authorizing on Lawyers recognized bar associations as them to represent clients in legal proceedings. organizations operating on the principle of self- Indeed, a 2006 survey organized by UNDP64 finance and having own charters governing their in 26 provinces found that legal consultancy internal affairs. The Law also recognized the activities by CSOs are generally believed to be rights of bar associations to protect the rights of effective. lawyers and provide them with training. In May Box 5.3. The paucity of lawyers in provinces with socio-economic difficulties A survey assessing the situation of lawyers' organizations and their activities in provinces with socio-economic difficulties was undertaken in 2007. The survey covered 16 provinces, many of which are in the mountainous areas. The survey found very few lawyers in those provinces, only for 3.8 percent of the whole country. In contrast, the two provinces of Ho Chi Minh City and Hanoi have 51 percent of the lawyers in Vietnam. The survey also found that most lawyers in the mountainous regions are retired state officials, with many above 60 years old. In some bar associations of the surveyed provinces, there are some registered lawyers that do not practice due to their age. Moreover, several lawyers do not have a law degree and have not passed the lawyer's training course organized by the local departments of justice and bar associations. A low demand for "paid" legal services was found to be a contributing factor. Most people in the surveyed provinces cannot afford to hire a lawyer. Lawyers in the surveyed provinces mainly take part in cases as appointed by the agencies conducting legal proceedings. However, in some cases they get either no payment or insufficient payment according to the laws. As a result, the legal profession is not attractive to young professionals with a law degree, who prefer to stay in big cities to look for jobs. Some lawyers have even resigned from the bar associations to look for another job due to financial problems. Source: "Report on the current situation of lawyer organizations and activities and proposals to support the development of the lawyer profession in some provinces" (Ministry of Justice, DANIDA and SIDA, 2007). The provinces are Quang Nam, Quang Ngai, Kon Tum, Gia Lai, Ninh Thuan, Binh Thuan, Tuyen Quang, Ha Giang, Thai Nguyen, Bac Can, Cao Bang, Hoa Binh, Son La, Dien Bien, Lai Chau and Lao Cai. 97 modern institutions 2009 the National Bar Federation was established, of some activities. In this case, an individual with governing documents and structures lawyer might not find it worthwhile to push for approved by the community of lawyers. These certain improvements, since that lawyer would documents and structures were ratified later by expend all of the costs and only reap a small share the Ministry of Justice. As argued elsewhere in of the benefits. A collective action organization this VDR, such collective action organization like the National Bar Federation can help resolve can help resolve the fundamental contradiction this contradiction. between diffuse benefits and concentrated costs 98 6. OVERSIGHT In Vietnam's devolving state, some bodies are of interest both because of their own devolution and because of their role in building accountability for other bodies. The formal investigating apparatus successfully uncovers waste and fraud, but faces important challenges when it comes to proving corruption. Greater autonomy for investigating bodies to do their work within the rules would improve their efficiency. Assets declarations would be a more effective tool if they were systematically verified or made public. Improving transparency and taking a sector-specific approach would help to reduce the problem of corruption which is seen by a large part of the population to be a serious problem. Monitoring of both corruption and anticorruption is needed to show progress. Civil society in Vietnam has two distinct strata, one with long-standing links to the state and quasi official duties, and the other emergent. Civil society organizations have gained some independence in both management and financing. Mass organizations can still play an important oversight role despite close links to the state. Associations face important challenges in getting permission to operate, and other forms of civil society organizations have their own challenges. The National Assembly and People's Councils are playing increasingly important oversight roles. The large number of part-time deputies and the short time allotted to study budgets and bills pose challenges. Many deputies simultaneously work in the government, putting them in a position of potential conflict of interest regarding the National Assembly's oversight role. The high turnover of deputies in each session makes a strong permanent supporting apparatus essential as a store of knowledge for the body. The media has increased in importance over the years. If their legal framework were made less uncertain they could play an even stronger oversight role. Increasing the professionalism of journalists and ensuring they are equipped with information could help encourage accurate reporting. Despite provisions in many laws, including the Constitution, guaranteeing access to certain types of information, many citizens and firms, researchers and journalists and even public officials have difficulty accessing information. Most provisions in the current legislation call for certain information to be public, but do not assign specific responsibility and mechanisms to ensure compliance. A new law on access to information could help fill this void. Earlier chapters have explored the devolution Some devolution has also taken place with of powers and responsibilities--to lower levels respects to other bodies that, although still close of government, to service delivery units, to the to the central state apparatus in many ways, were courts--and the need for new mechanisms of even more closely linked twenty years ago. The accountability to manage the devolved system. foci of this chapter, however, differ from those of 99 modern institutions Box 6.1. How do bribes affect the performance of small and medium enterprises? The University of Copenhagen used data on bribe payments made by 1,661 small and medium enterprises in ten provinces for the years 2005 and 2007 to explore the causes and consequences of bribe payments in Vietnam. One of the goals of the analysis was to identify characteristics that increase an enterprise's probability of paying bribes. The key factors are: visibility (measured by firm size), formality (measured by registration), ability to pay (measured by profits per employee), firm growth (measured by real revenue growth), sunk costs (measured by the capital labor ratio) and the level of interaction with public officials (measured by inspections, state assistance, customs transactions, and state as a customer or supplier). Among other things, the results suggest that well-performing small and medium enterprises in Vietnam have a higher probability of paying bribes. As the study was based on panel data, it allowed some insights into the dynamics of corruption. The study found that firms that initially pay bribes experience lower revenue growth later, controlling for other explanatory factors such as size, legal structure, location and sector, suggesting that bribe payments negatively affect firm performance in Vietnam. Source: John Rand, Patricia Silva, Finn Tarp, Tran Tien Cuong, and Nguyen Thanh Tam. 2008. "Understanding Firm Level Corruption in Vietnam: Who pays and how does it affect firm performance?" Department of Economics, University of Copenhagen and Central Institute for Economic Management. Note: The ten provinces are Ho Chi Minh City, Ha Noi, Hai Phong, Long An, Ha Tay, Quang Nam, Phu Tho, Nghe An, Khanh Hoa and Lam Dong. previous chapters in a fundamental way. Rather devolution and accountability mechanisms, than merely being the recipients of new powers round out the chapter. who consequently need to be held accountable, these bodies differ for the oversight role that they Anticorruption play in ensuring accountability of others. Controlling corruption is widely understood to This chapter centers on institutions that play a be central to Vietnam's efforts to move forward role in overseeing the activities of the institutions to becoming an equitable middle income analyzed in the four previous chapters. We first society. Corruption exists in every country, but discuss a manifestation of governance challenges uncontrolled corruption can deter investment, that the Vietnam Fatherland Front lamented waste resources, and erode the trust of the in its report to the National Assembly, cited in population. A recent study by researchers at the the opening chapter of this report: corruption, University of Copenhagen identified the best and the system of institutions leading the fight predictors for whether firms in Vietnam would against it. These institutions, including the be beset by corruption; by and large, it was the inspectorate and audit system, are essential successful performers who had to pay bribes, as for upward accountability for compliance described in Box 6.1. Whether this is because with the rules. We then discuss civil society successful firms were targeted, or because firms organizations, which play many roles as conduits had bribed their way to success, the implications of information and deliverers of services, but are not positive-in the former case, corruption also help provide oversight for others. Next, hurts the firms that are performing best, while in the oversight functions of elected bodies, the latter case the incentive for firms to play by including the National Assembly and People's the rules is weakened. Councils, will be discussed. Information, the common thread that runs throughout this report, The citizenry is also well aware of the importance is also discussed. Finally, the media's role as of the fight against corruption. The 2008 VHLSS an oversight institution, as well as its own Governance Module included a question that 100 oversight asked respondents directly whether corruption Recognizing the threat that corruption poses for poses a problem for their family. In Vietnam, the society is an important step, and it has already perception that corruption poses a problem for been several years since the government raised people is pervasive. (Figure 6.1). the importance of anticorruption on the agenda. In 2005, the Committee for Internal Affairs of the Figure 6.1. Is corruption is a major problem Communist Party, with support from the Embassy for you and your family? of Sweden, released a "Report of the Survey on Corruption in Vietnam", and that same year a Hard to sweeping Law on Anticorruption was passed. say The law itself is quite comprehensive, covering 13% a wide range of preventive and enforcement- oriented policies, as described in Box 6.2. In No May of 2009, another step forward came with 22% the adoption of the National Anticorruption Yes Strategy to 2020, which explicitly recognizes the 65% role of openness and transparency in reducing corruption, and includes an action plan, complete with timetables of legislative changes. In June, Note: Responses of "don't know" have been dropped Vietnam ratified the United Nations Convention from the analysis. Against Corruption. Source: Own estimates based on the 2008 VHLSS Governance Module. Box 6.2. Anticorruption policies specified in the law on anticorruption of Vietnam The Law on Anticorruption calls for a broad range of measures, including: Transparency and information Publicity and transparency in all activities and sectors Requests for information by state agencies, individuals, organizations and media agencies Public administration Regimes, norms and criteria for each agency, organization and unit Responsibility of heads of agencies, organizations and units for corruption occurring in their domains Use of bank accounts to pay salaries and execute other state budget transactions Administrative reform: decentralization, reform of administrative procedures and IT application Human resources Codes of conduct and rules of professional ethics Rotation of sensitive positions Declarations of income and assets by a selection of public employees and officials Control of income of persons with high positions or powers Detection Detection of corruption through inspections, audits, investigations, adjudications and parliamentary supervision Denunciations by citizens and protection and reward of whistleblowers Involvement of society Promotion of the anticorruption role of society, including CSOs, media, enterprises and citizens Source: Law on Anticorruption (2005) 101 modern institutions Since the adoption of the Law on Anticorruption, Enforcement and Detection by State Bodies several detailed implementing guidelines have been issued, anticorruption measures have started Enforcing the rules laid down about proper to be implemented by ministries and provinces, behavior in the laws is an essential element of and the detection and punishment of corruption upwards accountability. In Vietnam, several cases has been reenergized. The enforcement bodies play key roles in this regard. The aspect of anticorruption centered on the creation Government Inspectorate carries out inspections of specialized units in all the key anticorruption related to compliance with regulations, institutions, through improved coordination including detecting corruption, State Audit of among institutions, and their decentralized units Vietnam carries out audits, and the Ministry at the provincial level. of Public Security carries out criminal Box 6.3. Inspections system challenges A recent study supported by the Embassy of Denmark examined corruption and anticorruption in the construction sector. The authors argued that internal inspections are quite effective in identifying financial waste and losses, especially in construction projects. According to inspectors of the Ministry of Construction, they saved 25 billion VND in costs and collected approximately 10 billion VND from the inspected construction projects in the last two years. However, the effect of internal inspection on detection of corruption is still limited. The number of corruption cases detected by internal inspections is very low-- the Ministry of Construction reported no corruption case from their internal inspections in the past two years. According to inspectors from Ministry of Construction and Ministry of Transportation, it is difficult to detect corruption during inspections due to the following factors: Their main authority is to inspect the compliance with the internal rules and regulations governing the relevant industry (e.g. construction or transportation). During the inspections they look for violations of construction proceedings and accounting discrepancies. In the process, they may detect violations of the internal rules and regulations and uncover financial losses and waste, but in most cases there is insufficient evidence to establish grounds for accusation of corruption crimes. Since most corruption cases involve suspects that can cover up or withhold information, finding evidence of corruption requires investigation powers beyond the inspectors' authority. According to the Law on Anticorruption, when potential corruption violations are uncovered in an organization, only the head of the organization being investigated has the authority to refer the case to the competent authorities for further investigation or judicial follow up. Decree 107, which imposes the liability on the heads of organizations when corruption is found within their organizations, may create hesitance for the heads to decide on passing alleged corruption cases for further investigation. Meanwhile, there is no particular incentive or reward for them to advance the cases. There is no specific guidance or support from investigation authorities on how to establish evidence of corruption. For example, one inspector explained that despite the fact that they work closely and consult with the competent police authority on a regular basis, they rarely find sufficient evidence to determine a corruption crime. In the past two years, no corruption cases have been referred by the Ministry of Construction to the police authority for further investigation. Source: Søren Davidsen, Nguyen Viet Ha, Hoang Ngoc Giao, Thaveeporn Vasavakul, Maridel Alcaide Garrido. 2009. "Implementation Assessment of the Anticorruption Law: How far has Vietnam come at the Sector Level? A Case-Study of the Construction Sector." Denmark Ministry of Foreign Affairs. 102 oversight investigations. Recognizing that corruption agency attached to the government, it became requires cooperation among these enforcement independent from the executive in 2005. The bodies and others, a Steering Committee on mandate of the SAV has been expanded over Anticorruption headed by the Prime Minister time--it is now responsible for auditing all was established in 2006. agencies and organizations using state budget, money and property, for detecting corruption The Law on Anticorruption requires the heads cases, and for assisting the National Assembly of government agencies and organizations to in budget oversight. Indeed, SAV's role in regularly organize internal inspections and, if combating corruption is perhaps more active violations are found, take follow up measures than a traditional Supreme Audit Institution, which may include settling the case in accordance reviewing existing internal procedures and with their authority and reporting to investigative control systems to increase transparency, authorities. Compliance with these requirements- focusing on areas of high corruption risk in annual inspection plans approved by organization the course of audits, identifying loopholes and heads-is reported to be fairly good. A recent study weaknesses and recommending policy reforms. by the Embassy of Denmark, however, found that Audit recommendations are published widely. while this system was effective for identifying Importantly, SAV reports to the National fraud and waste, it was less effective at detecting Assembly, not the government, and there has corruption. (Box 6.3) been enhanced transparency of audits results. For the investigation of corruption, some Detection by Society further devolution of responsibilities may be in order. Under current law, when potential Beyond the question of who should lead the corruption violations are uncovered in an enforcement aspect of anticorruption, there is organization, inspectors can only report also the question of mechanisms and approaches and make recommendations to the heads of that can most effectively prevent, detect or deter their organization, but only the head of the corruption. In Vietnam, several approaches have organization being investigated has the authority received prominent attention. to refer the case to the competent investigative body. While it is appropriate for organizations to One approach is to rely on reports from those take primary responsibility for corruption within in society when they suspect corruption. While their ranks, requiring that they decide which avenues to report corruption are essential, there cases are worthy of further investigation puts are practical challenges for this system. According them in a position of conflict of interest. to the Law on Complaints and Denunciations, if citizens make a written denunciation, they must In addition to the Government Inspectorate, clearly state their name, surname and address, as a second body playing a key role in upward well as the content of the specific denunciation. accountability for other bodies, and one which In cases where a citizen comes in person to make has some devolved features that could be an oral denunciation, the person who receives emulated by others, is State Audit of Vietnam the citizen shall have to record the denunciation which, as a key institution of public financial contents, the name, surname and address of management aimed at providing assurance the denunciator, with his or her signature. In that resources are used as directed by the addition, those making denunciations must take government, was discussed in Chapter 2. Several personal responsibility for their statements. The key features of SAVs structure, however, are person making the accusation does have the right pertinent to understanding how inspection to request the confidentiality of his or her name bodies can generate upward accountability with and other personal details, but the accusation fewer conflicts of interest. Created in 1994 as an cannot be made anonymously. 103 modern institutions Figure 6.2. How much information do households Figure 6.3. Reasons for not reporting corruption have on the regulations to prevent and fight corruption? Did not A Lot Some know the 1% No 9% procedures Other Information 5% 29% Thought 8% would be ineffective A Little 14% 28% Did not Afraid due identify to lack of Very Little corrupt protection 33% behavior 5% 68% Note: Chart on the left is based on all respondents. The chart on the right was based on those who had not denounced corruption. The number of observations for the two charts were 9,188 and 9,040, respectively. Source: Own estimates based on the 2008 VHLSS Governance Module . Whistle-blowers are, in principle, protected Among those who had not, most indicated that by Article 16 of the Law on Complaints and they had not reported any corruption because they Denunciations, which prohibits a range of had not encountered any corruption, but nearly threatening, obstructing, intervening, and one third of respondents gave other reasons: other actions that might dissuade people from because they thought it would be ineffective, reporting corruption. The person making the because they were afraid or because they did not accusation can further request protection by know the procedures (Figure 6.3). These findings competent state agencies when being threatened echo another 2008 survey in nine provinces by or retaliated against. Furthermore, those who CECODES and Embassy of Finland65. In that threaten, retaliate, or insult the person making survey, seventy-four percent of respondents said the accusation may be subject to administrative that few corruption cases are denounced and that sanctions, criminal violations, or be required even if they were denounced, there would not be to pay civil damages. The Law also provides sufficient evidence to prove corruption. positive incentives: organizations or individuals who have, through their complaints and There is a second challenge for an approach that denunciations, prevented damage to the State, relies on the reporting of acts of corruption: the are to be rewarded according to the provisions sort of corruption that people are most likely to of the law, although those rewards are not clearly encounter may not be viewed as corruption at all spelled out. by significant portion of the population. When asked about various hypothetical actions and Despite these legal measures aimed at reporting whether they were "corruption", citizens were corruption, this approach has limited potential more likely to condemn the misuse of public as an anticorruption tool. Guarantees in the law funds as corruption than they were the sorts notwithstanding, national-level data show that of petty corruption that they are more likely people's awareness of the regulations to prevent to encounter. Perhaps not surprisingly, richer and fight corruption remains weak (Figure respondents, who presumably pay more in taxes, 6.2). A separate question on the 2008 VHLSS were more likely to condemn misuse of public Governance Module asked respondents if they resources or assets, while poorer wage earners had denounced an instance of corruption since were slightly more likely to condemn the giving 2006. Fewer than two percent had done so. of "small" gifts66. 104 oversight Figure 6.4. Is it "corruption"? Views of citizens Official requests unofficial Decision favors those who give Official fails to settle others' affairs payment bribes or gifts in favor of relatives over himself/herself Hard Hard Hard to Say to Say to Say 13% 14% 22% Yes No No 54% 17% Yes 15% Yes No 70% 71% 24% Official misuses public funds or Official receives small gift or Official receives small gift or assets for private benefit money before performing duties money after performing duties Hard Hard Hard to Say to Say to Say 11% 16% 18% No Yes 10% 45% Yes No Yes No 79% 18% 66% 37% Note: The number of observations on which the charts are based in 9,186. Source: Own estimates based on the 2008 VHLSS Governance Module. While an approach that relies on whistle-blowers At present the declarations themselves are faces a number of challenges, the importance not public information, but are only verified of making this avenue available for citizens is internally through a complex five-stage process. beyond dispute. Indeed, the positive response In practice, however, few declarations are to Vietnam Innovation Day 2009 shows how verified. The 2009 study by the Embassy of willing society is to become involved in the Denmark, which focused on the construction fight against corruption. Even when whistle- sector, reported that there was no evidence of blowers face a very hard and long slog in their verified declarations in the previous two years anticorruption battle, there are cases where the and no cases of corruption in that sector had been effort pays off, as illustrated in the case of one detected through the declarations. The Ministry persistent whistle-blower. (Box 6.4). of Construction had predominantly used the declarations upon appointment of officials into Transparency as Prevention new positions, but in these cases the declarations were only disclosed to employees at the unit to Another pillar of Vietnam's anticorruption effort which the candidate was assigned. introduced with the Law on Anticorruption and subsequent decrees was to require declarations Several options have been put forth that might of assets and income for a broad cross-section make the assets declarations more useful as a of public sector employees. As of the end of deterrent and as a tool for uncovering corruption. 2008, some 395,000 officials had submitted their One is to reduce the number of officials obliged to declarations of assets and income67. declare assets to a more targeted list of higher level officials or those in positions prone to corruption, 105 modern institutions Box 6.4. The battle of a corruption whistleblower Mr. Dinh Dinh Phu, a retired colonel living in Do Son town in Hai Phong city, detected in 2003 some serious corruption related to land use management. In the district of Van Huong, some land had been acquired from households for a tourism area, but in reality about 25 percent of the acquired land had been given as a present to Do Son town's leaders and about 10 percent was allocated to serve for "foreign affairs". Perceiving this situation to be unfair, Mr. Phu started at the beginning of 2004 to submit denunciations to many places. His first denunciation letter was sent to the authority of Hai Phong city, but was met with silence. After that, the authorities in Do Son town issued Announcement No. 83 concluding that the denunciation letter was inaccurate and that Mr. Phu had intentionally violated the local order. Later on, the leadership of the town issued Document No. 18 accusing the whistleblower of "taking advantage of democracy to slander the leader, the Party and the authority". Because of these accusations, Mr. Phu was brought to the lower court of Hai Phong, where a verdict was issued against him. As a retired soldier, Mr Phu would not give up easily. Five days after the trial, he sent emergency petitions to the Supreme People's Court, the Ministry of Public Security, the Prime Minister and the Deputy Prime Minister. The case was then investigated and cleared by the Government Inspectorate. On 24 March 2006, the Prime Minister issued Announcement No. 55 concluding that Mr. Phu's denunciation against Do Son leaders was true and that those leaders had issued a wrong decision. The Prime Minister also praised the sense of responsibility and courage of Mr. Phu. After that, Mr. Phu was nominated "Port Land Hero" for having overthrown the "corruption bastion" in Do Son and the port city of Hai Phong. Source: Report on Three Anticorruption Cases to Be Justified (Embassy of Finland, 2009) such as those involved in procurement. Second, since the volume of procurement documents instituting randomized, independent spot-checks is immense. Nevertheless, moving toward and verifications of the asset declarations to increasing the transparency of procurement supplement the current system could make them documents can help to implement more deeply a more credible deterrent for both corruption and the sound provisions already in the law. For false declarations. Making the asset declarations the construction sector, a major initiative is public information for high level officials, as is underway to overcome the technological and done in many countries, would make it easier for organizational challenges of making voluminous all of society to identify incongruities between procurement documents truly public68. declarations and lifestyle. Finally, simplifying the process of initiating the verification process Sector-Specific Approaches could make them more effective. Nearly all of the anticorruption interventions The Law on Anticorruption and other laws discussed so far, and nearly all of the approaches mandate transparency of a variety of activities, used in Vietnam, are cross-cutting approaches including those related to public procurement. aimed at the entire public sector. Corruption, Transparency provisions help level the playing however, may look very different from one field for those interested in doing business sector to the next. An approach that works well with the state, and help make it more difficult for one sector may not work well for others. to hide instances of corruption. The study by While the National Anticorruption Strategy the Embassy of Denmark reviewed a variety to 2020 calls for sector-specific approaches it of public spaces where such information could remains to be seen how well these strategies be publicized, including official websites and will be customized for the vulnerabilities to publications, and found evidence of partial corruption in each sector. The approaches needed publication. This is perhaps not surprising, to address unofficial payments or corruption in 106 oversight pharmaceutical procurement in the health sector, management described in chapter 2 improve for example, will be very different from those transparency and efficiency of public spending, needed to address corruption in construction. An but they also make it harder to hide corruption. example of vulnerability mapping for customs in And devolving authority to civil society and Russia is presented in Box 6.5. the media, described later in this chapter, helps make all of society allies in the fight against When thinking about anticorruption, it is corruption. also important to remember that many policy reforms whose main purpose is something else, Monitoring Corruption and Anticorruption also have the effect of reducing corruption. The administrative reforms described in chapter 4 are Monitoring is necessary to show progress aimed at simplifying life for firms and citizens, and identify areas of weakness. Monitoring of but these reforms also reduce opportunities anticorruption, for example tracking compliance for corruption. Reforms in public financial with transparency provisions, helps identify Box 6.5. Sector specific approaches to corruption--customs in Russia Few public agencies exist in which the classic preconditions for institutional corruption are as clearly present as customs. The amounts of money involved are large, and unlike tax administrations, customs agencies operate in geographically dispersed, remote posts, frequently around the clock, with relatively few staff. The opportunities for corruption abound. The Russian Federation Customs Service is one of the largest government agencies, with over 60, 000 staff operating in 11 time zones. The business community consistently perceived customs to be an obstacle to trade facilitation. Long delivery time, compared to other countries, was thought to be caused by most goods and related documents being examined individually by customs officials, and even minor mistakes could greatly delay shipments. In December 2000, the Russian government launched the Federal Targeted Program of Development of the Customs Service of the Russian Federation for 2001-2003. The program aimed to bring transparency and predictability to customs activities, foster partnership between customs and the trading community, and create an efficient dispute resolution system. The strategy sought to address the motives and opportunity for corruption in the customs service and included: Harmonization and simplification of the regulatory framework for customs operations, reducing uncertainty for traders. Simple and transparent procedures and the introduction of risk-based verifications to curtail the previously extensive physical inspections. Automation of customs processes, reducing discretion that provided opportunities for corruption. Strengthening a professional customs administration focusing on human resources, organizational restructuring, and improved management systems. Reinforcing the capacity of the personnel inspection unit. Ensuring an independent appeals mechanism. Reinforcing external feedback mechanisms. Tracing integrity improvements through performance indicators. Reducing corruption is a long term challenge, but sector-specific approaches both focus interventions on the vulnerabilities of that sector, and make each sector accountable for improvements. Source: Carlos Ferreira, Michael Engelschalk, and William Mayville. 2007. "The Challenge of Combatting Corruption in Customs Administration" in Sanjay Pradhan and J. Edgardo Campos, eds., The Many Faces of Corruption--Tracking Vulnerabilities at the Sector Level. Washington DC: The World Bank. 107 modern institutions where more effort is needed for implementation. the National Assembly include some data on Monitoring of levels of corruption, through the implementation of anticorruption policies surveys of firms and households, can help show specified in the Law on Anticorruption. Although progress where there is progress, and identify such information is valuable, further checking where more attention needs to be directed. compliance, for example with transparency Importantly, it can help bring reassurance to the provisions, and identifying the best indicators public that the government is taking the fight to track compliance would also be useful. The against corruption seriously. Upon ratification new National Anticorruption Strategy to 2020 of UNCAC in the summer of 2009, monitoring calls for a system of indicators by the end of has become even more crucial in order to meet 2010, providing an opportunity to strengthen the reporting obligations. monitoring of anticorruption policies. A good monitoring system requires tracking Quantifying the level and trends of corruption is the implementation of anti-corruption not an easy task. The large, well-known, cross- measures as well as the levels and trends of country measures of corruption perceptions corruption as perceived and experienced by have been instrumental for drawing attention citizens and enterprises. The reports of the to the problem of corruption, but they provide government on anticorruption submitted to little guidance as to the particular challenges Figure 6.5. Citizens' perception of overall Figure 6.6. Citizens' perceptions that level of corruption corruption is serious 36% Courts 22% 28% Police Very 18% Don't serious Issuance of land use right/house 28% know corruption ownership right certi cates 19% Serious 28% 9% corruption 28% 35% Central health service 19% No Percent of service 13% corruption Local health service users with 9% 1% opinions who said Slight Public university/college 17% corruption is corruption Average education 11% serious or very serious 8% corruption 14% 19% Public vocational training 9% Percent of all service users who 8% said corruption is Public secondary education 6% serious or very serious 8% Public primary education 6% 0% 25% 50% 75% 100% Note: The number of observations for the chart on the left is 9,188. The chart on the right shows the percentages saying corruption is serious or very serious as a share of all respondents who had used the service, and the percentage saying corruption is serious or very serious as a share of respondent who had used the service and did not answer "don't know." The numbers of observations are smallest for the courts (56 and 92) and range from 467 to 6,304 for the other services. Source: Own estimates based on the 2008 VHLSS Governance Module 108 oversight facing a country or about changes over time69. known about the extent of the latter two forms Fortunately, several surveys that are much of corruption, there is some information on better suited for the task have been conducted corruption in enterprise-state interactions from in Vietnam. surveys of firms. In the PCI survey of 2008, more than half of the firms said that firms in their Among respondents to the VHLSS Governance industry pay commissions when doing business Module, about one in four indicated that they do with the government, and 60 percent of firms not have opinions on the level of corruption, but said bribes to public officials pose a moderate or among the rest the majority think that the level major obstacle to doing business. of corruption in Vietnam is serious, and only 12 percent said there is little or no corruption (Figure Understanding trends in corruption is even more 6.5). When asked about individual services used complex, yet essential for understanding how by households (court, police, land and house anticorruption efforts are working. There are registration services, health and education), several approaches to understanding trends based citizens were somewhat less negative, in the sense on surveys. One approach is to simply ask people that fewer respondents think that corruption is their perception of the trends. While this approach very serious or serious. (Figure 6.6). Those who may not identify the actual trends, it nevertheless had actually used the services were slightly less provides useful information on whether people likely to say that corruption is serious or very perceive progress in the fight against corruption. serious than those who had not used the service. One survey, undertaken by CECODES and the This is true for all services except for the courts, Embassy on Finland in 2008 in nine provinces70, for which the sample of users was small. found that 67 percent of those surveyed think that the general level of corruption after the This interface between citizens and the state implementation of the Law on Anticorruption provides a partial picture of corruption. A has decreased, while only seven percent think more complete understanding would also that it has increased. The remainder reported the cover interactions between firms and the state, level of corruption to be the same. The national corruption within the state itself, and even VHLSS Governance Module implemented in fully private sector corruption. While little is 2008 similarly asked citizens about the trend in Figure 6.7. Trends in corruption in services, according to households (2006-2008) 50% Percent of respondents saying 22% corruption increased or 25% 16% 15% 13% 17% 16% 17% 9% 11% Got worse decreased 0% Got better -25% -27% -22% -27% -26% -24% -26% -24% -23% -29% -50% Primary SecondaryVocational Public Local Central Land use Police Courts educ. educ. training university health health and house educ services services ownership right certi cates Note: Includes only respondents who had used the service since 2006. The number of observations were smallest for courts (92) and ranged from 745 to 6,302 for the others. All educational levels refer to public education. Chart shows the percentage of respondents saying that the service had improved or deteriorated since 2006. Those saying there was no change are not shown. Responses on "don't know" are not shown. Source: Own estimates based on the 2008 VHLSS Governance Module 109 modern institutions corruption, but the results were somewhat less changed, but a question on whether the firm positive. When asked about particular services, considers corruption to be an obstacle for the the percentage of households who used those operation of the firm was very similar, allowing services who think that corruption has improved some comparison over time. For the panel of slightly outweighs the percentage who believe nearly 300 firms, there was a reduction in the it has deteriorated. On average, however, only assessments how much corruption poses an about one in four respondents thinks corruption obstacle between 2005 and 2009. is declining. (Figure 6.7) Taken as a whole, these assessments are somewhat A second approach to assessing trends over mixed, as one would expect. Citizens are not time using surveys is to compare the results pessimistic, yet only a fraction say corruption using repeated cross-sections. The PCI survey in services delivery is getting better. Two panel included several questions related to corruption. surveys of firms found that corruption is posing The results generally show a decline between less of an obstacle for operations, but two panel 2006 and 2008 in the percentage of firms that surveys also found that the magnitudes of bribes, say corruption is an obstacle to their firm, and in as a percentage of revenues, had not declined. It the percentage of firms that felt that enterprises should be noted, however, that if firms adapt to in their line of business were subject to bribe corruption to the extent that it becomes normal requests from provincial authorities. and less of a problem, even if no less frequent, it becomes even harder to eradicate72. Indeed, A third approach, perhaps the one most robust whatever the trend may be, the levels remain to the vicissitudes of surveys, is to track the worrisome-more than half of the firms in the responses of the exact same firms over time. PCI survey indicated that firms in their industry There are three different sets of surveys that pay commissions when contracting with the use this "panel data" approach. One, by CIEM/ government, and one in four of the firms in study DERG University of Copenhagen71, shows that by CIEM/DERG University of Copenhagen said the number of small and medium enterprises they paid bribes. The need to remain vigilant and paying bribes dropped significantly between step up the fight against corruption is as strong 2005 and 2007, although the magnitudes of as ever. bribes as a percent of total revenues increased slightly over the same period. Organized Civil Society The PCI survey panel firms also indicated mixed When sub-set of citizens, organizations or firms results. While there was no significant change share common interests, bringing those interests in the frequency with which firms reported together and organizing them into civil society paying bribes from 2006 to 2008, there was organizations, can give them greater voice than a decline in the fraction of firms saying that if kept separate. bribes to avoid taxes and regulations were an obstacle. Conversely, there was no decline in Organized civil society in Vietnam has two the magnitudes of bribes as a share of revenues, distinct strata. The Vietnam Fatherland Front and the percentage of firms saying that they pay and a handful of large, well established "mass "commissions" when doing business with the organizations" have official status and perform government increased. quasi-official duties73. In Vietnam's devolving system, the devolution of civil society has been A third set of panel firms tells a somewhat approached cautiously. While a decree expanding more positive story. The World Bank Enterprise the rights and self-reliance of associations Surveys were carried out in 2005 and again in was issued in 2003, the adoption of a Law on the summer of 2009. Much of the questionnaire Associations has been under discussion for more 110 oversight than a decade In this section we will briefly membership organizations and in community- survey the landscape of organized civil society based organizations (Table 6.1). Based only on in a devolving Vietnam. the numbers, it would seem that civil society is alive and well in Vietnam. There are several modalities of Vietnamese Civil Society Organizations (CSOs), and a At the beginning of Doi Moi, the picture looked high percentage of people engaged in these quite different. Although a law stipulating the CSOs. Mass-organizations, not including the right to associate was adopted in 1957, only 25 Vietnam Fatherland Front, have about 31 million associations or societies were established during members, with the biggest associations boasting 1957-1967 and 30 during the twenty year period about 23 million members. In addition, many from 1967 to 198674. There have been three main people participate in other associations, in non- positive changes in the devolution of power to Table 6.1. Types of local Civil Society Organizations that are legally recognized Category Types Size 1. Fatherland Front 2. Women's Union About 31 million people are members Mass- 3. Farmers' Association of mass-organizations, not including the organizations 4. Ho Chi Minh Youth Union Fatherland Front, which is an umbrella for 29 organizations. 5. War Veterans Association 6. General Labour Confederation 1. Associations About 320 associations at the national level and 2150 at the provincial level. The biggest associations include: Vietnam Cooperative Alliance (10.5 million members), Old Age Associations Association (6.4 million members), Red Cross (4.85 million members), Vietnam Union of Science and Technology Associations (1.15 million members). 1. Social and charity funds 2. Science and technology organizations Non- 3. Social protection centers About 200 social and charity funds and 800 membership science and technology organizations organizations 4. Non-membership development organizations established by associations 1. People's inspection boards 2. Community investment supervision Community- boards based Not available 3. Collaborative groups organizations 4. Small-sized financial institutions Source: Legal documents; "Filling the Gap: The emerging civil society in Vietnam" (Irene Norlund, 2007); "Developing a sound legal environment for the development of CSOs" (VUFO-NGO Resource Center, 2006). 111 modern institutions CSOs since that time, especially since the late The introduction of each new type of CSO has 1990s. First, mass-organizations, which were gone hand in hand with the introduction of traditionally seen as intermediaries between the measures to hold the new CSOs accountable. Party and the people, have been allowed since These include important mechanisms for 1989 to have more independence in terms of downward accountability, such as the election management and financing. Their operation has of the management board by the members, the become semi-independent from the Party and preparation and agreement on the charter by the the financial support that they receive from the members, the supervision of the CSO's funds state has been reduced. Second, the legal space by independent people's control boards, etc. for several new forms of CSOs has been opened, However, most emphasize upward accountability and the legal framework for some of the existing through the hierarchy. Many decisions regarding CSOs has been improved. The principle of self- associations, non-membership organizations and finance has been applied to all the new forms of some community-based organizations remain CSOs. Finally, CSOs have increasingly gained ultimately under the control of the government. rights and responsibilities in public affairs: For People's Inspection Boards and Community participation in grassroots democracy, provision Investment Supervision Boards, the decision of legal consultancy and legal aid, delivery of on the establishment lies in the hands of the public services, participation in anticorruption, Fatherland Front Committee at the commune establishing media agencies, participation in level. These decisions include the power to the formulation and evaluation of policies and approve the establishment, merger, division laws, providing feedback on administrative and dissolution of CSOs, as well as approve procedures, and the list goes on. their charter or cooperation contract. In addition to these approvals, various additional upward Not all CSOs have been treated equally in the accountability measures have been introduced. devolution process. Mass-organizations and a number of umbrella associations such as the Mass-organizations have seen a change in their Vietnam Union of Science and Technology upward accountability in the years since Doi Associations (VUSTA), the Vietnam Union of Moi. The 1989 regulations on mass-organizations Art and Literature Associations and the Vietnam required permission by central and provincial Union of Friendship Associations have been government authorities for the establishment assigned clearer oversight roles. Members of mass-organizations, and made sectoral state of VUSTA have been delegated the official agencies responsible for the management of function of "social feedback" or "independent mass-organizations. As quasi-state bodies, mass review" of governments projects and policies organizations have also become subject to some as stipulated in Prime Minister Decision 22. forms of downward accountability. Transparency Moreover, mass-organizations have been granted of the use of state funds has improved, as has some additional rights and responsibilities supervision by the people of mass-organizations which have not been given to the other CSOs: at the grassroots level. monitoring of the National Assembly and People's Council's elections and organizing the Mass Organizations nomination of candidates, participating in the selection of judges, participating in grassroots The extent to which CSOs play a role in oversight conciliation, assisting local governments in largely depends on the modality of CSO. Mass- the implementation of grassroots democracy, organizations have three main advantages: they issuing legal documents jointly with government can mobilize a large part of the population, they authorities, etc. are present nationwide, even at the grassroots 112 oversight level, and they have regular sources of finance other mass organizations, despite close ties to the from the state budget for their operations. Their state, still can play an important and constructive ability to serve as a check on the executive can oversight role. Indeed, being given the podium be limited due to their close relationship to the in the opening session of the legislature is an Party and their partial dependence on the state extraordinary opportunity not present in many budget. In practice, however, at the grassroots countries. levels mass-organizations have more autonomy than those at the central level76. In addition, Associations mass-organizations are increasingly receiving funding from various donors and international The number of associations in Vietnam has nongovernmental organizations (INGOs) to grown remarkably in the past two decades, implement development programs, which makes with the number of national associations four them financially less dependent on the state. times that of 1990. The increase in the number of provincial associations has been even more A key role of CSOs as collective action bodies spectacular. Before the decree on associations is to concentrate the diffuse views of members, was issued in 2003, on average 12 new national amplifying their voices. A recent study found associations and 96 new provincial associations that mass-organizations, more than other types were established every year. After the issuance of CSOs, see conveying the views and interests of the decree on associations, on average 27 new of their members to the authorities to be a key national associations and 758 new provincial objective77. One clear example of the role of associations have been established annually mass-organizations in channeling people's (Table 6.2). voices is the report that the Fatherland Front submits and presents to the plenary sessions of All associations have the right to provide the National Assembly. The report synthesizes consultancy and criticism on matters within the opinions and petitions received from voters the scope of the association. Business and and the people, and it is addressed to the National professional associations have also the right to Assembly, the Party and the government. The detect corruption and to report to competent report presented in the spring session of 2009, agencies, organizations and individuals. The and cited in the opening chapter of this VDR, reality shows that many associations are involved had positive assessments of some policies, but in monitoring the government, and there are also several critical comments, including about multiple examples showing that associations can corruption. The Vietnam Fatherland Front and be very effective in playing that role (Box 6.6). Table 6.2. Number of legally registered associations (approximate figures) National Associations Provincial Associations 1990 100 300 2002 240 1450 2004 301 1800 2006 350 2500 2008 400 6000 Source: Ministry of Home Affairs, Nongovernmental Organization Department (2008); "Join the club: civil organizations in Vietnam" (Dr. Nguyen Minh Phuong, Scientific Institute on State Organization, Ministry of Home Affairs, November 2007) 113 modern institutions Box 6.6. The role of associations in monitoring the government Many associations with both a national office and provincial branches are involved in monitoring government and industry projects, especially those using public resources. A prominent example is the Vietnam Consumer Protection Association (VCPA). Following its investigation into soy sauce, which uncovered gross violations of safety standards and practices, it pressured Ministry of Health officials to be more diligent about requiring producers to make products properly. Following VCPA's monitoring of this industry, the deputy director of the Health Department of Ho Chi Minh City was disciplined for failing to uncover the low, unsafe quality of soy sauce manufacturing. Another association that conducts monitoring is the Ho Chi Minh City Union of Science and Technology Associations (USTA). It found faults with many of the nearly 80 infrastructure and other construction projects it evaluated in Ho Chi Minh City during 2003-2006. Its investigations into a plan to move the Saigon Airport reportedly saved the city 26 billion VND. The USTA branch in Kon Tum province has evaluated and criticized numerous public works projects in the area, getting local authorities to take on board many of their suggestions. Other examples are the Vietnam Federation of Civil Engineering Associations (VFCE) and the History Association. The VFCE has found corruption and waste in several government construction projects. It has also worked with various ministries to set engineering standards to which the construction industry, including the government agencies overseeing them, could be held accountable. The History Association has on occasion pointed out inaccuracies in official versions of certain historical incidents. Source: "Forms of Engagement between State Agencies & Civil Society Organizations in Vietnam" (VUFO- NGO Resource Center, DFID and Embassy of Finland, 2008) Associations report several difficulties that and approval--mobilization committee, charter, constrain their ability to play their oversight application documents, and charter--and submit role effectively. They report that their advice at least six documents, which overall take at and criticism on public works and other projects least six months to be approved. Associations that they oversee are not always considered complain that the legal requirements are more by the authorities. Those who are supposed like permissions than registrations. The criteria to be responsive may be the very ones who for the acceptance or rejection of associations are benefiting from the status quo, and hence are not transparent, leaving significant room have a disincentive to do anything differently. of discretion to the authorities in charge of Another obstacle for many associations is that the approval. In addition, some of the existing they lack information needed to work well. criteria for the acceptance of associations are Often government agencies do not provide clear fairly stringent, such as the requirement of information about plans and projects. Even if an unnecessarily high minimum number of these shortcomings were addressed, however, members. associations would still face the challenge of limited resources--personnel, money, Another aspect of the legal framework that equipment--hampering the extent to which they causes difficulties for associations is the dual can monitor projects and government agencies. state management mechanism to which they are subject. Associations are "managed" There are several aspects of the current legal by either the Ministry of Home Affairs (for framework that could be adjusted to ease entry national associations) or the Provincial People's and operation of associations. The procedures for Committee (for provincial associations) and establishing an association are cumbersome and the corresponding line ministry. In some cases, time-consuming. To establish an association, one there may even be more than one line ministry needs to go through three steps of recognition involved. The involvement of the line ministries 114 oversight may be beneficial, especially when the association associations demonstrate over time that they is delivering services in a sector regulated can be held accountable primarily through their by quality standards, fees schemes and other members and society, such hierarchical controls regulations. Reducing the bureaucratic burden could be eased. for associations while ensuring and encouraging the positive functions of line ministries, is the Science and Technology Organizations challenge. Science and technology organizations which Moreover, associations report difficulties due primarily conduct research, analysis and policy to the degree of involvement of some state advocacy can play key roles in oversight, and agencies and officials in their activities. Current through their critical assessments they have made regulations require associations to submit to numerous contributions to the advancement various state agencies reports on their finances of development policy in Vietnam, such as explaining the sources and use of funds, and on conducting participatory poverty assessments or the situation of their organization and operation. advising on policy to address macroeconomic These measures may be necessary for the instability and inflation. Their ability contribute accountability of associations, especially in to Vietnam's accountability system, however, the early stages of their development--private has been put in question. The Prime Minister's firms are also required to keep good books and Decision 97, which took effect in September, pay taxes. The problem arises when the level held that science and technology organizations of control reaches a point that interferes in the established by individuals under the Law on ability of the association to effectively deliver Science and Technology would be restricted in their public and non-public activities. As to selected fields, excluding important areas of Box 6.7. People's Inspection Boards and Community Investment Supervision Boards In 2005, two new CSOs with oversight functions found legal space: people's inspection boards and community investment supervision boards. The people's inspection boards were made responsible to supervise the implementation of all regulations and policies by the commune People's Committees, including anticorruption and the settlement of complaints and denunciations. The mandate given to the investment supervision boards focused specifically on the supervision of investment projects and programs "that directly affect the community in communes", regardless of the source of capital. This includes not only investment projects by the commune government, but also investment projects executed in the communal area but decided and managed by central, provincial or district-level governments. A wide range of investment aspects can be supervised by the community investment supervision boards: efficiency and waste in use of capital, compliance with technical processes and regulations, procurement, land-use planning, resettlement schemes, social and environment impacts, etc. In 2007, the oversight mandate of these two CSOs was considerably expanded. Decree 47, on the roles and responsibilities of society in anticorruption, gave the people's inspection boards the responsibility to oversee the implementation of the law on anticorruption not only at the commune level, but also in state agencies, service delivery units and state owned enterprises, including through the detection of corruption cases. In addition, the Ordinance on Grassroots Democracy gave power to both people's inspection boards and community investment supervision boards to participate in the votes of confidence on top commune-level authorities and to supervise all government activities at the commune level that are subject to grassroots democracy: commune budgets, commune socioeconomic development plans, land use plans and drafts, compensation and resettlement draft plans, investment projects, etc. Some of these activities are decided and managed by the commune governments, but others are decided and managed by higher-level governments. Source: Decree 99 (2005), Decision 80 (2005), Decree 47(2007) and Ordinance on Grassroots Democracy (2007) 115 modern institutions research. In addition, this subset of science and cases reporting directly to authorities above the technology organizations faced a new constraint. commune-level, as well to oversight institutions Criticisms of the Party and the state are now at those higher levels, such as the People's required to be submitted to the government Councils and the government inspectorate in confidence, and not made public without departments. An effective reporting system permission. While some science and technology would contribute to improving the motivation of associations occasionally present confidential people to engage in monitoring. reports to the government already, they feel that the constraint on discussions in public fora will Strengthening these new oversight boards undermine their ability to distill clear messages also calls for building their capacity. Although collectively. charged with complex oversight activities at the commune level, a plan for building up the skills People's Inspection Boards and Community and knowledge of members of these boards to Investment Supervision Boards implement their duties is still lacking, and the budget allocated for the functioning of these Community-based organizations (CBOs) are boards has also been small. A review of the actual another category of civil society organization operations and effectiveness of both people's involved in oversight. People's inspection inspection boards and community supervision boards and community investment supervision boards would identify how these emerging boards are both CBOs with oversight mandates bodies can play a more effective role. (Box 6.7). These two CBOs are relatively new and their potential has not yet been fully Finally, the people's inspection boards and developed. Research on CBOs in the district community investment supervision boards are of Bac Ai in Ninh Thuan province78 found that not truly independent entities. Community there are many challenges facing the formation supervision boards and people's inspection and operation of CBOs engaged in monitoring boards at the commune level are mostly government programs, and that some engaged members of Fatherland Front's member in policy monitoring have disappeared after organizations, although other interested local a short time of existence. One of the specific citizens may also be members. Similarly, constraints identified in the research is the involvement in anticorruption depends on the attitude and motivation of people to engage in assignment by the heads of government agencies monitoring. Local people do not perceive it as or by the chairpersons of People's Committees. their right and responsibility, and they often face Reorienting the organization and membership local authorities who are also not keen to be of these boards so that members will not find monitored. The research concludes that building themselves in positions of conflicts of interest, confidence and motivation among local people or establishing mechanisms so that such conflicts to engage in monitoring is essential. can be resolved, would help to strengthen both the effectiveness and credibility of these bodies People's inspection boards and community in the fight against corruption and in their other investment supervision boards operate at oversight tasks. commune level but they are also entitled to monitor activities decided and managed by National Assembly and People's Councils higher level governments and even by state owned enterprises and service delivery units Vietnam's elected bodies, the National Assembly (Box 6.7). Developing mechanisms for quick and and People's Councils, have been the recipients effective reporting to the authorities so they can of devolved powers in the decades since the take action to resolve the problem is therefore beginning of Doi Moi, including certain powers very important. This might imply in many of oversight. This expanded mandate, which 116 oversight includes budget oversight and audit oversight Recently, a large-scale pilot on the removal of at central and local levels, and anticorruption, People's Councils at district and ward levels especially at the provincial level, is clearly has been approved. If the pilot is successful, important. the initiative will be extended nationwide. The initiative aims at making local governance The National Assembly was established in 1946 more efficient and effective, as the current and already before Doi Moi was given the power hierarchical system creates significant overlaps of supreme oversight. With Doi Moi, the National and inefficiencies. However, the removal Assembly gained even more independence: The of People's Councils could compromise the 1992 Constitution established the Standing system of oversight over governments at district Committee of the National Assembly as a fully and ward levels, unless new mechanisms are independent body from the executive, and the developed. To compensate for this loss, the 2001 Law on the Organization of the National initiative plans to strengthen the accountability Assembly mandated a minimum percentage of district and ward level governments to the of full-time deputies. In addition, the National higher level governments, by empowering the Assembly has gained additional oversight latter to directly appoint the chairmen of the powers, the right to cast votes of confidence, former. Encouragingly, the initiative also plans the right to monitor anticorruption, and the right to strengthen the role of the provincial People's to approve the allocation of the budget among Councils in overseeing governments at district sectors, programs and provinces. Doi Moi has also and ward levels. reinforced the oversight role of the specialized committees of the National Assembly. Constraints on Oversight People's Councils at the three local levels were The National Assembly is noticeably more established in the 1950s. Like the National assertive than in previous years. Deputies call Assembly, they have gained oversight powers. government ministers to testify before the All People's Councils are empowered to appraise National Assembly, frequently press them to and adopt legal documents that are specific to the explain the performance of their ministries, locality, to question the highest local authorities, and periodically reject government proposals. to cast votes of confidence, and to monitor However, there are still several factors that anticorruption at the local level79. Importantly, constrain the oversight role of the National People's Councils at the province level are Assembly and People's Councils. entitled to approve the budget allocation among the three local levels. One important constraint is the large number of part-time deputies, for whom it is difficult The oversight role by provincial People's to allocate sufficient time to oversight tasks. Councils has become more important after Doi Although the situation is improving, at present Moi as provincial governments have gained new only 29 percent of National Assembly deputies powers over public finance, public investment are working full-time. In the specialized National and land use management, among others. The Assembly committees the share of full-time new powers on the part of the local executive, deputies tends to be a bit higher, especially for call for stronger oversight at the province level. some cross-cutting committees such as the law In addition, provincial People's Councils have a committee (Table 6.3). At the local level these particularly important role to play in monitoring challenges are magnified. Only four percent of the anticorruption work of the government at deputies of People's Councils in the current term that level. Anticorruption steering committees are full-time deputies80. A recent case study on suffer from potential problems of conflicts of the province of Ninh Thuan81 shows that only interests due to the fact that they are headed by 16 percent of the deputies in the provincial the chairman of the provincial government. People's Council are working full time, and 117 modern institutions that the percentages are even lower in the two deputies. Most of the National Assembly deputies selected district-level People's Councils (seven working in government do so at the provincial percent) and in the four selected commune- level (73 percent)83. In Ninh Thuan province, level People's Councils (five to seven percent). two out of three deputies are also civil servants. Having part-time deputies has been argued to In the selected district-level and commune- have advantages in terms of representing the level People's Councils the percentages are 57 people's wills for all localities, social classes, and 42 percent, respectively. These conflicts of religions and ethnicities82. At the same time, the interest become quite visible during the question importance and volume of work call for full time and answer sessions with government. Deputies attention. working in government tend to favor the executive branch and rarely raise their voice or Another factor constraining the oversight role make questions84 to avoid negative consequences, of the National Assembly and People's Councils such as retaliation or even losing their jobs in the is the potential for conflicts of interest faced by government. There are signs that conflicts of those deputies who work in the government. interest may also occur during the appraisal of Currently the National Assembly has a total draft laws by the National Assembly committees. of 99 deputies working simultaneously for the A 2008 survey conducted by the Office of the government, which represent 20 percent of all National Assembly (ONA) with the support of Table 6.3. Full-time Deputies in the National Assembly 2002-2007 2007-2012 121 145 National Assembly (overall) (24%) (29%) 10 12 Nationality Council (26%) (31%) 18 14 Committee of Social Affairs (49%) (35%) 8 10 Committee of Foreign Affairs (24%) (33%) 14 16 Committee of Science, Technology and Environment (39%) (43%) 14 Committee of Economy 16 (39%) (40%) 10 Committee of Finance and Budget (29%) 20 Committee of Law 21 (57%) (62%) 14 Committee of Judiciary Affairs (41%) 10 9 Committee of National Defence and Security (26%) (26%) 14 16 Committee of Culture, Education, Youth & Children (36%) (43% ) Source: Office of the National Assembly (2009) 118 oversight the European Commission85 (EC) revealed that allocations are sent to the People's Councils only 25 percent of the interviewed National and the National Assembly committees by 1 Assembly deputies think that the appraisal reports October. The Financial and Budgetary Affairs of the National Assembly committees are highly Committee is required to complete its review critical. The rest of the interviewed deputies think by 5 October so that the estimates and plans that the reports are either not very different from are finalized and sent to the National Assembly the written submission from the government or members ten days before the opening session that they contain no different points of view in of the National Assembly discussions of the relation to the submitted drafts. budget. One working week for the financial and budget affairs committee to lead the review in The limited evidence-based, in-depth and cooperation with the Ethnicity Council and other independent analysis has also been pointed out National Assembly committees does not seem as a core deficiency in the oversight role of the commensurate with the importance of the job. National Assembly86. The findings of the ONA- Experience from other countries shows that the EC survey illustrate some of the consequences time for the National Assembly and Committees of this shortage. While speaking in debates, to review and discuss the budget is on average most respondents reported that deputies tend two or three months, or four months in some to focus on wording as opposed to focusing cases. on policies and they tend to lack persuasive arguments. The National Assembly has recently National Assembly deputies have also limited made significant efforts to improve the situation. time to study draft bills before the plenary. The A Training Center for Elected Representatives ONA-EC survey shows that the majority of the targeting deputies both in the National Assembly deputies (84 percent) think that time to study the and provincial People's Councils has been drafts is insufficient. The majority of deputies (93 established, training needs assessments have percent) also said that they receive the draft legal been conducted and training plans and curricula documents less than 20 days before the plenary have been developed. In addition, a new Institute sittings, and about one third of them said that of Legislative Studies has been established on a they receive the documents only five to ten days permanent basis under the National Assembly in advance. Moreover, the current fixed amount Standing Committee with the function of of time for discussion for each draft law limits generating and disseminating knowledge to the the contributions of the deputies. For example, deputies. These efforts to maintain a permanent during the reading of the draft Law on Laws store of knowledge are commendable, especially in the 2007 autumn session, only two thirds of considering the high turnover of deputies from the 44 members registered to speak had the one legislature to the next. Approximately 70 chance to voice their opinions. It is therefore not percent of deputies are new in each legislature. surprising that one in three deputies think that Without in-house research and knowledge, the laws are "often" approved without meticulous human capital on which the National Assembly discussion. invests would be largely lost at the end of the legislature. The first vote of no confidence was held in 2004 when the National Assembly dismissed the Limitations in the time to conduct oversight Minister of Agriculture and Rural Development activities are another major constraint. The from the cabinet following allegations of time reserved for the scrutiny and discussion corruption. However, due to the lack of specific of state budget, national programs and national regulations on forms and procedures, votes of projects in the financial timetable is very confidence on elected or ratified positions by the short. As stipulated by the State Budget Law, National Assembly have hardly been carried out. the state budget estimates and central budget The current regulations require the request by at 119 modern institutions least 20 percent of the total number of deputies, attend the government meetings. The forthcoming but do not specify how the opinions of the amendment of the Law on the Organization of deputies must be collected and how the agreement People's Councils and People's Committees among the deputies must be reached. Based on could improve this situation by clarifying the the example of Ninh Thuan, the situation in the responsibilities of the Standing Committee People's Councils does not seem to be any better of People's Councils and their specialized than in the National Assembly. When asked committees in relation to the implementation about the effectiveness of votes of confidence, of the post-monitoring recommendations, by the many deputies in provincial-level People's strengthening the role of CSOs in the post- Council of Ninh Thuan (36 percent) replied monitoring period, and by requiring government that it had not yet been implemented. The same reports on the implementation and results of the proportion replied as much for the district-level recommendations. People's Council of Pham Rang-Thap Cham. In addition, oversight by People's Councils is not The lack of specific regulations is not only reaching its full potential because of the limited affecting the exercise of votes of confidence but engagement of individual deputies in monitoring also the follow-up on the recommendations of the activities. The study of Ninh Thuan found that, People's Councils. The existing legal framework at all levels, monitoring by individual deputies for People's Councils stipulates in detail the is limited or non-existent. Gradually increasing contents and processes of monitoring activities, the number of full-time deputies and developing but it does not detail the work to be done during an annual plan of priority issues to be monitored the post-monitoring stage. The study of Ninh could help improve the situation. Equally Thuan revealed that the implementation of the important is to encourage partnerships with post-monitoring recommendations is limited due other oversight organizations. Strengthening the coordination of the People's Councils with the to the lack of implementation mechanisms as well People's Inspection Boards and the Community as concrete sanction mechanisms. Enforcement Investment Supervision Boards, for example, depends on individuals following-up when they could be promising. Table 6.4. National Assembly Deputies since the 1992 Constitution 1992-1997 1997-2002 2002-2007 2007-2012 Deputies 395 450 498 493 2 3 2 1 Self-nominated (1%) (1%) (1%) (1%) 33 68 51 43 Non-party members (8%) (15%) (10%) (9%) 327 363 345 First-time legislators n\a (73%) (73%) (70%) 74 118 136 127 Women (19%) (26%) (27%) (26%) 66 78 86 87 Ethnic minorities (17%) (17%) (17%) (18%) 58 17 6 6 Farmers (15%) (4%) (1%) (1%) 19 22 14 17 Businessmen in SOEs (5%) (5%) (3%) (3%) Source: Office of the National Assembly (2009) 120 oversight Accountability of public comments in law-making, and has opened up to the public its question and answer Policies to strengthen the accountability of the sessions, which are televised and attract a large National Assembly and People's Councils have audience. been significantly improved with Doi Moi. A stronger emphasis has been put on contact with The election process in Vietnam has two main voters and on assisting voters with their petitions, steps: the nomination of candidates and the complaints and denunciations. Monitoring of election of deputies among the candidates. elections has been enhanced and the election The nomination of candidates falls heavily procedures and rules have become more in the hands of the Fatherland Front, which is inclusive. Candidates and full-time deputies responsible for arranging consultative voters' have been required to declare their income conferences to select and nominate the candidates, and assets. Deputies in People's Councils have and in the hands of the election board, which is become subject to votes of confidence by voters, responsible for approving the candidates. It is and in the commune-level People's Councils also influenced by the Standing Committees of votes of confidence have been introduced for the National Assembly and People's Councils, the chairmanship positions. Importantly, the which propose the number and composition National Assembly has improved the collection of candidates. Almost all eligible citizens in Box 6.8. The Vietnamese Women's Caucus On 15 May 2008, the National Assembly Standing Committee issued a resolution on the "establishment of a Vietnamese Female Members of Parliament Group" (the Group). The resolution followed a proposal of the National Assembly Committee for Social Affairs that such a group be established. The Social Affairs Committee presides over, and is responsible for, the Group's operations. The Committee's Chairperson, Ms. Truong Thi Mai, is the Group's Chairperson and in this role, is accountable to the National Assembly Standing Committee for the Group's activities. All 127 women members of the National Assembly can participate in the caucus on a voluntary basis. The objectives of the Group are to: Provide information and to improve knowledge of female Deputies in Parliamentary work in line with each session of the 12th legislature, especially on gender issues and the representative role of female Deputies. Improve skills of female Deputies in parliamentary work and in gender analysis and awareness; and create a forum for female Deputies to share experiences on gender issues and in mainstreaming gender in legislation. Expand relationships to disseminate and mobilize resources through women's participation in the Group's activities. Promote the Group's participation in multilateral and bilateral fora on cutting edge issues such as anti trafficking, marriage between Vietnamese women and foreigners, anti domestic violence; and to exchange experiences among female Deputies on mainstreaming gender issues in legislation. The establishment of women's caucuses has been an effective strategy used to affect change in a number of parliaments around the world. In some cases, caucuses bring women from different political parties together to work on issues of common interest. Caucuses can also act as forums to work with other partners in the community, such as civil society and the private sector. A recent Inter-Parliamentary Union study found that in those countries with women's caucuses, 61 per cent of respondents felt that they were successful in influencing parliamentary or legislative activities and providing oversight Source: Ballington 2008. 121 modern institutions Vietnam participate in the second step of the voters remains limited. One key constraint is election process. The voter turnout is regularly the limited time that deputies have, given their 99 percent or higher. In addition, voters are heavy workloads and the fact that they only work highly interested in the elections. Based on an part-time. In addition, the voters who typically ONA-EC public opinion poll conducted before provide suggestions on draft laws in conferences the last elections in 200787, 82 percent of the and contacts with National Assembly deputies respondents reported being very interested in are often themselves officials from the grassroots the elections and only 1.4 percent said that they leve.89. Based on the case study of Ninh Thuan, were not interested. the social composition of voters participating in the meetings with People's Councils deputies The percentage of female deputies increased lacks diversity. with the 1997 Law on Elections, but has not changed much since. (Table 6.4). In the current The National Assembly in many ways is like legislature (2007-2012) they represent 26 a CSO, albeit one with extraordinary powers. percent of the deputies in the National Assembly, With the limited channels through which citizens slightly fewer in the People's Councils. While can voice complaints elsewhere, as discussed in not atypical-the 2008 average for developing earlier chapters, many turn directly to the National countries is about 17 percent and for developed Assembly with their frustrations. The volume is countries 23 percent-a strong voice for women in such that the National Assembly has difficulty the legislature is important for ensuring a body of dealing effectively with the massive number of laws that reflect their views and experience, and complaints and denunciations that it receives quite simply for increasing the pool of talent for from the people. The National Assembly has law making86. In addition to sheer numbers, the only the mandate to urge government officials to manner in which they are organized also makes a settle the complaints and denunciations within a difference. Collective action organizations such strict time limit. The National Assembly cannot as the Vietnamese Women's Caucus can help to settle them itself, even in the case when they amplify their voices. (Box 6.8). affect a large number of citizens. While the National Assembly only has a department of Ethnic minorities are represented in the National petitions belonging to the National Assembly Assembly roughly in proportion to their Standing Committee, it has neither a specialized share of the population. In contrast, farmers committee on petitions nor an ombudsman. and businessmen from the private sector are noticeably under-represented. Farmers constitute The National Assembly has improved the majority of the population of Vietnam engagement with constituents in the appraisal of (around 70 percent) but they only represent 1.2 draft laws and ordinances. It collaborates with percent of the deputies in the current legislature. the Public Opinion Research Institute to collect The business sector is becoming more important public opinions on draft bills, and it has opened in the economy, but this has not been translated more to the policy advice of Vietnamese CSOs. into a growing percentage of businessmen in In early 2007 it created a website to post drafts for the National Assembly. At the moment they collection of public comments. In 2008, all draft only represent 3.4 percent of the deputies in the laws and 88 percent of the draft ordinances were National Assembly. posted, representing a significant improvement in its first year. The National Assembly has set up delegations at the provincial level to help maintain contact with Information voters. Contact with voters is further facilitated by the fact that a large percentage of National At the center of most of the discussions in this Assembly deputies are based in the provinces VDR lies information. The new systems of (69 percent). However, contact of deputies with accountability that are called for by a devolved 122 oversight Box 6.9. Regulations on information A simple inventory of provisions on the information to be made public by all sectors of government found that there are many laws and other legal documents containing such provisions: 1. Ordinance on State Secrets (2000) 2. Decree 33, on the implementation of the Ordinance on State Secrets (2002) 3. Law on Anticorruption (2005) 4. Decree 120, implementing some articles of the Law on Anticorruption (2006) 5. Decree 47, detailing and guiding the implementation of the Law on Anti-Corruption regarding the role and responsibility of society in corruption prevention and control (2007) 6. Ordinance on Grassroots Democracy (2007) 7. Law on Publishing (2004) 8. Law on Statistics (2003) 9. Law on E-transactions (2005) 10. Law on Information Technology (2006) 11. Decree 64, on IT application in state agencies (2007) 12. Law on State Budget (2002) 13. Decree 60, on the implementation of the Law on State Budget (2003) 14. Prime Minister Decision 192, on public finance transparency (2004) 15. Law on State Audit (2005) 16. Decree 91, on the publication of auditing results and outcomes of the realization of auditing conclusions and proposals of State Audit (2008) 17. Law on Bidding (2005) 18. Decree 58, guiding the implementation of the bidding law and selection of construction constructors (2008) 19. Law on Management and Use of State Property (2008) 20. Decision 115, promulgating the regulation on publicity of the management and use of state property at state agencies, public non-business units and organizations assigned to manage and use state property (2008) 21. Law on the Promulgation of Legal Normative Documents (2008) 22. Law on the Promulgation of Legal Normative Documents of People's Committees and People's Councils (2004) 23. Prime Minister Directive 32, on the settlement of people's and enterprises' affairs (2006) 24. Decision 7 of Office of Government, on organizing individuals' and enterprises' feedback on administrative procedures via website (2006) 25. Decree 20, on handling individuals' and organizations' feedback on policies and administrative regulations (2008) 26. Prime Minister Decision 7, on the implementation plan of simplification of administrative procedures (2008) 27. Press Law (1989, amended in 1999) 28. Decree 51, on the implementation of the Press Law (2002) 29. Prime Minister Decision 77, on making statements and supply of information to the press (2007) 30. Prime Minister Decision 1390, on cooperation between among various ministries and central agencies in providing information to the press (2008) Most of the provisions indicate which pieces of information are to be made public, but many do not assign personal and institutional responsibilities for the publication of the information, how compliance is to be guaranteed, or procedures for appealing refusals. Source: Maria Delfina Alcaide, 2009. "Access to information in Vietnam--current legal framework". Processed. 123 modern institutions system rely crucially on accurate and timely Governance Module asked respondents about information. For citizens to be able to help in their interest in a range of local documents, such the battle to prevent and detect corruption they as land use plans, schemes for compensation need information. For citizens to know their and support for resettlement, fees and charges rights and obligations, and to be able to claim collected by the commune, etc. Between 25 them, they need information. For enterprises to and 50 percent of respondents said they were be able to operate on a level playing field, they interested in such documents. But when asked need information. For the media to be able to about the amount of information they have on accurately communicate important information these same documents, many indicated that they to the public they need information. had little, and the majority of those who say they have information also indicate that it does not At the moment, however, Vietnamese citizens meet their needs. and enterprises, the media and civil society, and even some public officials are unable to meet Some information has national significance. As the potential to which they aspire, because they discussed in chapter 5, understanding how the simply do not have the information they need in law will be applied to an individual requires a systematic manner. Access to legal documents information on how it is applied to others. is improving, if not yet complete, and access to Especially when the legal language is open administrative procedures is also increasing with to interpretation or when laws conflict with the government's program on administrative each other, some simple information on court procedure reform. Yet, even for this most judgments would be very useful. At present, practical function of information-how to do however, information on court judgments is not things--some citizens find information hard to widely available in a systematic format. Similarly, obtain. When those who had interaction with as discussed in this chapter, the media, which is various government services were asked whether increasingly called upon to play an active role it was simple to find guidance information, in informing the public about a range of issues, many users of some services reported that it including promoting anticorruption activities, was not simple. As discussed in chapter 4, for find themselves wanting for information from notaries and registration of some services, most official sources. Researchers likewise report respondents indicated that it was easy to find difficulty accessing the information they need guidance, while the more negative opinions to conduct policy analysis. Without a systematic were reserved for administrative complaints, and policy on access to information, journalists, applications related to house ownership and land researchers, and even government officials may ownership. find it difficult to do their jobs well. As discussed throughout this VDR, active This situation clearly calls for change, but the participation by citizens in the affairs of the tension between a legal and organizational public can help to ensure that decisions take into culture that emphasizes secrecy and the genuine account the valuable contributions that citizens need to safe-guard certain forms or information, can make, particularly on issues that impact and the need to make public information the rule them directly, and also can help ensure that they rather than the exception, poses a formidable feel confidence in the course of action ultimately challenge. In this section, we first discuss the chosen. Investing in participatory processes can challenge of giving access to information a also strengthen the effectiveness of policies, firm grounding in the law, and then take up the since having citizens on board can help to ease question of the implementation challenges that implementation. In order to participate effectively, would need to be addressed to improve access however, citizens need information. The VHLSS to information. 124 oversight Legal Basis for Access to Information regulations on access to information tend to focus on publication of approved documents. A draft of what might be Vietnam's first Law Only a few (e.g. the Law on the Promulgation on Access to Information was prepared in 2009 of Legal Normative Documents, the Ordinance and may be discussed for the first time in the on Grassroots Democracy) have taken a step spring 2010 session of the National Assembly, further by requiring the publication of both the after having been postponed from the fall 2009 approved document and the draft document, session. But what exactly would such a law thereby encouraging public participation. accomplish, and how? Despite all these legal provisions mandating Access to information is recognized as a right public disclosure, the information may or may not in the Constitution and there are currently many be easily accessible or even provided on request. legal documents regulating access to government Most legal documents regulating access to information. The Ordinance on State Secrets information do not clearly assign institutional and and its implementing Decree are the main legal individual responsibilities for the publication of documents regulating the list of information that information. The implementing guidelines of the cannot be disclosed. The Law on Anticorruption Law on Anticorruption assign heads of agencies, regulates quite comprehensively the types of organizations and units the responsibility "for the information that must be disclosed in many organization and direct application of publicity", different sectors. It also introduces for the first but it only applies to the information mandated to time the right of individuals and organizations to be disclosed under that Law. Importantly, there request information from government agencies, are no regulations on specialized departments organizations and units, as well as the obligation or officers on information supply, except for the of the government to reply to those requests within provisions on spokespersons for information to 10 days. The Ordinance on Grassroots Democracy the media. The timing for publication is only regulates very comprehensively the information specified in a few of the legal documents listed that must be publicized at the commune level, as in Box 6.9. The right to request information is well as the forms of publication. There are many specified in the Law on Anticorruption, but not more legal documents that require the disclosure in the vast majority of the other legal documents of information across all sectors of government regulating access to information. (Box 6.9), as well as some sector-specific laws. Although institutional responsibilities are Overall, the current legal framework usually specified for the oversight of the overall comprehensively covers the information that implementation of a given legal document, very must be disclosed. However, there are two key few specify the institutional responsibilities for reasons that an access to information law is still the oversight of the specific task of supplying needed: one is to help do better what is already in information. The implementing guidelines of the the law, and the other is to recognize the benefits Law on Anticorruption stipulate that the heads of of making public information the rule, rather agencies, organizations and units are responsible than the exception. We will discuss each in turn. for overseeing the implementation of supply of information, but only implicitly. Under the Although many legal provisions call for certain current legal framework, the oversight system documents to be disclosed, these provisions are for access to information consists of multiple spread across many different legal documents, institutions and authorities with only an implicit making it difficult and time-consuming for mandate, but not an explicit one. public officials to know their obligations in relation to the types of information that need to One option that has been taken in other countries be made public. In addition, most of the existing is to create an oversight agency with the explicit 125 modern institutions Box 6.10. Monitoring implementation of access to information in international experience Access to information is becoming increasingly recognized in international law, and a large number of countries have recently issued this type of legislation. While in 1990 only 13 countries had access to information laws, by now more than 80 countries have passed such legislation. A quick look at other countries' experience in implementing access to information laws suggest that those that clearly specified the mechanisms and agency responsible for overseeing implementation were the most successful. Indonesia, Thailand, and Mexico, are all developing countries that passed laws with specific and concrete chapters regarding the agency in charge of implementation. In Thailand, an Official Information Board receives complaints on failure to publish information and reports to the Government. In Mexico, the Federal Institute of Access to Public Information is an autonomous body charged with overseeing the law at the national level. Indonesia is currently working toward the establishment of an Information Commission. During the drafting of Vietnam's access to information law, several options for an oversight agency were contemplated, including (i) creation of a new, autonomous, body reporting to either the Government or the National Assembly, and (ii) entrusting the Vietnam Fatherland Front to play this role. Whichever course of action is taken, a clear distinction between the monitoring and oversight function on the one hand, and day-to-day implementation on the other hand, will help ensure that the agency, whether existing or newly created, has a clear mission to ensure access to information according to the law. Source: Jairo Acuña-Alfaro. 2009. "Heightening access to information in Vietnam--The challenge of monitoring implementation." Vietnam Law & Legal Forum, August 2009. mandate on monitoring the implementation of are not covered. Moreover, the provisions in the provision of information across all sectors the current legislation constitute a "positive and government agencies. As described in Box list" of information that should be disclosed. 6.10, oversight authorities, combined with The presumption that all information that is not clearly assigned institutional and individual prohibited, for example on national security responsibilities for the provision of information grounds, should be considered public is still within each state agency and adequate financial lacking in Vietnam. Ensuring that the right to resources, have been effective in other countries. request information is extended to all types of information and is applicable to all sectors and Only a few of the legal documents outlined levels of government would be a major advance in Box 6.9 specify that the failure to supply for Vietnam. information is a violation subject to punishment. An exception is the Law on Anticorruption, the Implementation Challenges for Access to implementing guidelines of which state that Information failure to supply the information is subject to discipline and sanctions. Even for this law, Even a perfect legal regime would face however, the sanctions corresponding to specific challenges. There are a range of practical violations are not specified. issues that impact how much information the citizenry actually has, and whether and how As a whole, then, Vietnam's legal framework, public officials would provide that information. despite many provisions calling for certain types A recent survey of the Ministry of Justice and of information be made public, does not ensure the National Hanoi University (NHU) on access to information by the public. Clarifying the current situation of access to information responsibility for providing the information, in four provinces (Ho Chi Minh City, Binh responsibility for monitoring compliance, and Duong, Dong Nai and Long An) suggests that sanctions for failing to provide the information cultural factors constitute an important barrier 126 oversight for provision of information by government that information held by public authorities is officials. According to the survey, almost all the property of the people. Overcoming such public officials do not consider the provision cultural barriers would take time and effort--a of information to citizens their responsibility large-scale public relations campaign, perhaps because the provision of information is not the grounded in the rights under a new Law on main duty of policy implementation provided in Access to Information, would be an important the laws and regulations. step in this regard. In contrast, public officials, staff and leaders Establishing an effective access to information of public agencies tend to be familiar with the law will also need to overcome a related working context of secrecy. Almost all answers accountability barrier. As outlined in Chapter 1, consider that public officials are puzzled when if the system of accountability is asymmetric, they are requested to provide information. for example if making a mistake is punished Almost all of them transfer the requests to their more than failure to do something good, the higher officials. The NHU survey suggests that result will be overly risk-averse behavior. But cultural barriers extend not only to civil servants, this neatly describes Vietnam's system: those but also to enterprises and individuals. Almost who release information can be punished if they all respondents--public officials, enterprises make a mistake, but are not rewarded for making and individuals--do not know or recognize information available. Box 6.11. Access to information in Hanoi, Quang Binh, Ninh Thuan, and An Giang In order to provide some useful information to the team at the Ministry of Justice entrusted with drafting the Law on Access to Information, the People's Participation Working Group, composed of a number of international NGOs and financial institutions, organized a survey in Hanoi, Quang Binh, Ninh Thuan, and An Giang in the summer of 2009. The survey was designed to provide a quick snapshot of the real situation and concerns about access to information. An attempt was made to balance the sample of 500 respondents according to gender, ethnicity, and poor versus non-poor status, but without full information on a sample frame, the results can not necessarily be considered representative in the statistical sense. Nevertheless, the study provides a good example of how some basic understanding of an issue can be attained fairly quickly. By and large, citizens tend to have the greatest need for information regarding issues that touch them directly--more than half of respondents identified healthcare, environment, education and social and cultural situation, land, and transport safety as issues that concern them. In contrast, information on macroeconomic facts and contacts of government agencies attract little attention of citizens--only 30 percent of interviewees are interested in this kind of information). Citizens were also asked how they prefer to receive their information. The preferred channels were through mass media, citizen group or village heads, and posting at local authority's office. Reflecting the realities of many of Vietnam's citizens, the least desired channel was through Internet. While publishing documents on the Internet may be a cost-efficient way of disseminating information, and should be encouraged for this reason, it is clearly not sufficient. Seeking other cost-effective measures to disseminate information, paying attention to citizens' and enterprises' preferences for forms of publicity, can help make Vietnam's access to information regime effective. Results of in-depth interviews show that ethnic minority citizens in rural and remote areas expect to access information through radio broadcasting, newspapers, citizen meeting, and community activities rather than posting at local authority's office. Many also prefer the system of loudspeakers, which they say saves them time. Source: Survey of Citizens' Information Accessibility Situation and Needs as Conducted by People's Participation Working Group and Development and Policies Research Center, 2009 127 modern institutions A useful regime of access to information should citizens in mountainous areas do not agree to pay ensure foremost that information is provided on fees for required information. According to them, the issues that concern the citizenry, in a form information supply is the state's responsibility that is useful to them. A survey conducted in and the state should have budget to support this four provinces (Hanoi, Quang Binh, Ninh Thuan activity. Such a finding is not surprising, since and An Giang) in the summer of 2009 provides incomes in these regions are lower. Yet, it serves insights into citizen's preferences, and current as a reminder that an equitable system of access difficulties, in accessing information (Box 6.11). to information would ensure that even the poor can access the information they need, through As a good access to information system should waivers on fees, or by extensive efforts to make also ensure that the public bodies providing the the information available in a low cost manner information can recover some of the costs, and to that works for the poor. And whichever approach dissuade excessive and frivolous requests, many is taken, transparency in the rules about fees of countries include fees for some information. The information supply would be paramount. survey also enquired about willingness to pay such fees, and sixty-one percent of respondents While the studies described above focus on the agree to pay fee for obtaining the information sorts of information demanded by the citizenry, that they requested. But this sentiment is not access to information is important for other universally shared: information from the in-depth constituents, as well. Think tanks in Vietnam are interview shows that most of local officials and routinely called in to brief the National Assembly Box 6.12. Innovative sources of information to address unanticipated policy needs Following a brief period of stabilization in mid-2008, the effects of the global financial crisis became evident through reduced external demand in key export sectors, a slowdown in manufacturing, and a sharp reduction in capital inflows in 2009. In discussions around the design of an effective stimulus package and policy responses more broadly, senior policy makers raised questions about the impact of the external crisis on firms and workers: they wanted to know how much export demand was falling in key sectors; how firms were coping, whether firms had shut down or were contemplating closure; impacts on workers including how many were being laid off, working reduced hours or receiving reduced wages; how workers who lost jobs were coping for example by seeking jobs in the informal sector or working on the family farm. Like many low income countries, statistical and information gathering systems in Vietnam are not well-suited to provide the kind of real-time information those in leadership positions needed to make informed policy decisions when unanticipated shocks occur. To fill the gap, a series of innovative data collections efforts were launched, buttressed by small and focused studies on certain subsectors of the economy. For example, the Center for Analysis and Forecasting at the Vietnam Academy for Social Sciences (VASS) launched a quarterly series of rapid impact assessments covering migrant neighborhoods near urban industrial parks in the North and South, craft villages near Hanoi and several rural areas known for sending high numbers of migrant workers to the cities. Firms were interviewed in industrial parks near Hanoi and Ho Chi Minh City, and export-oriented firms located in industrial areas in Hai Pong. In addition, the Central Institute for Economic Management launched a special monthly survey focused on industrial parks in eleven provinces to measure firm level and park-wide impacts on labor, investment plans, inventories and new orders. Other agencies followed suit including ILSSA, with expanded firm surveys, and IPSARD with aa study of rural impacts of the financial crisis. External shocks, both policy induced such as the recent financial crisis and natural disasters, are becoming a permanent feature of the development landscape. Increasing integration means that the effects of local shocks are transmitted throughout the global economy, and there is a need for nimble information systems and more coordinated policy responses. 128 oversight or to provide comments . For researchers to media as an ally for advancing several goals, contribute to a good policy making process that including the fight against corruption--the is nimble and can respond quickly to long-term Law on Anticorruption, the Socio-Economic goals and to crises, the researcher needs both Development Plan, and the National information and the power to interject ideas, Anticorruption Strategy all emphasize this even controversial ideas, into the policy arena. role. Indeed, autonomy is essential in order for Vietnam has no shortage of talented researchers, the media to be able to do this job well. Yet, a and they are indeed often called upon to provide countervailing concern by some over the quality advice. They will be better equipped to provide of reporting and the impact of vigorous reporting that advice if they have at their disposal a wider has generated a refocused effort on strengthening range of information. Box 6.12 describes how accountability.91 The mechanisms, however, Vietnamese institutions helped fill an information have been almost entirely a return to upwards void when concern was raised about the impacts accountability for compliance with rules--rules of the global financial crisis. whose boundaries, in the case of the media, are not entirely clear. The result is that the media in Media Vietnam is caught in a state of uncertainty. In the unified state society that existed before Doi The mechanisms of accountability vary. Moi, the media had but one purpose: to promote According to the Press Law, a range of sanctions the goals of the state as determined by the Party can be applied for journalists and press agencies and the government. The media has benefitted that violate press regulations, including warnings, from a considerable expansion of autonomy in fines, suspension or withdrawal of press licenses, the past two decades. They have gained more revoking of press cards, administrative sanctions, control over their finances, more choices in and even criminal responsibilities. What they all their organizational structures, and permission have in common is that they can all be employed to organize business activities in various stages to discipline journalists, editors, or others in the of the product cycle. Beyond the legal changes media for reporting that is perceived as improper. that devolved greater authority to the media, The dividing line between the violations that lead other changes, particularly over content, have to more severe punishments and the violation that been started from within the media in a process lead to less severe punishments are generally not of experimentation. The vigor of reporting grew well defined. over the first two decades after Doi Moi began. In addition to the high profile arrest and The devolution of authority to the media subsequent conviction of two journalists and two accompanied a growing acceptance of the investigators of a major corruption case, a series Table 6.5. The media in Vietnam 2003 2004 2005 2006 2007 Media organizations 378 500 687 702 Newspapers and magazines 564 620 813 Printed copies (thousands) 653 670 989 991 1,064 Online newspapers 5 10 10 Source: Corruption and the Media in Vietnam (Soren Davidsen and Martin Rama) 129 modern institutions of less draconian measures, such as replacements Vietnam's experience in devolving power to of key editors, withdrawal of press licenses, firms and farmers, to health care providers and to etc., have made the media more cautious to local governments, provides important lessons report on high level corruption. Stories of low- for the media. Indeed, various aspects of reforms level corruption have continued to appear in the discussed throughout this VDR have parallels press and have generated positive results (Box when it comes to regulating the media. 6.13). The challenge for media reform, as with other aspects of Vietnam's devolving system, Vietnam's rapid economic growth is attributable, is to align the system of accountability with in part, to reforms that enabled entry of new firms incentives to generate positive results. In the to the market and strengthened competition. case of the media, the positive results to which In the same way, competition among media reforms should strive are vigorous and high organizations has already contributed to the quality reporting. increased reporting on many important issues in Vietnam over the past decade. As the number of Box 6.13. Role of the media in uncovering problems with taxis at Ho Chi Minh City airport Since 2007, charging unmetered fares has become rather common among the different taxi companies in the Ho Chi Minh City airport. This situation was not only annoying passengers, but was also seriously affecting the image of Vietnam among foreign visitors. Despite the fact that unmetered fares are illegal, authorities were not taking action. Thanh Nien reporters started to investigate this situation by interviewing passengers and taxi drivers, and then exposed the situation in the newspaper. Thanh Nien received many letters from readers explaining their experiences with the taxi drivers and their views on the situation. With all the gathered information, Thanh Nien reporters went to talk to various taxi companies, the company managing the airport (TTOC) and the transport department of Ho Chi Minh City government. The directors of the taxi companies said that they would punish or fire drivers overcharging customers. The director of the TTOC explained that some of its staff were now keeping a close eye on the taxis, and promised to take all possible measures to do away with the overcharging as soon as possible. The chief inspector of the Ho Chi Minh City transport department started a month-long inspection of taxi operations in the airport and began to fine and withdraw the driving licenses of the violating taxi drivers. In spite of these positive results, Thanh Nien did not stop its oversight on the situation in the airport. Through additional investigations, it discovered that the guards in the airport were asking taxi drivers for bribes in order to have priority in picking up passengers. Taxi drivers claimed that it was the bribe payment which was forcing them to charge higher fares to their customers. Given this situation, Thanh Nien went to talk to the two guard service companies and then back to the TTOC and the transport department. The directors of the two guard companies reported not having heard about their employees receiving bribes and that they were already educating and overseeing employees. Nevertheless, one of the guard companies promised to fire immediately the corrupt guards and to change regularly the guards' working places. The director of the TTOC promised to cooperate with the traffic police and the inspectors of the transport department to stop the unhealthy competition between taxi drivers. The government authorities provided two hotlines for reporting problems. The vigorous reporting of Thanh Nien helped strengthen accountability of many parties who contributed to the problem of unmetered fares, and bring about real change at the Ho Chi Minh City airport. Source: Thanh Nien Newspaper, 3-5 February 2009 130 oversight media outlets has expanded, especially electronic professionalism, while ensuring greater media outlets, reporting on corruption has also autonomy over content. Although a draft of a grown both in terms of the number and quality revised Press Law was taken off the agenda of of articles. the National Assembly in 2009, a new draft may have just such a provision. As with service delivery units, allowing media organs greater flexibility over their Similarly, reorienting efforts to deter poor organization would allow them to better tailor reporting toward civil remedies through the their operations for the business they are in. courts, rather than subjecting journalists to Allowing a range of corporate governance the specter of criminal sanctions, can provide models, such as joint ventures with private accountability without extreme measures that entities or even private ownership, may make tend to stifle edgy reporting altogether. sense for some media organs, especially as the boundaries between media, entertainment, and Vietnam's experience in constructing advertising are becoming more porous. Easing accountability systems in other sectors also entry into the media sector could also be affected provides lessons for media reform. Just as in the same way as in the business sector. devolving powers to lower levels of government Easing administrative procedures for business called for an expansion of training for how to registration has worked elsewhere--applying exercise those powers productively, and training the same model of simplicity to media organs, on how to institute new mechanisms of downward easing and clarifying the process of applying accountability through participation, a more for media licenses and procedures to follow if autonomous media needs training on how to applications are rejected, could ease entry into report accurately and ethically. Many journalists the media sector. feel that improving the professionalism of reporters and reporting will help bring about the The mechanism for upward accountability for confidence needed to attain independence with the media could also draw on the experience of accountability for the media. Vietnam's economic reforms. In the move from a planned economy to a market-based system, the Finally, ensuring that the media has the tools to separation of management of enterprises from do the job needs to be an essential element of the governmental bodies that do the regulating reforms aimed at increasing the professionalism has been key for ensuring a level playing field, of the media and encouraging accurate reporting. and moving toward a system whereby ministries The draft Law on Access to Information, slated and other state agencies set the policy framework for discussion in the spring 2010 session of under which firms operate, and follow up on the National Assembly, could be an important violations, but the management is controlled by advance toward enabling the media to do its the managers through their corporate governance job better. Somewhat ironically, it would also framework. This has improved incentives for the strengthen accountability of the media, since managers and owners of firms. More cleanly inaccurate reporting would be easier for the separating regulatory functions from direct population to identify if the quantity and quality management is showing positive results in the of information available to the public were economic sectors, and this could be true for the improved. While access to information is a media sector, as well. For example, delegating necessary condition for the media to do its job the power and responsibility to issue Press well, freedom of expression, a right guaranteed Cards to the Vietnam Journalists Association in the Constitution, is also necessary. could still provide a framework for maintaining 131 7. THEMES AND LESSONS FOR GOVERNANCE REFORM Vietnam's remarkable progress in sustaining field and had little recourse. Discussions are a high level of economic growth, in reducing underway for revising the mechanisms for poverty and increasing the well being of the setting compensation prices, and Ho Chi Minh people is well documented. The factors driving City is using professional appraisers to better this performance are only partially understood. understand the "market price." A hard working spirit and proximity to other growing nations have contributed. But the policy · Two decades ago, the process of planning reforms associated with Doi Moi are widely was purely top-down. Now provinces have attributed with improving the incentives for considerably more discretion over the use of production and growth. Devolving responsibility their budgets, and a competitive spirit among to decentralized actors, in this case farmers and provinces has helped drive many reforms. firms, and allowing them to sink or swim yielded strong results. This Vietnam Development Report · Just over a decade ago, the entire state budget argues that another contributor to Vietnam's was considered secret. The first published performance has been the devolution in other budget, in 1998, looked more like a pamphlet aspects of what was once a centralized state: to than a budget document, but was a significant provincial and lower levels of government, to milestone nevertheless. Now, aggregate data is administrative and service delivery units, to the widely available, and plans are underway for a courts and to elected bodies, and to the media and broad range of disaggregated data to be made civil society. It also argues that accountability publicly available. mechanisms need to evolve to mediate these new relationships. They have evolved in many · Half a decade ago, corruption was known to ways, but much more can be done. be a problem, but was not openly discussed. Now it is freely recognized to be a scourge and Progress mechanisms for reducing corruption are freely debated, if not always agreed upon. Five years It has been said that institutional change takes ago, surveys asking questions about corruption place over centuries, not years. In Vietnam, were carried out in some cities as part of the however, some important changes have taken citizen's report cards. In 2008, the General place in a relatively short period of time: Statistics Office carried out a nationwide survey of citizens about their experiences with state · Two decades ago, there was no "price" for land at services, including perceptions of corruption. all and no land transactions. A price, determined by the state, was set in 1993. One decade ago, Prospects land availability for investors was greatly eased, but small-holders faced an unbalanced playing The purpose of exploring these trajectories 132 themes and lessons for governance reform from the past is to better understand the · While the flow of all sorts of information direction forward. The real questions are how has expanded tremendously, with increasing devolution should take place, and what forms penetration of the media and the internet, of accountability are needed for the devolved provision of information by the state remains system. While the institutional improvements sporadic concern of many. Dozens of laws and described above are important, so are the regulations mandate the publishing of certain challenges that remain. pieces of information, but often they are nowhere to be found in the public domain. Moreover, · With the 1992 Constitution, the concept of a the concept that publishing information should "law-based state" was introduced. Devolution be the default, rather than the exception, is not throughout the economy calls for an independent present either in law or in concept. arbiter of disputes. Moving to a system that is guided by principles--especially those enshrined Themes in the Constitution--that can, in some cases, even override subsidiary laws if they are in conflict, Beyond these specific challenges, there are also and building true independence of the judiciary several recurrent themes that emerge from the analysis in this VDR. will be formidable challenges going forward. Devolution works, most of the time. · The devolution of powers to provinces and lower levels of government has brought certain Letting farmers and firms have rights over their benefits, especially by empowering them to output helped spark growth and reduced poverty, provide the mix of services that their citizens but the economic devolution of Doi Moi was demand, and encouraging some healthy only the beginning. Geographic decentralization competition. Yet, significant gains especially for has fostered innovation at the provincial and efficiency and environmental protection could lower levels. Devolution to administrative and also be had through better regional planning. And service delivery units has improved flexibility while downward accountability has been greatly and contributed to vastly improved outcomes. strengthened at the commune level, progress at While there is a need for changing the instituting accountability at the province level accountability framework to match the devolved responsibilities, as discussed below, and the need has not kept pace. for some things to remain centralized is clear, the · Devolving power to the media to decide on fact that devolution of powers has often yielded positive results for Vietnam is unmistakable. their own content has had important positive effects. An initial explosion of activity a few While devolution has brought positive outcomes, years ago, during which the media was regarded it has also raised new problems. The increased as an instrumental ally in disseminating positive autonomy of service delivery units has helped information and for identifying problems, has improve quality, but it has also created incentives eased more recently. Regulating the media to abandon the provision of less profitable through top-down controls, whether it be services. The decentralization of land allocation through appointments and dismissal of editorial decisions has helped local governments respond staff, control over press cards, or use of other better to local economic needs, but has also severe sanctions, may mitigate misreporting resulted at times in an unbalanced playing field. and libel, but it also dampens what might be a The process of fiscal decentralization has clearly more positive role. Concerns about accuracy benefitted the poor provinces, but the rich ones and defamation are valid, but the challenge is to are complaining about not being able to retain find ways to deal with mistakes without stifling fiscal resources to maintain their high growth reporting. rates. In order to maximize the benefits of 133 modern institutions devolution while minimizing the costs, changes with each other, is not well understood. People in accountability framework are necessary. serving on people's inspection boards or as conciliators may be local officials themselves. Accountability has improved more than In health care, doctors who operate private is often acknowledged, albeit often with a practice separate from their public function, or delay, and not always of the best form. have relationships with supply or pharmaceutical companies, puts them in a position of conflict of Upwards accountability aimed at compliance interest. Different countries deal with conflict of with rules from above was the essence of the interest in different ways, ranging from outright highly hierarchical system of the 1970s and prohibitions on outside activities, to prohibitions 1980s. In any system, upward accountability will on only those activities that pose a conflict of be needed. This applies particularly to the inner interest. For Vietnam, the first step will be to workings of the public administration. Many recognize that in a devolving state, conflicts of of the challenges for reforming the civil service interest can lead to problems, and only then can call for instituting new rules of competition and the solutions be identified. internal review of compliance with those rules will be needed to make them effective. Similarly, Expanding and strengthening mechanisms although many forms of economic activity are of downward accountability, which works so self-regulating, with accountability for quality well in the economic sector, can help build being assured by market forces, there are in accountability for performance. Downward many cases information asymmetries that call accountability for results was barely in evidence for upward accountability. In health care, the two decades ago. It is now improving in many devolution of responsibility to service delivery ways, but could be further strengthened. The units calls for commensurate improvements mechanisms of participation, while much in upward accountability. While facilities are better than in the past, remain hindered by regulated, the system for maintaining health capacity constraints and a legacy of a top-down care professionals are not. In the legal and organizational culture. Information needed for judicial system, as well, uniform and predictable downward accountability, as discussed below, adherence to the rules of procedures are remains difficult to access. The essence of essential. downward accountability--making the best use of the information content of society--calls for At the same time, an accountability system society to be informed. whereby individuals are held to account for anything and everything, an accountability Information is central to accountability and system that emphasizes repercussions for bad to performance. behavior, can lead to a slow system. This is evident in many aspects of Vietnamese public Whether it is for the policy maker's or the administration, from low disbursement of ODA, public's purpose, the need for better and more to the layers of approvals sought for even small widely available information was a theme in decisions. every chapter of this VDR. For understanding the impacts of the crisis, to establishing mechanisms One aspect of upward accountability to the rules of downward accountability, the need for deserves special mention. As Vietnam moves information is pervasive. Policy makers need increasingly toward arms-length relationships, information to do their job well, and citizens the importance of cleanly delineating those need information to exercise their rights. While relationships becomes central. The concept of the advances in transparency described earlier in "conflict of interest", whereby one person or this chapter are laudable, in some cases it remains body has multiple interests that may not align difficult to obtain information, such as court and 134 themes and lessons for governance reform case statistics. Even some policy makers report these reforms are clear, but the beneficiaries having difficulty getting information they need. are diffuse. The perceptions of improvement in administrative procedures and service delivery People are becoming more demanding. not met with same perception of improvement in corruption. While nobody likes corruption, Another repeated theme of this VDR is that even many view petty corruption as a way to speed in areas where things are improving, the public up services or get better quality services. The is demanding more. Even while saying that demand to improve services is stronger than the things are getting better, many respondents to demand to stamp out petty corruption. Higher the VHLSS Governance Module said that they level corruption, which benefits a very few at the were not satisfied, and when surveys have been expense of the many, is more widely condemned repeated, as with the Ho Chi Minh City citizen's by the population. report cards, fewer said they were satisfied, even as fewer said they were dissatisfied. Despite There are several implications of this pattern undeniable progress improving property rights, for reformers. First, there is a need to enable the number of disputes over land has been and empower constituencies to support change. increasing. There is a need to push forward Fostering easier establishment and open voice with reforms to align devolved authorities with for associations, think tanks, and civil society accountability in the most efficient and fairest in general can help give the push for change way. And since many institutions are closely needed to move forward with the reforms linked with each other, progress in one area already identified in the Public Administration ratchets up the importance of progress in others. Master Plan, the Judicial Reform Strategy, the Anticorruption Strategy, and others. Second, for The areas of greatest progress have been all of these tasks that are essential, yet without those areas where a constituency existed and constituency, the need top level determination was empowered to push for progress. to move forward, as is currently the case for Project-30, is essential. Considering the range of reforms that have been launched in the past decade, a pattern emerges that The Next Decade? can help predict how resolutely the reforms can proceed. In the case of administrative procedures The past two decades have been remarkable reform, which has shown considerable progress, for economic growth and poverty reduction. there was a constituency--especially the business Those decades have also been remarkable for community, but also the citizenry--whose the devolution of powers and responsibilities. interest it was to push for reforms. Similarly, Vietnam's success has come hand-in-hand with the great progress in improving transparency of market reforms that strengthened property rights, the law making progress was pushed along by increased citizen involvement and participation, the aligned interests of the business community and strengthened external accountability. and the government in the desire to accede to the World Trade Organization. In the case Many changes reflect a step-by-step approach of devolution to the provinces, it has been the of experimentation in the search for solutions provinces themselves that have demanded the to Vietnam's problems. Whatever the impetus change. for the changes, the fact is unmistakable. In an Annex at the end of this VDR we present a series At the same time, areas where progress has been of "devolution and accountability timelines" slower, such as public administration reform and identifying key legal milestones of devolution in devolving true independence to the judiciary, or centralization of power, and changes in have been the areas where the constituency for accountability. There is no presumption of change is less well defined. The benefits of whether devolution or centralization is good 135 modern institutions or bad, or whether upward or downward for the media and for civil society organizations accountability is best, just an examination of (excepting mass organizations) have been aimed how these factors have changed in Vietnam's at upward accountability for compliance with legal framework. centrally determined rules. The sheer number of changes, large and small, is The first decade after Doi Moi was the era of striking, but even more interesting is the variation devolution of economic power, from central in patterns. In the area of local governance, planners to farmers and enterprises. The most of the reforms have been oriented second decade saw significant devolution of toward downward accountability, emphasizing powers and responsibilities to the provinces, transparency and participation. In law making and stronger accountability for communes, and the judicial system, increased transparency raising new challenges for inter-provincial has similarly led to a large number of new efforts planning. More recently, functional devolution aimed at downward accountability. Service to service delivery units and non-state providers delivery units have seen a mix of initiatives has accelerated, and brought new challenges in strengthening both upward and downward aligning accountability with incentives. accountability. In contrast to the other areas studied, many of the changes in accountability What will the next decade look like? 136 NOTES 1 See, for example, Dang Phong and Melanie Public Administration System? UNDP Policy Beresford, 1998. Authority Relations and Discussion Paper. Economic Decision Making in Vietnam--An Historical Perspective. NIAS; Martin Rama, 6 The closest periods of time for which per capita 2008. "Making Difficult Choices: Vietnam GDP data is available have been used (e.g. for in Transition". Commission on Growth and the period January 2000- December 2008, the Development, Working Paper 40 Edmund increase in per capita GDP has been calculated Malesky, 2004. "Leveled Mountains and Broken from 1999 to 2008; for the period January 2003 Fences: Measuring and Analysing de facto ­ September 2005, the increase in per capita Decentralisation in Vietnam." European Journal GDP has been calculated from 2002 to 2005; for of East Asian Studies 3(2): 307-336; the period October 2005-September 2006, the increase in per capita GDP has been calculated 2 Pham Duy Nhgia, 2008. "Institutional Reform from 2005 to 2006; etc) in Vietnam: From the Perspective of Determining the Accountability." 2008 International Forum 7 Vietnam State Budget Disclosure of Financial on Economic Transition. Accounts of 2004. 3 Martin Gainsborough (2007) argued that a 8 They also tended to be younger and were less mixed approach, with features common to Asia likely to have higher degrees than their male as well as emerging elements from the liberal counterparts in the survey. democratic tradition would be more fruitful than relying soley on the latter. 9 Institute of Labor and Social Affairs and World Bank, 2009, based on data for 2004-2009; and 4 Thaveeporn Vasavakul (Vietnam Law and Ministry of Planning and Investment, 2008. Legal Forum, February 2009) writes "the concept `public administration' did not exist 10 A separate Law on Public Employees, to cover separately during the central planning period staff of service delivery units, is currently under but was merged into the concept of the state, development. itself referred to as the bureaucratic subsidizing apparatus. The revival of the term and the entity 11 Jairo Acuña-Alfaro (2008) "Where does Civil `public administration' can be considered the Service Reform fit in?" Policy Brief on Public post-central planning's `new thinking.'" (p. 16) Administration Reform and Anti-Corruption. UNDP Viet Nam. Ha Noi, May. 5 This finding is consistent with Wescott et al (2009), Public Financial Management: How to 12 Suk-Kim, Pan. 2008. "A Brief Comparative delivery better value for money in Viet Nam's Study on Civil Service Laws in Four Asian Countries: China, Japan, Korea, and Viet Nam." 137 modern institutions Policy Note on Public Administration Reform sustainable growth" (Kim N.B. Ninh, Vu Tahnah and Anti-Corruption. UNDP Viet Nam. Ha Noi, Tu Anh, 2008) September. 23 Nguyen Ngoc Anh, Nguyen Duc Nhat, 13 This point is also made in Poon et al (2009) Nguyen Thi An, Doan Quang Hung, Tran Thanh "The Reform of the Civil Service System as Viet Thuy. "Some Initial Findings from the Survey Nam moves into the Middle-Income Country of Citizen's Information Accessibility Situation Category." UNDP Policy Discussion Paper. and Needs as Conducted by PPWG Members" People's Participation Working Group and 14 The CFAA was prepared by the Government DEPOCEN. Draft August 20, 2009. Survey of of Vietnam and the World Bank, with support of 500 citizens in Ha Noi, Quang Binh, Ninh Thuan Belgium, Germany, European Union, Ireland, and An Giang. Denmark and the ADB with funding support from the Public Financial Management (PFM) 24 Inputs include: work site selection, Multi-Donor Trust Fund. contributions to work construction (mainly in labor days), participation in construction, 15 East Asia Decentralizes: Making Local supervision of construction, or selection of Government Work (World Bank, 2005) beneficiary households. 16 "Fiscal Decentralization, Fiscal Incentives and 25 Christophe Gironde, 2009. "Decentralized Pro-Poor Outcomes: Evidence from Vietnam decision-making and participation under Program (ADB, 2009); and Vietnam Development Report 135--A study in five provinces of Vietnam." 2008, Social Protection 26 The case study focusing on Dien Bien, Dong 17 Vinh Phuc, Ha Tay, Da Nang, Quang Nam, Thap and Ninh Thuan provinces was carried out Khanh Hoa, Binh Duong, Tien Giang. For by UNICEF. more details, see "Decentralization in Vietnam: Challenges and policy implications for 27 The case study in Hoa Binh described in this sustainable growth" (Kim N.B. Ninh, Vu Tahnah chapter was carried out by JICA and SDC in Tu Anh, 2008) 2009. 18 Gironde (2009). 28 "Implementation Assessment of the Anti- Corruption Law: How far has Vietnam come at the 19 "Staffing" is understood in the Vietnamese Sector Level? A Case Study of the Construction legislation as the number of persons recruited Sector" (Soren Davidsen, et al, 2009) and appointed as civil servants 29 The 2004 Law on Construction and Decree 8 20 "Decentralization in Vietnam: Challenges and of 2005. policy implications for sustainable growth" (Kim N.B. Ninh, Vu Tahnah Tu Anh, 2008? 30 This section draws heavily on Dang Hung Vo, 2009, "Improving Land Acquisition and 21 CIDA study of provincial financial management Voluntary Land Conversion in Vietnam". World in three provinces. Bank. 22 Vinh Phuc, Ha Tay, Da Nang, Quang Nam, 31 The percentage of complaints on land issues Khanh Hoa, Binh Duong, Tien Giang. For over total complaints is 70-80 percent according more details, see "Decentralization in Vietnam: to 2007 data of the "Security Agency", but 80- Challenges and policy implications for 90 percent according to a 2008-2009 survey in 7 provinces. The latter figure also coincides 138 notes with the percentage for the complaints received 39 Martin Painter. 2009. " Low Quality Government by the Department of Claims and Petitions the as a Development Strategy: Dilemmas of Office of the National Assembly. "summary Governance in China and Vietnam." report on the results of settlement of complaints and denunciations from the year 2006 up to now, 40 Joint Annual Health Review 2008. and the solutions in the new circumstances," presented at the Summary Conference of 41 Health Policy and Strategy Institute, Inspection Work in 2007 and the Deployment "Assessment of hospitals' financial autonomy of the Task in 2008, Hanoi, 11 January 2008, as implementation in health service provision and cited in "The Mechanism to Settle Administrative payments" as cited in the Joint Annual Health Complaints in Vietnam--Challenges and Review 2008. Solutions." The Asia Foundation and Policy, Law and Development Institute. August 2009. 42 Joint Annual Health Review 2008. 32 Land Policy in Vietnam: Current Status and 43 Ha Tay Health Care Department, 2007, "Report Key Challenges (World Bank, 2008) on Implementation of Decree 43", as cited in the Joint Annual Health Review 2008. 33 Conflict Resolution in Urbanized Rural Areas: Empowering Civil Social Organizations. Land 44 This is based primarily on draft versions of the use and environment pollution (VUSTA and document " án i mi c ch hot ng, c VIDS, 2008) ch tài chính, chính sách tin lng và vin phí i vi n v s nghip y t công" [Proposal 34 Decree 69/2009. for reforms of the operational and financial mechanisms, salary and user fee policy for public 35 Earlier studies also suggested they were service facilities] which has been submitted to successful SDC, 2004. "Review on One- the Government for approval. Stop_shops at Commune & Ward Levels, Viet Nam." Guidotti Matteo, 2004. "District One 45 Summary Report on Survey Results Situation Stop Shop Assessment in Quang Binh Province, of Education Socialization at Districts no. 3, Viet Nam." Go Vap, Phu Nhuan and Tan Phu (Vietnam Fatherland Front Committee of HCMC, 31 36 "Cutting down on `baby permits' to facilitate March 2009) business" Saigon Times Daily, as reported on VietnamNet.com August 7, 2009. 46 The 2008 Joint Annual Health Review. 37 On the donor side, the VHLSS Governance 47 "Join the club: civil organizations in Vietnam" Module was supported by the World Bank, (Dr. Nguyen Minh Phuong, Scientific Institute on UK-DFID, and SDS, and the PCI survey was State Organization, MOHA, November 2007) supported by USAID through the Vietnam Competitiveness Initiative. 48 Vietnam Development Report 2008--Social Protection. 38 ActionAid International Vietnam. "Experiences on using citizen's report cards in assessment 49 Based on the criteria set by the regulation of public services in Vietnam." Presented at on HCFP, as of 2004 roughly 31 percent of the Social Audit Project Inception Workshop, the population ought to have been covered by Ministry of Planning and Investment and HCFPs, but by the end of 2006 the real figure was UNICEF. only around 22 percent (Vietnam Development Report 2008) 139 modern institutions 50 UNDP, August 2005. "User fees, financial establishment of administrative tribunals in autonomy and access to social services in Vietnam (draft, 13 March 2007) Vietnam" 59 "Report On The Results Of Citizens' 51 This chapter draws on a number of studies Satisfaction Index Survey 2008 for Public including Charles Philpott (2009), CIDA (2008) Services In Ho Chi Minh City" "Social Survey on Conciliation Activities at Grassroots Level". 60 Nguyen Ngoc Anh, Nguyen Duc Nhat, Nguyen Thi An, Doan Quang Hung, Tran Thanh 52 This section draws on papers in Vietnam Thuy. "Some Initial Findings from the Survey Law and Legal Forum: Nguyen Hai An, Civil of Citizen's Information Accessibility Situation Tribunal, Supreme People's Court, "Grassroots and Needs as Conducted by PPWG Members" Conciliation in Civil Procedures", January 2009, People's Participation Working Group and pp. 19-20; and by [author unknown] "Grassroots DEPOCEN. Draft August 20, 2009. conciliation crucial for social harmony." December 2008, pp. 22-23, 28. 61 John Rand, Patricia Silva, Finn Tarp, Tran Tien Cuong, and Nguyen Thanh Tam. 2008. 53 InvestConsult (2008) "Social Survey on "Characteristics of the Vietnamese Business Conciliation Activities at Grassroots Level". Environment: Evidence from a SME Survey in CIDA 2007". CIEM (Central Institute of Economic Management) and University of Copenhagen. 54 Nguyen Hai An, Civil Tribunal, Supreme The number of SMEs interviewed was 2635 in People's Court, "Grassroots Conciliation in Civil 2005 and 2603 in 2007. The provinces of the Procedures", Vietnam Law and Legal Forum. survey are Hanoi, Hai Phong, HCMC, Ha Tay, January 2009, pp. 19-20 Phu Tho, Nghe An, Quang Nam, Khanh Hoa, Lam Duong and Long An. 55 The EBRD-World Bank Business Environment and Enterprise Performance Survey was carried 62 "Support to the Legal Aid System in Vietnam, out in 2004 and 2005 in Albania, Armenia, 2005-2009. Annual Progress Report 2008" Azerbaijan, Belarus, Bosnia and Herzegovina, (SIDA, SDC, Oxfam Novib and Save the Bulgaria, Croatia, Czech Republic, Spain, Children, 2008) Estonia, Georgia, Germany, Greece, Hungary, Ireland, Kazakhstan, Korea, Kosovo, Kyrgyz 63 "Support to the Legal Aid System in Vietnam, Republic, Latvia, Lithuania, FYR Macedonia, 2005-2009. Annual Progress Report 2008" Moldova, Poland, Portugal, Romania, Russia, (SIDA, SDC, Oxfam Novib and Save the Serbia and Montenegro, Slovakia, Slovenia, Children, 2008) Tajikistan, Turkey, Ukraine, Uzbekistan, and Vietnam. Statistics for the transition countries 64 "Support to the National Legal Aid System in can be found in Anderson and Gray (2006). Vietnam 2005-2009. Mid-Term Review" (SIDA, SDC, Oxfam Novib and Save the Children, Truong Hoa Binh, Chief Justice of the Supreme 56 2008) People's Court, "Reforming the Courts", Vietnam Law and Legal Forum, May 2009 (p. 7). 65 LEADCO. 2007. "Survey report on the needs, current status and effectiveness of legal 57 Van-Hoa To, "Judicial Independence" consultancy conducted by socio-political and (Juristforlaget i Lund, 2006) socio-professional organizations". Report prepared for UNDP, Hanoi. 58 Drafting team for the establishment of Administrative Tribunals, "Project for the 140 notes 66 Do Hoang Yen. 2009. "Introduction on the in the countries of the former Soviet Union newly established Vietnam Bar Federation. were more likely than elsewhere to report that Perspectives and challenges". Paper presented corruption was frequent, but not a problem. in the Vietnam Legal Forum, June 2009, Hanoi. 75 Gainsborough (2007) refers to the relationship 67 CECODES and Embassy of Finland, 2008. between civil society and the state as a "disciplined partnership." 68 This is based on formal wage earnings of the respondent, rather than household income. 76 "Join the club: civil organizations in Vietnam" (Dr. Nguyen Minh Phuong, Scientific Institute on 69 This section draws on Davidsen et al 2009. State Organization, MOHA, November 2007) 70 Vietnam is one of seven pilot countries for "Filling the Gap: The emerging civil society in 77 the Construction Sector Transparency Initiative Vietnam" (Irene Norlund, 2007) (CoST), which is being led in Vietnam by the Ministry of Construction with support from UK- 78 "Forms of Engagement between State DFID and the World Bank. Agencies & Civil Society Organizations in Vietnam" (VUFO-NGO Resource Center, DFID 71 See, for example, Christiane Arndt and Charles and Embassy of Finland, 2008) Oman (2006) "Uses and Abuses of Governance Indicators." OECD. Development Centre 79 CBOs' involvement in monitoring government Study. Paris: OECD; Stephen E. Knack (2007) programs. Lessons from Vietnam (Oxfam GB, "Measuring Corruption: A Critique of Indicators 2009) in Eastern Europe and Central Asia." Journal of Public Policy. 27:255-291; and James H. 80 By "locality-specific", we understand legal Anderson (2009) "A Review of Governance documents that do not directly implement Indicators in East Asia and the Pacific", World legal documents issued by superior authorities. Bank, processed. The 1996 Law on the Promulgation of Legal Documents allowed People's Councils to issue 72 "Anticorruption in Vietnam: The situation only legal documents that implement legal after two years of implementation of the Law documents of superior authorities. The 2004 (Embassy of Finland, Cecodes, 2008)". Nine Law on the Promulgation of Legal Documents provinces in three areas of the country: four by People's Councils and People's Committees, northern provinces, Ha Giang, Lao Cai, Ha Noi, allowed People's Councils to issue legal and Thai Binh; three Central provinces, Thanh documents that do not directly implement Hoa, Da Nang and Lam Dong; and two provinces legal documents of superior authorities e.g. in the South, Ba Ria ­ Vung Tau and Long An. legal documents approving the socioeconomic development plan of the locality. 73 Characteristics of the Vietnamese Business Environment: Evidence from a SME Survey in Department of Deputies' Activities, National 81 2007 (CIEM and University of Copenhagen, Assembly, 2009. 2008) 82 Report on the Analysis of Vietnam's Current 74 Martin Gainsborough, Dang Ngoc Dinh, and Legal Framework for People's Councils: A Tran Thanh Phuong (2009) argue that corruption Perspective from Ninh Thuan (Oxfam GB, in Vietnam is systemic, rather than an aberration 2009) to an otherwise healthy system. James Anderson and Cheryl Gray (2006) found for countries in 83 On-line dialogue of National Assembly vice- eastern Europe and Central Asia that in firms chairman Nguyen Van Yeu with citizens on the 141 modern institutions election to the National Assembly, hosted on 2 vice-chairman of Committee on Economic and May 2007 Budget Affairs, 2007) 84 Office of the National Assembly, 2009. 88 Report on the Public Opinion Survey Result on: National Election of Parliament members for 85 The National Assembly of Vietnam and its the 12th mandate period (ONA and EC, 2007) Oversight Role ­ Achievements and Challenges (Associate Professor Dr. Dang Van Thanh, former 89 The 2008 Millenium Development Report vice-chairman of Committee on Economic and (UN) Budget Affairs, 2007) 90 National Assembly of Vietnam: Represents 86 Research Report on the Amendment of the voters at constituencies and the entire people Law on the Promulgation of Legal Documents (Dr. Nguyen Si Dung, 2007). and Issues Related to the Legislative Process (ONA and EC, 2008) 91 This section draws on the excellent studies by Catherine McKinley (2009), Culpin Planning 87 National Assembly of Vietnam and its Limited (2009), and Davidsen and Rama Oversight Role ­ Achievements and Challenges (2008). 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Hanoi. the publication "Women in Retirement Age". Hanoi. 151 Annexes modern institutions Annex 1- Timelines This annex presents a series of timelines depicting changes in devolution and accountability. The purpose of the timelines is to provide a rough picture of how devolution and accountability have proceeded in Vietnam. The timelines capture not only the specific events, but give a sense of the cumulative changes that have taken place. Devolution, shown above the arrow, refers to legal event that influence decision making rights, responsibilities and tasks, budget sources, human resources, and the right to be legally established. Accountability, shown below the arrow, refers to legal events that result in an increase in upward accountability to government authorities through approvals, reporting requirements, inspections and monitoring, sanctions, standards and other conditions. It also includes legal events that result in an increase in downward accountability to citizens and enterprises through increased transparency, fewer opportunities for corruption, public participation, governing structures, external oversight by citizens, enterprises, CSOs, people's elected bodies and SAV. Two caveats are in order. First, an exercise such as this necessarily requires many judgment calls. Some actions may have characteristics of both devolution and accountability. Some may largely codify or consolidate other legal practices, or even informal practices. We have attempted to focus on changes in the legal environment and to the best of our knowledge the events depicted in the timeline were new. Second, the analysis is based only on policies specified in legal documents, not actual implementation. The date considered is generally the date of issuance of the legal document, not the date in which the legal document takes effect. 154 Local Governments - State Budget 1990: Two budget layers are stipulated: the central and provincial governments. 2002: Provincial governments are empowered 2004: The decision on the allocation of the NTP block funding to formulate budget allocations and revenue is transferred back to the central level, but provinces retain the 1996: Provincial governments are assigned 100% of some taxes and are assignments for the lower level governments. authority to allocate funds for specific projects within each allowed to share other taxes with the central government. The taxes to be shared NTP. are: VAT, enterprise and personal income taxes and remittance tax. The taxes Provincial governments are empowered to assigned 100% to provinces are mainly those on land, housing, natural formulate regimes and norms on expenditure 2006: Provinces are allocated capital expenditure transfers resources and various fees and charges. and budget allocation, to be followed by all more transparently and equitably, based on criteria like local levels. population, poverty and ethnicity. District and commune governments are assigned some minor revenues (trade license tax, slaughter tax, fees and charges, people's contributions) as well as a Equalization transfers from central government percentage of provincial revenues predetermined by law. to provincial governments are made stable for periods of 3 to 5 years. Spending powers over a wide range of activities are assigned to provincial governments, and to a lesser extent to district and commune governments, Provincial governments are entitled to share which are not assigned any spending powers in the areas of education, health, with the central government two additional technology and environment, among others. taxes i.e. special consumption taxes and fees of gasoline and oil, and to borrow domestically for Provincial governments are empowered to formulate regulations on the infrastructure investment up to 30% of the collection of fees, charges and people's contributions at local levels. provincial capital budget. 2000: Provinces are allocated a block of funding for all NTPs and are entitled to decide the allocation of this funding between the different NTPs. DEVOLUTION 1986 ACCOUNTABILITY 2009 1996: The allocation and execution of local budgets are required to be approved 2002: The budget allocations and revenue 2004: Local governments of all levels are required to disclose and supervised by the People's Councils of all levels. assignments for the three local levels are the estimates and uses of annual state budgets, the transfers required to be approved by the Provincial received from higher levels, and the collection and use of The regulations on the collection of fees, charges and people's contributions at People's Council. people's contributions. local levels are required to be approved by the Provincial People's Council. The regimes and norms on expenditure and 2005: Individuals, mass-organizations and media obtain the Sharing rates for sharable taxes between the central government and the budget allocation at local levels are required to right to request information to local governments and to provinces are required to be approved by the NA Standing Committee. be approved by the Provincial People's Council, receive the information within 10 days, except in some cases. Central budget allocations to provinces and sectors are required to be approved and to be in compliance with Government's regulations. 2007: At commune level, the timing, forms and by the NA Standing Committee. responsibilities for the publication of budgets are improved. The Government-attached State Audit Agency is given the mandate to audit all The authority to approve central budget People's Inspection Boards and Community Investment state agencies and units with state budget revenues and expenditures. allocations to provinces and sectors is transferred Supervision Boards are assigned to oversee commune from the NA Standing Committee to the NA budgets. 1998: Individuals and organizations can submit complaints on administrative plenary. decisions\acts and denunciations on illegal acts, against all local governments Deputy heads of division and higher positions in provincial and their employees. 2003: Commune governments are required to and district governments, as well as certain commune publicize regulations on payers and levels of government officials, are mandated to declare their assets and Commune governments are required to publicize the estimates and uses of taxes, charges and fees. income. annual commune budgets, assorted funds and people's contributions. People are entitled to supervise commune budgets through various forms. CSOs, private sector, media and citizens are made responsible and assigned various tasks to prevent and detect corruption, including at local levels. 155 Local Governments ­ Socioeconomic Development Planning 1989: Decisions on the five-year socio- 2003: Local governments of all levels gain 2005: The participation of local governments in 2006: The regulations for the preparation of regional economic development plan of a given more responsibilities in the co-ordination, the formulation of the national five-year SEDP development plans are adopted, specifying institutional level of government are decentralized to budget allocation and finalization of the is strengthened, remarkably by engaging them responsibilities, including for local governments. that same level of government. SEDPs in their respective levels. earlier in the process. DEVOLUTION 1986 ACCOUNTABILITY 2009 1989: Local governments are required to 2004: People's Councils of all levels are empowered to issue legal documents to decide on 2006: All state agencies are mandated to disseminate develop their local planning based on plans on socio-economic development in their respective localities. strategies and master plans in their websites. overall national, sectoral and economic zone planning. Provincial annual and five-year socioeconomic development plans are required to be Regional plans are required to be disclosed. formulated based on evidence and public consultation. 1998: Commune governments are 2007: At commune-level, the timing forms and mandated to publicize the socio-economic responsibilities for disclosure and consultation of development plans of the commune, and socioeconomic development plans are improved. to collect public comments on the drafts 2009: The practices of publicizing socioeconomic of these plans. development plans and conducting public consultation of their drafts are institutionalized for the three sub- national levels (pending approval). 156 Local Governments - Public Investment 1996: Provincial governments are entitled 2000: The threshold of category B projects is raised, which allows provincial 2007: Provincial governments gain the authority to ratify the list to formulate the assignment of governments to decide on investment projects of higher value. of and granting licenses for investment projects in public-private responsibilities at local levels to spend on arrangements such as BOT, BTO & BT. public investment projects. Local 2005: The decentralization of investment decisions to provinces is made irrespective of governments of all levels are allowed to the project category, but the list of category A projects (projects of more importance) is spend on public investment projects. decided by the Prime Minister, and the capital amount for individual category A projects must be decided jointly by provinces and ministries. 1999: Provincial governments are entitled to decide on public investments projects Provincial governments are authorized to issue licenses to foreign investment projects. of categories B and C (projects of lesser 2006: The assessment and approval of ODA-funded projects is decentralized. importance). Provinces are allocated capital expenditure transfers more transparently and equitably. DEVOLUTION 1986 ACCOUNTABILITY 2009 1996: The assignment of responsibilities 2003: Guidelines on the supervision and evaluation of investment projects at provincial 2007: Standard and detailed reporting is introduced for all ODA- at local levels to spend on public level are issued. PMUs are required to produce and submit quarterly sum-up evaluation funded public investment projects. The reports are required to be investment must be approved by the reports on their projects. submitted to the NA, Prime Minister and mass-organizations. Provincial People´s Council. Public procurement is strengthened through open bidding and a bulletin for advertising The modern principles of transparency and corporate governance 1998: Individuals and organizations can procurement opportunities, award results, list of firms banned to receive state contracts, are introduced in provincial infrastructure funds. submit complaints on administrative among other procurement-related information. decisions\acts and denunciations on illegal CSOs, private sector, media and citizens are made responsible acts, against all local governments and Commune governments are mandated to collect people's opinions on undertakings and and assigned various tasks to prevent and detect corruption, their employees. plans on infrastructure construction before making decisions. including at local levels. Commune governments are required to 2004: The allocation and use of investment funds in all capital projects using state At commune level, the timing, forms, and responsibilities for publicize investment projects in budget sources are mandated to be publicized. disclosure and consultation of investment plans and projects are communes, and the estimates and uses of improved. 2005: Foreign investment projects licensed by provincial governments are required to state funds and people's contributions for be suitable to local management capacity and socio-economic development. People´s supervision over infrastructure investment in communes the investment projects. is improved, remarkably by further empowering Community Community participation is mandated during the formulation of construction Supervision Investment Boards and People´s Inspection Boards. People in communes are entitled to decide investment master plans. After approval, plans are required to be publicized. the amount and undertakings of their 2008: The criteria for the selection of public investment projects contributions for the construction of More types of procurement-related information are required to be disclosed. The by provinces are tightened. Projects without adequate funding or infrastructure, and to supervise all the information is required to be publicized in a website in addition to the bulletin. with outdated objectives must be stopped. MPI must review all communes' construction projects. Oversight over procurement processes is improved through the introduction of a projects and suspend those considered ineffective or inefficient. 1999: Investment plans of provincial bidding inspectorate and an advisory council on bidding complaints. Procurement examinations are mandated for a selection of governments are required to be nested into The legal framework for the establishment and operation of Community Investment investment projects and for the PMUs of all local governments, sectoral and local development plans, and Supervision Boards is adopted. These Boards are allowed to supervise public regularly based on a plan and extraordinarily upon a problem. state budget capital plans. Investment investment programs and projects "that directly affect the population in communes". plans of districts and communes are A hotline unit in MPI is created to receive and handle required to be approved by the Individuals, mass-organizations and media obtain the right to request information to procurement complaints. Supervision by the community of immediately superior local government. local governments and to receive the information within 10 days, except in some cases. project procurement activities is explicitly authorized. Pre-feasibility studies are made 2006: Infrastructure master plans are required to be based on the broader, regional 2009: Standard monitoring and evaluation for all public compulsory for all investment projects. development plans. investment projects is introduced. 157 Local Governments - Public Investment under Program 135 1998: Program 135 is launched. District governments are 2000: The authority over the planning, allocation and 2006: A second phase of Program 135 is approved for the period entitled to receive funds for infrastructure investment projects in management of NTPs is transferred from the central 2006-2010. The revised Program fully devolves the authority to communes faced with extreme difficulties. Investment projects government to the provinces. Provinces are allocated a manage investment projects to the commune level. can be chosen by the commune governments out of a menu of block of funding for all NTPs and are entitled to decide options, but the plans of the commune require district approval. the allocation of this funding between the different NTPs, including Program 135.. 2004: The decision on the allocation of the NTP block funding is transferred back to the central government, but provinces retain the authority to allocate funds for specific projects within each NTP. DEVOLUTION 1986 ACCOUNTABILITY 2009 1998: Information on investment projects and programs in 2003: Commune governments are mandated to collect 2006: The revised Program 135 increases participation in planning communes is required to be publicized. The estimates and uses people´s opinions on draft plans on the implementation of and investment management at the commune level, and of state funds and people's contributions for investment projects all NTPs, including Program 135. communications outreach to promote public access to information must also be publicized. about Program 135. 2005: Community supervision of public investment People in communes are entitled to decide on the amount and programs and projects "that directly affect the population 2007: The timing and forms for disclosure of information at undertakings of their contributions for infrastructure in communes" is facilitated through the adoption of the commune-level are improved, as well as the forms for collecting construction, and to supervise all the commune's construction legal framework for the establishment and operation of public comments on draft plans. The responsibilities of commune projects. Community Investment Supervision Boards. The reports governments to implement those tasks are clearly specified and and proposals of these Boards go to local governments, strengthened. People´s Councils, MPI, and Prime Minister. People's supervision over infrastructure investment at the commune level is improved, remarkably by further empowering Community Supervision Investment Boards and People's Inspection Boards. 158 Local Governments ­ Land Use Management 1993: Local governments of all levels 2001: Provincial governments can now decide on land recovery, allocation, conversion obtain the responsibility of formulating and lease to organizations regardless of the size and the purpose of the land, except for land use plans in their localities. land for national security and defense and for generating capital for infrastructure. Provincial and district governments gain District governments gain the authority to decide on land recovery, allocation, the authority to decide on land recovery conversion and lease to individuals\households for purposes other than agriculture and and allocation to organizations (provincial forestry. Commune governments are empowered to lease of land for agricultural and governments) and individuals\households forestry use. (district governments) for agricultural and forestry purposes. 2003: Provincial governments gain the responsibility to formulate and implement Provincial governments gain the authority resettlement projects aimed at compensating persons subject to land recovery and to decide on land recovery and allocation relocating their residences. They also gain the authority to annually decide on the land for purposes other than agriculture and price framework, which serves among other purposes to calculate compensations. forestry, but only for pieces of land of 1 to The authority on the formulation of the land use plans of communes inside the zoning 10 hectares, depending on the case. area for urban development is transferred from commune to district governments. DEVOLUTION 1986 ACCOUNTABILITY 2009 1993: Land-use plans prepared by local 2003: Land-use plans, land recovery decisions, plans for compensation, site clearance 2007: Draft plans on compensation, support and resettlement are governments must be first approved by the and resettlement, and land prices are required to be publicized. mandated to be publicized for collection of public comments. People´s Councils, and then submitted to Answers must be provided in cases when there are many the immediately superior government for Land-use right holders are entitled to increased compensation payments and better opinions against the draft plans. approval. resettlement support policies. The land price framework used to calculate compensations must be close to the actual market prices and must be based on the price Resettlement and compensation procedures are clarified for cases Decisions on land allocation by local determination methods regulated by the Government. where occupants lack land-use right certificates. governments are mandated to be aligned with the approved land use plans. The Voluntary land conversion is introduced for some commercial investments projects. At commune level, the timing, forms and responsibilities for the management of land by local governments Under this modality, land holders are allowed to negotiate directly with investors to set disclosure and consultation of land-related plans are improved. is subject to specialized land inspections. the compensation price. People's Inspection Boards and Community Investment Supervision Boards are assigned to oversee land use management The reasons, time and compensation 2004: Limitations are imposed on the types of projects for which land can be recovered at commune level. arrangement for land recovery are required Land-use plans of hi-tech parks and economic zones are explicitly required to be to be notified to the concerned land users in 2008: In the forest development sector, guidelines for disclosed. All land-use plans are required to be disclosed in detail. participatory land-use planning are issued. advance. The contact information for receiving land-related complaints and denunciations and 2009: Compensations for land recovery are required to be based 1998: Individuals and organizations can the settlement decisions on land-related complaints are required to be publicized. submit complaints on administrative on the market price at the time of issuance of the land recovery decisions\acts and denunciations on illegal The land price determination system becomes much more flexible and is required to be decision. Support policies for resettlement are further improved. acts, against all local governments and adjusted in accordance with changing market values. Detailed support policies for Land development funds are mandated to be established at their employees. people affected by resettlement are stipulated. provincial and district levels to better implement land recovery, resettlement and compensation. Commune governments are mandated to 2005: People are entitled to be informed about the elaboration of land use plans by all publicize land-use plans, and to consult agencies. The elaboration of land use plans must ensure democracy and publicity Urban plans are required to be accessible to the general public. with people draft land-use plans and the Draft urban plans must be consulted with the public and sent to Guidelines for the formulation of land use plans are issued, indicating clearly the the NA and People's Councils. plans and undertakings on compensation authority and obligations of each level. for ground clearance. A more comprehensive framework is adopted on the 2006: The land price framework used for determining compensations is required to be compensation to individuals and organizations for damage People are entitled to supervise the the market price when the price set by the provincial government is not in line with management and use of land at the caused by illegal activities of state employees, including while market prices. Job-change support policies are improved for households losing more recovering, allocating and converting land, and while commune level. than 30% of their agricultural land. undertaking compensation, site clearance, and resettlement. 159 Local Governments - Human Resource Management 1998: Provincial governments become 2003: Provincial governments become responsible for 2005: Administrative units at local levels under the block grant modality gain more responsible for managing civil servants "in the planning and evaluation of staffing in their autonomy in relation to staff remuneration. accordance with the Government´s assignment attached units and in district governments. and provisions of the law". The management of Heads and deputy heads of agencies and units in all local governments are made civil servants includes: recruiting, appointing, 2004: Provincial governments are given the power to responsible for preventing corrupt acts in their respective domains. deciding on staffing plans, organizing decide increases in salary grades and certain allowances for civil servants in all local levels. 2009: Heads of agencies and units in all local levels become responsible for the evaluation assignments, evaluating work, and inspecting the of the performance of civil servants under their domains. implementation of regulations, among others. Provincial governments gain the right and responsibility to use their own financial resources to Provincial governments gain the power to decentralize and delegate the recruitment of Managerial positions in local governments are pay for the salaries of civil servants in local civil servants within their jurisdictions. They also gain the power to issue regulations on made responsible for the performance of their governments. the authority, sequence and procedures for the appointment of civil servants to positions subordinate staff. of leadership and management. District governments can now decide on human resource management, but only if they are 2001: Administrative units at local levels under assigned to do so by the provincial governments. the block grant modality gain the power to use cost savings to increase staff salaries up to 2.5 times the basic salary. DEVOLUTION 1986 ACCOUNTABILITY 2009 1993: A common minimum salary and standard 2003: Staffing plans of local governments are required 2005: All local governments are mandated to publicize the recruitment of civil servants, in salary-multiplying coefficients become to comply with the quotas and norms determined by terms of quantity, criteria, forms and results, and the plans for promotion, appointment, compulsory for civil servants in all local the central government. The management of staffing commendation, training, dismissal, discipline and retirement of civil servants. governments. by provincial governments is subject to inspections by the central government. Civil servants at local levels obtain the right to request information to the heads of the 1998: The recruitment and management of civil agencies or units where they work, and to receive the information within 10 days, except in servants in local governments is required to abide The annual staffing plans of provincial and district some cases. to the standard rules, procedures and disciplines governments are required to be approved by the specified in the Ordinance on Officials and Public Provincial People's Councils. The management of civil servants in all local governments is required to abide to the Employees. standard regulations of the Law on Anti-Corruption, such as rotation of sensitive positions, 2004: Increments in salaries and allowances are declarations of income and assets, payment of salaries through bank accounts, restrictions Civil servants at local levels are entitled to required to follow the guidelines of the central on the reception of gifts, and ethics codes. complain about disciplinary decisions of government. competent persons that contravene laws and 2007: Chairpersons and vice-persons of commune governments become subject to votes of Units under local governments are prohibited to use confidence by various community groups. infringe upon their legitimate rights and interests. 10% of their regular expenditure for paying salaries. In these units, at least 35-40% of the generated revenues 2009: The principles of competition, merit-orientation and transparency are required to be are required to be used for paying salaries. Salaries applied in the recruitment, appointment, promotion and dismissal of civil servants in all must also be paid with 50% of the difference between local governments. planned and actual revenues of the local government. The criteria for the evaluation of civil servants in all local governments include the results of the execution of assigned tasks and the attitude with people. 160 Administrative Units 1999: Business registration units are 2003: Land registration units are mandated to 2007: Tax administrative services delegated clear responsibilities in relation be established at provincial level and, on the nationwide are delegated to functional units to business registration and administration. basis of demand, at district level. The units e.g. tax collection units, taxpayer are responsible for registering land registration units. 2001: Administrative units in all levels of transactions, managing land files, and government gain substantial allocation carrying out land-related administrative The application of e-government is control over a 3-year fixed block grant formalities. delegated to specialized IT units at both from the state for administrative central and provincial levels. expenditures and staff costs. Cost savings 2005: Administrative units gain more can be used to increase staff remuneration autonomy in relation to administrative up to 2.5 times the basic salary. expenditures and staff remuneration. DEVOLUTION 1986 ACCOUNTABILITY 2009 1996: The OSS is piloted for the first time 2003: The OSS is required to be implemented 2006: All state agencies are required to 2008: The plan for the simplification by 2010 of all in HCMC. in four departments at provincial level, six publicize in their websites their administrative procedures of ministries and provinces procedures at district level and four administrative procedures and the is issued. 1998: Individuals and organizations can procedures at commune level. responsible officials. State websites must submit complaints on administrative also be used to provide on-line services. Individuals and organizations are entitled to send their decisions\acts and denunciations on illegal 2004: The citizen report card survey is piloted feedback on all existing administrative procedures. The acts, against all agencies, organizations and in four urban cities for various public Administrative units are mandated to results of the handling of such feedbacks are required individuals. services, including administrative ones. publicize the contact information for to be publicized in a national on-line database. receiving complaints and denunciations At commune-level, regulations on 2005: Administrative units are mandated to from the public on the handling of The national household living standard survey adds for administrative procedures and settlement publicize administrative procedures, as well administrative services. the first time questions on administrative procedures. of people's affairs are required to be as the decisions on the settlement of publicized. An investment climate monitoring tool with 2009: The principles of consultation and user- complaints and denunciations. friendliness are required to be systematically applied in questions on administrative procedures is 2001: Heads of administrative units are All provinces and ministries are required to introduced as part of the annual enterprise the development of new administrative procedures and required to streamline their organizational conduct a review of their administrative survey. in the review of existing ones (pending approval) structure, reduce staff number, and prepare procedures to reduce red tape. plans on the use of savings. 2007: The OSS model is required to be An on-line national database with all the administrative The PCI enterprise survey is introduced to applied to all administrative levels and procedures is launched. assess provincial governance aspects such as units. OSS initiatives interlinking different Ministries and provinces are required to provide level-2 administrative procedures. units and/or administrative levels are online services and prioritize certain level-3 ones. introduced. Citizens' and enterprises' surveys on unofficial CSOs, private sector, media and citizens are payments are mandated to be undertaken on an annual made responsible and assigned various tasks basis. to prevent and detect corruption, including in administrative units. A more comprehensive framework is adopted on the compensation to individuals and organizations for At commune level, the timing, forms and damage caused by illegal activities of state employees, responsibilities for the disclosure of including while granting various licenses and administrative procedures are improved. certificates. 161 Service Delivery Units in Health and Education 1989: Public hospitals 2002: Partially and fully self-financed SDUs gain substantial 2006: Fully state-financed SDUs are also granted are allowed to charge allocation control over a three-year fixed block grant from the financial autonomy. More power is given to the heads of fees to cover parts of state. SDUs are encouraged to expand revenue resources, and all types of SDUs to reduce costs and raise revenues. In their costs and alleviate are allowed to use the receipts for reinvestment and for addition, the heads gain control over manpower (e.g. their financial increasing staff remuneration. SDUs are allowed to borrow recruitment, promotion, assignments, dismissal) and difficulties. from commercial banks to expand and improve services, to subordinate units (e.g. create, merge, dismantle). Fully keep the receipt of liquidated assets, and to hire additional self-financed SDUs are freed from any caps on staff staff on a contractual basis as needed. SDUs are given more remuneration, and the caps for partially self-financed autonomy to set user fees for on-demand and non-core SDUs are made less restrictive. services. 2005: SDUs in the health sector are allowed to mobilize private investment to establish joint ventures and business collaborations and to develop better quality services for those paying additional fees. DEVOLUTION 1986 ACCOUNTABILITY 2009 1994: A user fee scheme 2002: The adjusted salary of staff in partially and fully self- 2006: Responsible line ministries are mandated to 2008: In the health sector, annual in the health sector is financed SDUs is capped to 2 and 2.5 times the common formulate specific criteria for evaluating the performance performance self-evaluations by all SDUs established, with a range minimum salary, respectively. Additional payments to staff of SDUs, including quality of services. Feedback from are required. of fees for different must be made based on their performance. Salary packages service users should be used for the evaluations. types of services in are required to be disclosed and consulted with the labor union The national household living standard various types of before approval. Heads of SDUs are made accountable for SDUs are mandated to set aside 25% of their net revenues survey includes for the first time questions hospitals. their financial and human resources decisions. They are to invest in service quality before making additional on the cost, quality and corruption of mandated to submit budget estimates and annual financial payments to staff. Caps on staff remuneration are public health and education services. 1998: Individuals and reports to relevant state agencies imposed for fully state-financed SDUs. organizations can submit Negative behaviors and abuse of medical complaints on 2004: Minimum quality standards for primary schools Heads of SDUs are mandated to create conditions for the profession for making profit, such as administrative nationwide are adopted. Party and mass-organizations to join in supervision and asking for bribes or gifts, are banned. decisions\acts and management of all aspects of the SDUs´ operations. SDUs are mandated to publicize their annual state budget 2009: Tuition fees at secondary and denunciations on illegal 2007: Performance standards for primary teachers are tertiary levels are required to be revised to acts, against all agencies, expenditures, as well as the collection and use of contributions received from organizations and individuals. extended nationwide, including evidence-based reflect local economic conditions and the organizations and assessments. contribution capacity of the people. individuals. The citizen report card survey is piloted in four urban cities for various public services, including health and education. CSOs, private sector, media and citizens are made Annual citizens' surveys on unofficial responsible and assigned various tasks to prevent and payments are mandated. 2005: SDUs in the education sector are mandated to publicize detect corruption, including in SDUs. information on enrollment, exams, and award of diplomas and Criteria for the evaluation of principals of certificates. Heads and high-ranking officials in SDUs are mandated all secondary schools are specified, to be to declare their income and assets. used for promotions and dismissals. SDUs in the education and health sectors are mandated to publicize the collection, management and use of state A system for certifying health practitioners properties is outlined, to ensure that practitioners are qualified, and disciplined if they make mistakes repeatedly 162 Non-State Actors in Service Delivery 1993: Private provision of health care is 1999: Adoption for the first time of 2003: Adoption of policies to support the further 2006: All social organizations, socio-professional officially authorized policies to encourage non-state activities development of the private health sector organizations, economic organizations, groups of in the health, education, culture and sports individuals and individuals are allowed to create non- 1994: Non-state provision of education domains. 2005: Tertiary education opens to private sector state service delivery establishments in a wide range of services is authorized. participation. domains. Policies to encourage the development of The legal framework allowing social and non-state establishments include preferential conditions charitable funds to work non-for-profit on The private sector is allowed to invest in public SDUs in the health sector through: joint ventures, for credit and land, as well as reductions or exemptions culture, sports, scientific and "social" in various taxes and fees. Non-public establishments development is adopted. business collaborations and development of better quality services for those paying additional fees. are allowed to raise revenues from various sources and distribute profits to their capital-contributing members. 2007: Social and charity funds are explicitly allowed to work non-for-profit on the development of education and healthcare. 2008: More generous preferential policies are granted to non-public establishments delivering health, education, vocational training, culture, sports and environment services. Private enterprises with establishments, investment projects, joint ventures or partnerships in the above- mentioned services are now entitled to benefit from the same preferential policies as those applied to non- public service establishments. DEVOLUTION 1986 ACCOUNTABILITY 2009 1993: Provincial health departments are 1999: Social and charitable funds are 2003: The regulatory role of the Ministry of 2006: Non-public service establishments are mandated assigned responsibility for monitoring required to be managed by an elected Health over the private health sector is to make public their operations and finance, and to private practitioners, including the council and inspected by an independent strengthened. periodically report to and be subject to inspections by issuance of operating certificates or control board. Government approval is the corresponding line ministry, the ministry of finance licenses. needed for their establishment, charter, 2005: All establishments in the education sector and the tax administration. Line ministries and local merger, division and dissolution. are mandated to publicize information on governments of all levels are responsible for granting enrollment, exams, award of diplomas and and withdrawing licenses to non-public establishments certificates. and for ensuring service quality. 2008: Private enterprises with establishments, investment projects, joint ventures or partnerships in public services are now subject to the same accountability measures as those applied to non-public service establishments. 163 Law Making System 1996: Central-level authorities with the power to 2002: The Chief Judge of the SPC is empowered by the Law on 2008: The State Auditor General is empowered by the Law on Laws to issue issue legal documents are restricted to: NA, Laws to issue legal documents legal documents Standing Committee of the NA, President, Prime Minister, Government, Ministers, heads of 2004: People's Councils and People's Committees are entitled to The types of legal documents that each law-making authority can issue are central-level agencies, Judges' Council of the issue legal documents other than to implement documents of reduced. SPC, and Chief Prosecutor of the SPP. superior authorities, particularly in the areas of socio-economic development, budget, defense and security, people's livelihoods, and performance of state management functions. DEVOLUTION 1986 ACCOUNTABILITY 2009 1996: Before issuance, central-level legal 2002: Opinions of stakeholders directly affected by legal 2008: The specific responsibilities of the NA Law Committee in relation to documents are required to be evaluated by the documents are required to be collected during the drafting process. evaluating the constitutionality, legality and consistency of draft laws and MOJ, the NA Ethnicity Council and/or the NA ordinances are strengthened. specialized committees. The NA Law Committee is assigned to evaluate and ensure the constitutionality, legality and consistency of draft laws and All draft legal documents are mandated to be publicized in websites and other Approved legal documents are mandated to be ordinances. forms during at least 60 days for collection of public opinions. published in the Official Gazette, posted for public notice and communicated to the mass A two-session process for the hearing of laws and ordinances by All draft legal documents are required to collect opinions from MOF, MOHA, media. the NA is introduced. MONRE and MOFA on financial and hum an resources, environment and international treaties. Collection of public comments on legal 2004: Before issuance, local-level legal documents are required to documents is required "depending on the nature be evaluated by the local justice departments and/or the sections of Fast-track law-making procedures are introduced for cases of emergency or and contents of the draft legal document". the People's Councils. necessity of immediate legal changes. Mass-organizations are allowed to issue joint Clear guidelines on the rules and timing for publication of legal The MOJ is assigned to monitor the implementation of legal documents, legal documents with government authorities, and documents in the Official Gazette are issued. focusing on macro and inter-ministerial problems. make suggestions on draft legal documents. 2005: The effectiveness of legal documents is conditioned to their 2009: Drafting agencies are required to produce and publicize explanations Approved legal documents are required to be publication. on the assimilation of collected public opinions. supervised in order to detect and handle illegal Clear guidelines on the collection of comments from stakeholders Draft law-making programs are mandated to be posted on MOJ's website for documents. directly affected by legal documents are issued. collection of public opinions for at least 20 days. 1998: Commune governments are required to The MOJ launches an on-line legal database. Impact assessments of legal documents (RIAs) become mandatory prior to publicize legal documents issued by commune the drafting process, during the drafting process, and 3 years after taking authorities, as well as documents of superior 2006: The NA allows public access to its legal database. effect. All draft RIAs must be publicized for collection of public opinions. authorities relating to the commune. 2007: A separate NA committee specialized only on legal issues is Drafting agencies are allowed to mobilize organizations and individuals to All draft legal documents of Commune People´s established, facilitating its law evaluation tasks. assess impacts of legal documents, evaluating their enforcement, and Councils are required to be consulted. The NA launches a website for collection of public comments on conducting surveys and legal analysis. 2001: The law evaluation responsibilities of the draft laws and ordinances. Approved legal documents are required to be periodically reviewed by NA Ethnicity Council and all the NA specialized At the commune-level, the timing, forms and responsibilities for government agencies, and codified every 5 years by topic and area. Through committees are clearly specified. publicity of legal documents are improved. the review and codification, overlapping, contradictory, inappropriate and outdated documents must be identified. 164 Law Advocacy System 1987: Lawyers are allowed to 2001: Lawyers are allowed to practice in law offices 2006: The new Law on Lawyers sets the frame for independent law- 2007: State legal aid provision is provide legal consultancy and or law firms. practicing aimed at best protecting the legitimate rights and interests further decentralized and participate in legal proceedings of clients. brought closer to the remote as members of bar associations. 2002: A legal aid fund is set up to support state legal areas. Itinerant legal aid services aid operations Lawyers are allowed to represent their clients in legal proceedings and and commune-level legal aid 1994: Trade unions are allowed to practice law not only in law-practicing organizations but also clubs are legally specified. to provide legal advice on labor 2003: CSOs are allowed to provide legal individually. law consultancy services through legal consultancy The National Target Programs centers. They have the responsibility of providing Law-practicing organizations obtain the rights stipulated in the new include financial support for 1997: State legal aid centers free-of-charge services for certain groups, but they Enterprise Law. A new type of law-practicing organization is allowed legal dissemination and legal aid managed by the MOJ are can also collect charges. i.e. limited liability law firm. in disadvantaged communes authorized. Their function is to provide free-of-charge legal 2004: The new charter of the Vietnam Lawyers´ Foreign lawyers and branches of foreign lawyers´ organizations are 2008: Training institutions and counseling and legal services for Association recognizes the rights of the Association given the same treatment as domestic ones. law research units are allowed to the poor and other policy to take part in legal dissemination and consultancy, provide legal consultancy and to offer free-of-charge legal assistance to certain Bar associations are allowed to operate on the principle of self-finance beneficiaries. with own charters governing their internal affairs. They can represent services. Legal consultancy groups. centers can now contract legal and protect lawyers´ rights, provide training to lawyers and organize 2005: The JRS to 2020 includes the objective of their probation, and gather and report lawyers' opinions. practitioners for representing promoting the autonomy of lawyers' organizations. their clients in legal proceedings. Legal aid officials and the other authorized legal-aid providing The LSDS to 2010 includes the objective of persons gain the right of representing and defending legal aid 2009: The National Bar improving legal dissemination, legal consultancy beneficiaries in legal proceedings. Association is established, with and legal aid services. governing documents and The forms of legal-aid providing organizations and legal-aid structures approved by the providing persons are widened and diversified. All lawyers are lawyers' community. encouraged to provide free-of-charge legal aid. DEVOLUTION 1986 ACCOUNTABILITY 2009 1987: Lawyers are required to 2001: Lawyers are required a law-practice 2006: Foreign lawyers must comply with the legal practice principles 2008: Standard criteria to assess have a license from a bar certificate issued by the MOJ, and to go through a and obligations stipulated in the Law of Lawyers. the quality of legal aid cases are association to be able to professional practice probation. adopted. The satisfaction of legal practice. The managing board and charters of bar associations are voted by aid beneficiaries must be 2003: CSOs' legal consultancy centers and members in a congress. The adopted charter of the bar association considered in the assessment. consultants need a permit or card issued by the must be then approved by the government. MOJ. Legal consultants and collaborators must meet Bar associations become subject certain conditions and qualifications. The procedures for obtaining legal aid are made more efficient and to inspections by the MOJ, who convenient for beneficiaries. The management of legal aid cases is can handle violations and stop 2005: The JRS to 2020 includes the objective of strengthened. the implementation of decisions enhancing the accountability of lawyers' contrary to the Law on Lawyers. organizations to their members. 165 Judicial System 1989: Procedures for civil cases 1994: District courts are given jurisdiction 2002: The management of provincial and district courts is 2006: The jurisdiction of the court on under court jurisdiction are defined over economic disputes with value less transferred from the MOJ to the SPC. administrative cases is expanded to 22 types of in a systematic manner. than 50 million VND. cases. 2003: The right to lodge to the court administrative cases 1992: The Constitution requires The jurisdiction of the court on labor related to land management is restricted, as second-settlement 2009: Jurisdiction on civil and criminal cases is judges to be independent and disputes is confined to cases settled first decisions by provincial governments become final. extended to all district courts. subject only to the law in through conciliation and/or arbitration. adjudication. 2004: The court jurisdiction over civil disputes increases. The The management of civil judgment execution is The court is authorized to make final courts can now settle "civil matters" and accept cases from strengthened through the stipulation of an 1993: The courts are delegated the adjudication on strikes and collective more types of civil-lawsuit right holders. agency from central to local levels independent jurisdiction to settle economic labor disputes. from local justice departments. cases. Economic courts are Jurisdiction on civil and criminal cases is extended to some required to be established at 1996: The courts are given jurisdiction on district courts. District courts meeting certain capacity The circumstances under which local administrative cases, but only for 8 types conditions obtain jurisdiction over most business and governments or their civil judgment execution provincial level. of cases. commercial disputes irrespective of the dispute value. departments can veto judgments or send them back to the courts are eliminated. 1998: The jurisdiction of the courts on 2005: The JRS to 2020 plans to enhance the independence of administrative cases is limited to cases the judicial branch through: extension of the term of office A HCMC pilot on hiring private-sector bailiffs settled first by a government authority. and\or application of lifetime appointment; separation of to assist in judgment execution and some court judges, prosecutors and investigators from the court activities is approved. administration; organization of a jurisdiction-based court system independent from administrative agencies; removal of the functions of the procuracy on judicial supervision. DEVOLUTION 1986 ACCOUNTABILITY 2009 2003: The Criminal Procedural Code confirms the 2006: The results of investigations on Constitutional principle of openness of trials to the public, corruption cases start being disclosed. except for some specific criminal cases. 2007: A separate judicial committee is 2004: The Civil Procedural Code confirms the Constitutional established in the NA to better supervise judicial principle of openness of trials to the public, except for some affairs. specific civil cases. 2009: The SPC launches its website and 2005: The JRS to 2020 plans to enhance the oversight over the publicizes there a selection of cassational review judicial branch through: strengthening of internal control judgments of the Justice Council of the SPC. mechanisms, promotion of the oversight by elected-bodies and mass-organizations; creation of favorable conditions for The procedures for civil judgment execution are people to participate in court proceedings; enhancing the role simplified, and the monitoring and complaints of the mass media in providing and disseminating information system is improved. on judicial activities. A more comprehensive framework is adopted on The JRS to 2020 plans to enhance the transparency of the the compensation to individuals and judicial branch through: gradual publication of judgments, and organizations for the damage caused by illegal activities of state employees, including while increased openness and democracy of proceedings. issuing decisions related to judgment execution or by intentionally not issuing those decisions. Bailiffs must be appointed by the MOJ. 166 National Assembly and People's Councils 1992: A Standing Committee of the NA is established in 2001: The NA obtains the right to cast votes of 2003: PCs obtain the right to cast 2007: Separate law, judicial, substitution of the old "State Council". Members of the NA confidence on officials elected or ratified by the votes of confidence on officials economic and budget committees are Standing Committee are prohibited to be members of the NA, including the Prime Minister, president and elected or ratified by the PCs. established to strengthen the roles of Government at the same time. ministers. the NA in these areas. PCs gain responsibilities in the co- The role of the chairman of the NA is no longer limited to The oversight responsibilities of the NA ethnicity ordination, budget allocation and An NA committee is for the first time administration and coordination. He becomes the head not only council and seven specialized NA committees are finalization of SEDPs in their explicitly assigned to oversee the of the NA but also the head of the Standing Committee of the specified and strengthened. respective levels. detection and handling of corruption. NA. He can now certify NA laws and resolutions. Full-time deputies in the NA are set to a 2004: PCs are allowed to issue 2008: The specific responsibilities of The Constitution recognizes the right of the NA's and PCs' minimum of 25% legal documents other than to the NA Law Committee in evaluating deputies to make questions and receive answers from the highest implement documents of higher the constitutionality, legality and authorities in the presidency, government, court, procuracy, NA 2002: The power to allocate budget to sectors and level authorities, particularly in the consistency of draft laws and and PCs. provinces is transferred from the NA Standing areas of socio-economic ordinances are strengthened. Committee to the NA plenary. development, budget, defense and 1996: The NA Standing Committee is empowered to approve security, and people's livelihoods. A pilot on the removal of PCs at the state budget allocation to sectors and provinces. The NA can The NA Law Committee is assigned to evaluate district and ward levels is approved. also approve the list of national programs and projects. law constitutionality, legality and consistency. 2005: The NA and PCs of all levels Provincial PCs are empowered to approve budget become responsible for supervising Provincial PCs are empowered to approve regulations on fees, the work on anti-corruption. charges and people's contributions at local levels, as well as the allocations and revenue assignments for the three assignment of authority at local levels to spend on public local governments, as well as the norms on investment projects. budget allocation and expenditure at local levels. DEVOLUTION 1986 ACCOUNTABILITY 2009 1992: The Constitution mandates NA´s and PCs´ representatives 2001: Full-time NA delegations are established in 2003: A law detailing the election 2007: The NA launches a website for to maintain close contacts with voters, accept their supervision, provinces to facilitate contact with voters. of PCs deputies is adopted, along collection of public comments on reflect their opinions, answer to their requests, and report to the same lines as the law detailing draft laws and ordinances. them on activities. 2002: Candidates to the NA are required to the elections of NA deputies. declare their assets. NA's and PCs' candidates and full- 1997: A law detailing the election of NA deputies is adopted. Key positions in PCs at commune- time deputies are required to declare The NA Standing Committee is entitled to propose the number level become subject to votes of their income and assets. Declarations and composition of deputies. Participation is open to citizens confidence by mass-organizations. can be verified. running on their own and to non-party members. The Fatherland Front is assigned to monitor the election process and organize Deputies in PCs can be dismissed 2008: The NA Institute of Legislative conferences with voters to nominate candidates. Voters can by voters or by two thirds of the Studies of the NA is established to express their complaints on the nominations. PC, depending of the seriousness mobilize knowledge and society's of their violations. attention into the legislative work of 1998: When receiving complaints and denunciations from the NA. citizens, the NA and PCs are obliged to urge competent officials 2006: The NA allows public access to promptly settle them. to its legal database The Public Opinion Research Institute starts to assist the NA on Ministerial Q&A sessions start being broadcast live on TV. collecting public opinions on some draft laws. 167 State Audit of Vietnam 1994: The SAV is established as 2002: The SAV is explicitly required to audit the 2005: The SAV is transformed into an independent an agency attached to the budgets of all the levels of government. specialized agency established by the NA with power Government to audit all agencies and organizations using state 2003: SAV is allowed to employ private audit budget, money and property. 1996: The SAV is assigned to firms and auditors to provide assistance to its audit all state agencies and units audit work The SAV is given the responsibility to assist the NA tasked with state budget revenues Budget Committee and other NA agencies in budget and expenditures. oversight. The SAV is assigned to detect corruption cases through its audits and to forward them to competent agencies for handling. The Auditor General is authorized to issue legal documents. DEVOLUTION 1986 ACCOUNTABILITY 2009 1994: The State Auditor General is 2002: The audit results are required to be reported 2005: The annual audit reports, their financial 2008: The detailed content and timing of made accountable to the Prime to the NA, the Government and other agencies, statements and the reports on the outcomes of the disclosure of SAV reports are legally specified. Minister. including the People's Councils. implementation of auditing conclusions, are mandated Audit reports of individual entities are required to be disclosed in the website and publications of the to be disclosed. Prompt and transparent 2003: Performance auditing is introduced SAV and through press conferences. correction of errors is mandated. Auditing standards consistent with international 2009: Procedures for the annual audit plan are practices are adopted. adopted, ensuring sufficient frequency and adequate provincial coverage. 2006: An anti-corruption action plan to prevent and combat corruption within the SAV is issued. 168 Mass-Organizations 1989: A new legal framework for 1996: Mass-organizations are allowed to issue joint legal 2003: The Fatherland Front is given the 2006: Mass-organizations and other CSOs are mass-organizations is introduced, documents with central-level government authorities and responsibility to organize votes of confidence encouraged to create non-public service providing them with more to make suggestions on draft legal documents. for village chiefs and key positions of delivery establishments independent management and Commune People's Councils. 1997: The Fatherland Front is assigned to monitor the 2007: The engagement of mass-organizations finance, and promoting voluntary NA election process and to organize the nomination of Mass-organizations and other CSOs are allowed and other CSOs in the provision of legal aid is membership. candidates. to provide legal consultancy services. strengthened. 1998: Mass-organizations are given the responsibility to 2004: Mass-organizations become responsible Mass-organizations become responsible for assist Commune People´s Committees in the for monitoring public finance transparency in coordinating with state agencies and People´s implementation of grassroots democracy at commune all government levels. Councils in disseminating the Law on Anti- level Corruption and in overseeing its implementation The Fatherland Front becomes responsible for Mass-organizations are entitled to take part in organizing the contribution of opinions of 2008: Mass-organizations and other CSOs are conciliation groups to settle disputes at grassroots level mass-organizations´ members to legal entitled to provide feedback on all existing documents issued by People´s Councils. administrative procedures Mass-organizations and other CSOs are allowed to submit complaints and denunciations 2005: Mass-organizations obtain the right to 2009: Mass-organizations and other CSOs are request information to all agencies, entitled to provide comments on all draft legal 1999: The roles of the Fatherland Front are expanded, organizations and units and to receive the documents and to engage with drafting agencies including: supervision of all state activities; monitoring information within 10 days, except in some in assessing impacts of legal documents, the People's Councils election process and organizing the cases. evaluating the enforcement, conducting surveys nomination of candidates; participating in the selection of and legal analysis. judges and nominating candidates for the courts' juries. DEVOLUTION 1986 ACCOUNTABILITY 2009 1989: The establishment of mass- 1999: The organization and activities of the Fatherland 2003: The activities of mass-organizations at 2007: Certain positions in mass-organizations organizations is required to be Front are required to be based on the principle of grassroots level are mandated to be supervised are obliged to declare their income and assets. authorized by the heads of consultation. by people. People´s Committees and\or the head of the Council of Ministers. 2004: Mass-organizations receiving support Mass-organizations are to be from the state budget are required to publicize managed by the corresponding state budgets and expenditures. sectoral state agency. 169 Other Civil Society Organizations 1992: The legal framework for 1999: The legal framework 2003: The legal framework for the establishment and operation 2007: Business and professional associations become responsible the establishment and operation for the establishment and of associations is adopted. Associations can self-finance with for actively participating in anti-corruption. of science and technology operation of non-for-profit various sources, carry out activities for their members, contribute The legal frameworks for social and charity funds and small- organizations is adopted. social and charity funds is opinions to legal documents and provide consultancy and sized financial institutions are revised to facilitate their adopted. These funds can criticism. establishment and operation. The legal framework for 1995: The legal framework for work on culture, sports, the establishment and operation CSOs are allowed to provide legal consultancy services. collaborative groups is specified in detail. scientific and social of collaborativegroups at development. Community investment supervision boards and people's commune level is adopted. 2004: The legal framework for the operation of business associations is improved. inspection boards gain additional responsibilities on anti- Members of these groups can 1999: Policies to corruption and grassroots democracy. contribute assets and labor for encourage service delivery 2005: The legal framework for the establishment and operation carrying out certain tasks and by CSOs and other non- The engagement of CSOs in the provision of legal aid is of community investment supervision boards and people's strengthened. mutually enjoy benefits. state actor are adopted. inspection boards are adopted. 2008: CSOs are entitled to provide feedback on all existing 1998: CSOs are allowed to 2000: The rights and The legal framework for the establishment and operation of administrative procedures. submit complaints and autonomy of science and small-sized financial institutions is adopted. denunciations. technology organizations 2009: CSOs are entitled to provide comments to all draft legal are expanded. 2006: CSOs are encouraged through various preferential policies documents, and to engage with drafting agencies in assessing to create non-public service delivery establishments. impacts of the legal documents, evaluating their enforcement, 2001: The legal framework and conducting surveys and legal analysis. for the establishment and operation of social The activities of science and technology organizations protection centers is issued established by individuals are restricted to seven fields. DEVOLUTION 1986 ACCOUNTABILITY 2009 1992: Science and technology 1999: Social and 2003: The charter, leadership and control board of associations 2007: Business and professional associations are mandated to organizations must be charitable funds are are required to be voted by members. Government approval is apply measures to prevent and detect their internal corruption. established by the Council of required to be managed needed for their establishment, initial mobilizing committee, Ministers, Ministries or mass- by an elected council and charter, merger, division and dissolution. Associations are 2009: Evaluations of government policy by science and organizations, and must be inspected by an required to report to the government the use of their funds and technology organizations established by individuals are registered under the state science independent control their annual organization and operation situation. required to be approved by the government before publication. committee. board. Government approval is needed for The activities of CSOs at grassroots level are mandated to be 1995: The cooperation contracts their establishment, supervised by people. of cooperative groups must be charter, merger, division authenticated by the commune 2004: A minimum number of founding members is imposed for and dissolution. associations and for their initial mobilizing committees. government. The head of a cooperative group must be 2000: Taking advantage All CSOs receiving support from the state budget are required to elected by the members. of science and publicize state budgets and expenditures. technological activities is strictly prohibited e.g. 2005: Community investment supervision boards and people's distorting or opposing inspection boards are elected by people in communes and state policies and laws, approved by the Fatherland Front. They are required to submit º infringing upon private reports periodically to the Fatherland Front. and state interests. 170 The Media 1989: The State, the Party and social 1999: Media agencies are allowed to use 2002: Media agencies are allowed to 2006: Administrative sanctions are stipulated for those who organizations are allowed to set up sources of finance other than the funds "organize business and service activities" fail to supply information to the media, obstruct their lawful media agencies. provided by the parent organization, in some stages of the product cycle e.g. professional activities, or hurt or threaten journalists. including business revenues and voluntary printing, distribution, advertisement.. The media obtains the right to report contributions from organizations and 2007: The mechanisms for supply of information of the citizens´ feedback on public affairs and individuals. The head of the media agency is separated government to the media are comprehensively specified. to receive a response from government from the head of the parent organization. on the feedback. The media becomes responsible for disseminating anti- Media agencies are allowed to disagree corruption policies, mobilizing people to participate in anti- The media obtains the right to request with the reported corrections, and to refuse corruption, praising good anti-corruption behaviors and and be supplied with information from to publish the corrections that violate the condemning corrupt acts. state agencies, which bear law or infringe their prestige and honor. responsibility for the content. The media is explicitly allowed to report on corruption cases, 2005: Media agencies obtain the right to to request and receive information on cases showing signs of The Vietnam Journalists Association be supplied within 10 days the requested corruption, and to be protected while reporting on corruption. obtains the right to participate in the information from government agencies, formulation and implementation of organizations and units, except in some 2008: The media obtains the right to be supplied quickly with media policy, and to protect the legal cases. information on issues capturing public interest or causing rights and interests of journalists. public concern. DEVOLUTION 1986 ACCOUNTABILITY 2009 1989: A permit by the state 1999: The state management of the media 2002: The organization of business and 2006: Administrative sanctions are strengthened and widened to management of the media, i.e. Council is transferred from the Council of service activities by media agencies requires ensure accurate and correct reporting by the media. of Ministers, is required for setting up a Ministers to the Ministry of Culture and prior permission from the parent press agency. Information. organization and the notification to the state. Journalists are required to receive ethics training, organized by the state management of the media. The media is prohibited to report on Media agencies are required to promptly (Deputy) heads and (deputy) editors-in-chief some "no-go areas" e.g. state secrets, publicize corrections of false or harmful of media agencies are required to be 2007: Tighter time limits and detailed instructions on content propaganda against Vietnam, information reported by state agencies, appointed by the parent organization, in and format are required for the publication of corrections. propaganda on ideologies and violence, organizations or individuals. written agreement with the Ministry of High ranking officials of newspapers using state budget and incorrect or damaging information. Culture and Information. assets are mandated to declare their income and assets. The press becomes subject to inspections Tough sanctions are applied for from a specialized press inspectorate. The distribution into Vietnam of overseas 2008: Supplements, channels or programs on advertisement in journalists and media agencies that published media requires the permit of the the media are required a permit from the state management of violate press regulations, including The Penal Code is ratified, stipulating Ministry of Culture and Information. various criminal sanctions applicable to the media. withdrawal of press licenses and cards the media. and examination for criminal liability. 2001: A wide range of administrative violations by the media and the corresponding administrative sanctions are specified. 171 Annex 2- Statistical Data Table A1.1: POPULATION (thousand persons) Population Growth By sex By area Year (mid-year) Rate Male Female Urban Rural 1976 49,160 2.35 23,597 25,563 10,127 39,033 1977 50,237 2.19 24,197 26,039 10,116 40,114 1978 51,337 2.19 24,813 26,524 10,105 41,226 1979 52,462 2.19 25,444 27,018 10,094 42,368 1980 53,630 2.23 26,047 27,583 10,295 43,335 1981 54,824 2.23 26,665 28,159 10,499 44,324 1982 56,045 2.23 27,297 28,747 10,708 45,336 1983 57,292 2.23 27,944 29,348 10,921 46,371 1984 58,568 2.23 28,607 29,961 11,138 47,429 1985 59,872 2.23 29,285 30,587 11,360 48,512 1986 61,109 2.07 29,912 31,197 11,817 49,292 1987 62,452 2.20 30,611 31,841 12,271 50,181 1988 63,727 2.04 31,450 32,277 12,662 51,065 1989 64,774 1.64 31,589 33,185 12,919 50,801 1990 66,017 1.92 32,203 33,814 12,880 53,136 1991 67,242 1.86 32,814 34,428 13,228 54,015 1992 68,450 1.80 33,242 35,208 13,588 54,863 1993 69,645 1.74 34,028 35,616 13,961 55,683 1994 70,825 1.69 34,633 36,191 14,426 56,399 1995 71,996 1.65 35,237 36,758 16,938 55,057 1996 73,157 1.61 35,857 37,299 15,420 57,737 1997 74,037 1.20 36,473 37,564 16,835 57,202 1998 75,456 1.92 37,090 38,367 17,465 57,992 1999 76,597 1.51 37,662 38,935 18,082 58,515 2000 77,635 1.36 38,166 39,469 18,805 58,830 2001 78,686 1.35 38,684 40,002 19,481 59,205 2002 79,727 1.32 39,197 40,530 20,004 59,723 2003 80,902 1.47 39,755 41,147 20,870 60,033 2004 82,032 1.40 40,311 41,721 21,737 60,295 2005 83,106 1.31 40,846 42,260 22,337 60,770 2006 84,137 1.24 41,355 42,782 22,793 61,344 2007 85,172 1.23 41,868 43,304 23,399 61,773 2008/e 85,790 0.73 42,483 43,307 25,374 60,415 Source: GSO (2009) 172 Table A1.2: POPULATION BY SEX AND LOCALITY IN 2008 (thousand persons) Total By sex By locality Provinces/ Cities Male Female Urban Rural Ha Noi 6,449 3,176 3,273 2,632 3,817 Hai Phong 1,837 911 926 847 990 Ha Giang 724 363 361 87 637 Tuyen Quang 725 365 361 94 632 Cao Bang 511 253 258 88 423 Lang Son 732 365 367 141 590 Lai Chau 370 189 181 53 317 Dien bien 491 246 245 74 417 Lao Cai 613 308 305 130 483 Yen Bai 741 370 371 140 601 Bac Can 295 149 146 48 247 Thai nguyen 1,125 559 566 288 837 Son La 1,081 545 535 150 930 Hoa Binh 787 391 396 120 667 Vinh Phuc 1,001 496 505 224 776 Phu Tho 1,314 649 665 209 1,105 Bac ninh 1,024 503 521 242 782 Bac Giang 1,556 776 780 150 1,406 Quang Ninh 1,144 586 559 576 568 Hai Duong 1,703 833 870 325 1,379 Hung Yen 1,129 554 575 138 990 Thai Binh 1,781 861 920 175 1,606 Nam Dinh 1,826 896 930 323 1,502 Ha Nam 785 385 400 77 708 Ninh Binh 898 447 452 161 738 Thanh Hoa 3,400 1,683 1,717 355 3,045 Nghe An 2,913 1,449 1,464 368 2,545 Ha Tinh 1,228 608 619 184 1,044 Quang Binh 847 424 423 128 719 Quang Tri 598 297 301 165 433 Thua Thien - Hue 1,088 538 550 393 695 Quang Nam 1,420 692 727 264 1,155 Da Nang 887 438 450 770 117 Quang Ngai 1,217 600 617 179 1,039 Binh Dinh 1,486 726 760 413 1,073 Phu Yen 862 432 430 189 673 Khanh Hoa 1,157 572 584 459 697 Ninh Thuan 564 281 283 204 360 Binh Thuan 1,169 591 579 461 709 Gia Lai 1,273 640 632 363 909 Kon Tum 430 218 212 145 285 Dac Lac 1,728 874 855 388 1,340 Dac Nong 489 255 234 72 417 Lam Dong 1,187 596 591 449 737 Ho Chi Minh City 7,123 3,426 3,697 5,929 1,194 Binh Duong 1,483 713 769 444 1,039 Tay Ninh 1,066 531 535 168 898 Binh Phuoc 875 444 431 147 728 173 Dong Nai 2,483 1,232 1,251 825 1,658 Baria - Vung Tau 995 498 497 495 500 Long An 1,437 714 723 251 1,186 Dong Thap 1,665 832 833 287 1,378 An Giang 2,145 1,067 1,078 609 1,536 Tien Giang 1,670 821 849 230 1,440 Ben Tre 1,255 616 639 126 1,129 Vinh Long 1,028 507 521 159 870 Tra Vinh 1,001 494 507 154 847 Can Tho 1,187 590 598 781 406 Hau giang 757 381 376 149 607 Soc Trang 1,289 641 648 251 1,038 Kien Giang 1,683 850 834 453 1,231 Bac Lieu 856 427 429 225 631 Ca Mau 1,205 607 598 247 958 Note: Population by sex and by area may not add to the total due to the possible exclusion of the armed force and migrant workers. Source: GSO (2009) Table A1.3: TOTAL EMPLOYMENT BY SECTOR (thousand of persons) rev est 2002 2003 2004 2005 2006 2007 2008 Total Employment 39,508 40,574 41,586 42,527 43,339 44,174 44,916 State 3,751 4,035 4,142 4,039 3,949 3,985 4,073 Non-state 35,757 36,538 37,445 38,488 39,390 40,189 40,843 State Sector Employment 3,751 4,035 4,142 4,039 3,949 3,985 4,073 Central 1,569 1,628 1,678 1,613 1,573 1,569 1,590 Local 2,181 2,407 2,464 2,426 2,376 2,416 2,484 Employment by Sector Agriculture, forestry and fisheries 24,456 24,443 24,431 24,342 23,995 23,812 23,635 Industry and Construction 6,085 6,671 7,217 7,782 8,336 8,826 9,356 Services 8,967 9,460 9,939 10,402 11,008 11,536 11,925 Note: Figures are rounded Source: GSO (2009) 174 Table A2.1: GDP BY INDUSTRIAL ORIGIN AND BY ECONOMIC SECTOR (VND billion at current prices) rev est 2002 2003 2004 2005 2006 2007 2008 Total 535,762 613,443 715,307 839,211 974,266 1,143,715 1,477,717 State 205,652 239,736 279,704 322,241 364,250 410,883 507,620 Non-State 330,110 373,707 435,603 516,970 610,016 732,832 970,097 Agriculture, Forestry and Fisheries 123,383 138,285 155,993 175,984 198,798 232,586 326,505 Agriculture and Forestry 103,043 114,160 128,519 143,037 160,463 186,462 268,096 Fisheries 20,340 24,125 27,474 32,947 38,335 46,124 58,409 Industry and Construction 206,197 242,126 287,616 344,224 404,697 474,423 587,156 Mining 46,153 57,326 72,492 88,897 99,702 111,700 131,968 Manufacturing 110,285 125,476 145,475 173,122 207,027 243,142 311,848 Electricity and Water 18,201 22,224 25,091 28,929 33,464 39,869 47,644 Construction 31,558 37,100 44,558 53,276 64,503 79,712 95,696 Services 206,182 233,032 271,698 319,003 370,771 436,706 564,055 Trade 75,617 83,297 96,995 113,768 132,794 156,442 204,735 Hotel and Restaurant 17,154 18,472 22,529 29,329 35,861 44,992 64,828 Transportation and Communication 21,095 24,725 30,402 36,629 43,825 51,118 67,100 Finance, Banking and Insurance 9,763 10,858 12,737 15,072 17,607 20,756 27,215 Science and Technology 3,009 3,694 4,315 5,247 6,059 7,065 9,221 Real Estate and Renting 24,452 27,287 31,304 33,635 36,814 43,509 53,743 Public Administration 13,816 16,676 19,061 23,037 26,737 31,310 40,992 Education and Training 18,071 21,403 23,335 26,948 30,718 34,843 38,510 Healthcare and social welfare 7,057 8,865 10,851 12,412 14,093 16,160 18,592 Culture and Recreation 2,987 3,376 3,693 4,158 4,617 5,200 5,989 Party and Association 712 774 885 1,054 1,217 1,425 1,874 Community and Social service 11,412 12,497 14,354 16,293 18,789 21,959 28,704 Private Household Employment 1,037 1,108 1,237 1,421 1,640 1,927 2,551 Source: GSO (2009) 175 Table A2.2: GDP BY INDUSTRIAL ORIGIN AND BY ECONOMIC SECTOR (VND billion at constant 1994 prices) rev est 2002 2003 2004 2005 2006 2007 2008 Total 313,247 336,242 362,435 393,031 425,373 461,344 489,833 State 128,343 138,160 148,865 159,836 169,696 179,718 187,310 Non-State 184,904 198,082 213,570 233,195 255,677 281,626 302,523 Agriculture, Forestry and Fisheries 68,352 70,827 73,917 76,888 79,723 82,717 86,082 Agriculture and Forestry 60,480 62,350 64,717 66,707 68,751 70,585 73,289 Fisheries 7,872 8,477 9,200 10,181 10,972 12,132 12,792 Industry and Construction 117,126 129,399 142,621 157,867 174,259 192,065 203,791 Mining 19,396 20,611 22,437 22,854 22,987 21,904 21,065 Manufacturing 63,983 71,363 79,116 89,338 100,436 113,801 125,115 Electricity and Water 7,992 8,944 10,015 11,247 12,604 13,485 14,899 Construction 25,755 28,481 31,053 34,428 38,232 42,875 42,712 Services 127,769 136,016 145,897 158,276 171,391 186,562 199,960 Trade 51,245 54,747 59,027 63,950 69,418 75,537 80,389 Hotel and Restaurant 10,125 10,646 11,511 13,472 15,145 17,086 18,561 Transportation and Telecom 12,252 12,925 13,975 15,318 16,870 18,793 21,266 Finance, Banking and Insurance 6,424 6,935 7,495 8,197 8,867 9,651 10,291 Science and Technology 1,909 2,044 2,196 2,368 2,543 2,738 2,906 Real Estate and Renting 13,106 13,796 14,396 14,816 15,252 15,872 16,268 Public Administration 8,768 9,228 9,773 10,477 11,270 12,186 12,974 Education and Training 10,475 11,260 12,125 13,127 14,231 15,477 16,721 Healthcare and social welfare 4,464 4,853 5,234 5,640 6,082 6,572 7,117 Culture and Recreation 1,706 1,857 1,997 2,163 2,329 2,518 2,682 Party and Association 353 372 395 423 454 491 525 Community and Social service 6,353 6,743 7,141 7,655 8,210 8,860 9,419 Private Household Employment 589 610 632 670 720 781 840 Source: GSO (2009) 176 Table A2.2B: GDP BY INDUSTRIAL ORIGIN -- GROWTH RATE (in percent) rev est 2002 2003 2004 2005 2006 2007 2008 Total 7.1 7.3 7.8 8.4 8.2 8.5 6.2 State 7.1 7.6 7.7 7.4 6.2 5.9 4.2 Non-State 7.1 7.1 7.8 9.2 9.6 10.1 7.4 Agriculture, Forestry and Fisheries 4.2 3.6 4.4 4.0 3.7 3.8 4.1 Agriculture and Forestry 4.0 3.1 3.8 3.1 3.1 2.7 3.8 Fisheries 5.7 7.7 8.5 10.7 7.8 10.6 5.4 Industry and Construction 9.5 10.5 10.2 10.7 10.4 10.2 6.1 Mining 1.1 6.3 8.9 1.9 0.6 -4.7 -3.8 Manufacturing 11.6 11.5 10.9 12.9 12.4 13.3 9.9 Electricity and Water 11.4 11.9 12.0 12.3 12.1 7.0 10.5 Construction 10.6 10.6 9.0 10.9 11.0 12.1 -0.4 Services 6.5 6.5 7.3 8.5 8.3 8.9 7.2 Trade 7.3 6.8 7.8 8.3 8.6 8.8 6.4 Hotel and Restaurant 7.1 5.1 8.1 17.0 12.4 12.8 8.6 Transportation and Telecom 7.1 5.5 8.1 9.6 10.1 11.4 13.2 Finance, Banking and Insurance 7.0 8.0 8.1 9.4 8.2 8.8 6.6 Science and Technology 9.1 7.1 7.4 7.8 7.4 7.7 6.1 Real Estate and Renting 3.8 5.3 4.3 2.9 2.9 4.1 2.5 Public Administration 3.9 5.2 5.9 7.2 7.6 8.1 6.5 Education and Training 8.1 7.5 7.7 8.3 8.4 8.8 8.0 Healthcare and social welfare 7.5 8.7 7.9 7.8 7.8 8.1 8.3 Culture and Recreation 3.5 8.9 7.5 8.3 7.7 8.1 6.5 Party and Association 5.7 5.4 6.2 7.1 7.3 8.1 6.9 Community and Social service 5.4 6.1 5.9 7.2 7.3 7.9 6.3 Private Household Employment 1.0 3.6 3.6 6.0 7.5 8.5 7.6 Source: GSO (2009) 177 Table A2.3A: GDP DEFLATOR rev est 2002 2003 2004 2005 2006 2007 2008 Total 1.7 1.8 2.0 2.1 2.3 2.5 3.0 State 1.6 1.7 1.9 2.0 2.1 2.3 2.7 Non-State 1.8 1.9 2.0 2.2 2.4 2.6 3.2 Agriculture, Forestry and Fisheries 1.8 2.0 2.1 2.3 2.5 2.8 3.8 Agriculture and Forestry 1.7 1.8 2.0 2.1 2.3 2.6 3.7 Fisheries 2.6 2.8 3.0 3.2 3.5 3.8 4.6 Industry and Construction 1.8 1.9 2.0 2.2 2.3 2.5 2.9 Mining 2.4 2.8 3.2 3.9 4.3 5.1 6.3 Manufacturing 1.7 1.8 1.8 1.9 2.1 2.1 2.5 Electricity and Water 2.3 2.5 2.5 2.6 2.7 3.0 3.2 Construction 1.2 1.3 1.4 1.5 1.7 1.9 2.2 Services 1.6 1.7 1.9 2.0 2.2 2.3 2.8 Trade 1.5 1.5 1.6 1.8 1.9 2.1 2.5 Hotel and Restaurant 1.7 1.7 2.0 2.2 2.4 2.6 3.5 Transportation and Telecom 1.7 1.9 2.2 2.4 2.6 2.7 3.2 Finance, Banking and Insurance 1.5 1.6 1.7 1.8 2.0 2.2 2.6 Science and Technology 1.6 1.8 2.0 2.2 2.4 2.6 3.2 Real Estate and Renting 1.9 2.0 2.2 2.3 2.4 2.7 3.3 Public Administration 1.6 1.8 2.0 2.2 2.4 2.6 3.2 Education and Training 1.7 1.9 1.9 2.1 2.2 2.3 2.3 Healthcare and social welfare 1.6 1.8 2.1 2.2 2.3 2.5 2.6 Culture and Recreation 1.8 1.8 1.8 1.9 2.0 2.1 2.2 Party and Association 2.0 2.1 2.2 2.5 2.7 2.9 3.6 Community and Social service 1.8 1.9 2.0 2.1 2.3 2.5 3.0 Private Household Employment 1.8 1.8 2.0 2.1 2.3 2.5 3.0 Source: GSO (2009) 178 Table A2.3B: CHANGE IN GDP DEFLATOR (in percent) rev est 2002 2003 2004 2005 2006 2007 2008 Total 4.0 6.7 8.2 8.2 7.3 8.2 21.7 State 3.9 8.3 8.3 7.3 6.5 6.5 18.5 Non-State 4.0 5.7 8.1 8.7 7.6 9.1 23.2 Agriculture, Forestry and Fisheries 5.9 8.2 8.1 8.5 8.9 12.8 34.9 Agriculture and Forestry 5.5 7.5 8.5 8.0 8.8 13.2 38.5 Fisheries 7.5 10.1 4.9 8.4 8.0 8.8 20.1 Industry and Construction 2.6 6.3 7.8 8.1 6.5 6.4 16.6 Mining 2.9 16.9 16.2 20.4 11.5 17.6 22.9 Manufacturing 3.8 2.0 4.6 5.4 6.4 3.7 16.7 Electricity and Water 1.9 9.1 0.8 2.7 3.2 11.4 8.2 Construction 2.2 6.3 10.2 7.8 9.0 10.2 20.5 Services 4.1 6.2 8.7 8.2 7.3 8.2 20.5 Trade 4.0 3.1 8.0 8.3 7.5 8.3 23.0 Hotel and Restaurant 4.0 2.4 12.8 11.2 8.8 11.2 32.6 Transportation and Telecom 1.4 11.1 13.7 9.9 8.6 4.7 16.0 Finance, Banking and Insurance 4.2 3.0 8.5 8.2 8.0 8.3 23.0 Science and Technology 4.2 14.7 8.7 12.8 7.5 8.3 23.0 Real Estate and Renting 9.2 6.0 9.9 4.4 6.3 13.6 20.5 Public Administration 4.0 14.7 7.9 12.7 7.9 8.3 23.0 Education and Training 2.9 10.2 1.2 6.7 5.1 4.3 2.3 Healthcare and social welfare 2.3 15.6 13.5 6.2 5.3 6.1 6.2 Culture and Recreation 3.1 3.8 1.7 4.0 3.1 4.2 8.1 Party and Association 3.5 3.2 7.7 11.2 7.6 8.3 23.0 Community and Social service 4.0 3.2 8.5 5.9 7.5 8.3 23.0 Private Household Employment 4.2 3.2 7.8 8.4 7.4 8.3 23.1 Source: GSO (2009) 179 Table A2.4A: NATIONAL ACCOUNTS: SOURCES AND USES (VND billion at current prices) rev est 2002 2003 2004 2005 2006 2007 2008 Sources 563,446 664,671 769,307 874,299 1,018,704 1,325,017 1,722,165 GDP 535,762 613,443 715,307 839,211 974,266 1,143,715 1,477,717 Trade Balance 27,684 51,228 54,000 35,088 44,438 181,302 244,448 Uses 563,446 664,731 769,307 874,299 1,018,704 1,325,017 1,722,165 Total Consumption 382,137 445,221 511,221 584,793 675,916 809,862 1,084,876 Gross Capital Formation 177,983 217,434 253,686 298,543 358,629 493,300 607,746 Statistical Discrepancy 3,326 2,076 4,400 -9,037 -15,841 21,855 29,543 Source: GSO (2009) Table A2.4B: NATIONAL ACCOUNTS: SOURCES AND USES (VND billion at constant 1994 prices) rev est est 2002 2003 2004 2005 2006 2007 2008 Sources 334,640 367,691 392,558 417,469 455,924 548,166 591,617 GDP 313,247 336,243 362,435 393,031 425,373 461,344 489,833 Trade Balance 21,393 31,448 30,123 24,438 30,551 86,822 101,784 Uses 334,640 367,691 392,558 417,469 455,924 548,166 591,617 Total Consumption 225,610 243,515 260,940 280,104 303,520 335,776 366,045 Gross Capital Formation 104,256 116,623 128,916 143,291 160,247 203,191 215,948 Statistical Discrepancy 4,774 7,553 2,702 -5,926 -7,843 9,198 9,624 Source: GSO (2009) 180 Table A3.1: BALANCE OF PAYMENTS rev est 2002 2003 2004 2005 2006 2007 2008 (In millions of U.S. dollars, unless otherwise indicated) Current account balance -604 -1,931 -1,591 -561 -163 -6,992 -10,706 Trade balance -1,054 -2,581 -3,854 -2,439 -2,776 -10,360 -12,782 Exports, f.o.b. 16,706 20,149 26,485 32,447 39,826 48,561 62,685 Imports, f.o.b. 17,760 22,730 30,339 34,886 42,602 58,921 75,467 Non-factor services (net) -750 -778 61 -296 -8 -894 -835 Receipts 2,948 3,272 3,867 4,176 5,100 6,030 7,096 Payments 3,698 4,050 3,806 4,472 5,108 6,924 7,931 Investment income (net) -721 -811 -891 -1,206 -1,429 -2,168 -4,400 Receipts 167 125 188 364 668 1,093 1,357 Payments 888 936 1,079 1,570 2,097 3,261 5,757 Transfers (net) 1,921 2,239 3,093 3,380 4,050 6,430 7,311 Private 1,790 2,100 2,919 3,150 3,800 6,180 6,804 Official 131 139 174 230 250 250 507 Financial account balance 2,090 3,305 2,753 3,083 2,987 17,191 11,180 Net foreign direct investment (FDI) 1,400 1,450 1,610 1,889 2,315 6,550 9,065 inflows Medium and long-term loans (net) 66 457 1,162 921 1,025 2,045 995 Disbursements 1,102 1,540 2,047 2,031 2,260 3,397 Amortization 1,036 1,083 885 1,110 1,235 1,352 Portfolio Investment 0 0 0 861 1,313 6,243 -580 Short-term capital (net) 624 1,398 -19 -588 -1,666 2,353 1,700 NFA of commercial banks 624 1,372 35 -634 -1,636 2,623 677 Errors and omissions -1,038 777 -279 -391 1,398 Overall balance 448 2,151 883 2,131 4,222 10,199 474 Financing -448 -2,151 -883 -2,131 -4,322 -10,199 -474 Change in SBV's NFA (-, increase) -464 -2,151 -883 -2,131 -4,322 -10,199 -474 Sources: State Bank of Vietnam, IMF and World Bank 181 Table A3.2: MAJOR EXPORTS BY COMMODITY (US$ million) rev est 2002 2003 2004 2005 2006 2007 2008 Total Exports 16,706 20,176 26,485 32,442 39,826 48,561 62,685 Rice 726 721 950 1,047 1,276 1,490 2,894 Quantity (000 tons) 3,241 3,813 4,060 5,250 4,643 4,558 4,742 Average Unit Value (US$/ton) 224 189 234 199 275 327 610 Crude oil 3,270 3,812 5,671 7,373 8,265 8,488 10,357 Quantity (000 tons) 16,879 17,143 19,501 17,967 16,419 15,062 13,752 Average Unit Value (US$/ton) 194 222 291 410 503 564 753 Coal 156 184 355 669 915 1,000 1,338 Quantity (000 tons) 6,049 7,246 11,624 17,986 29,307 31,948 19,355 Average Unit Value (US$/ton) 26 25 31 37 31 31 69 Rubber 268 378 641 804 1,286 1,393 1,604 Quantity (000 tons) 449 433 975 587 708 715 658 Average Unit Value (US$/ton) 597 872 658 1,370 1,817 1,948 2,436 Tea 83 60 96 97 110 131 147 Quantity (000 tons) 75 60 99 88 106 114 104 Average Unit Value (US$/ton) 1,103 1,002 961 1,103 1,045 1,143 1,407 Coffee 322 505 641 735 1,217 1,911 2,111 Quantity (000 tons) 719 749 975 892 981 715 1,060 Average Unit Value (US$/ton) 449 674 658 824 1,241 2,674 1,993 Cashew Nut 209 284 436 502 504 654 911 Quantity (000 tons) 62 84 105 109 127 153 165 Average Unit Value (US$/ton) 3,358 3,390 4,150 4,610 3,973 4,287 5,510 Black Pepper 107 105 152 150 190 271 311 Quantity (000 tons) 77 74 112 109 117 83 90 Average Unit Value (US$/ton) 1,399 1,416 1,362 1,381 1,632 3,269 3,448 Marine Products 2,023 2,200 2,401 2,739 3,358 3,763 4,510 Vegetable & Fruits 201 151 179 235 259 306 407 Textiles and Garments 2,752 3,687 4,386 4,838 5,834 7,750 9,120 Footwear 1,867 2,268 2,692 3,040 3,592 3,994 4,768 Handicraft 331 367 426 569 630 825 1,363 Wood products 435 567 1,139 1,563 1,933 2,404 2,829 Electronic and Computer parts 605 855 1,075 1,427 1,708 2,154 2,638 Electric cables and wires 188 292 389 523 705 883 1,001 Plastic products 153 154 261 350 480 711 921 Source: GSO (2009) 182 Table A3.3: MAJOR IMPORTS BY COMMODITY (US$ million) rev prel 2002 2003 2004 2005 2006 2007 2008 Total Imports 19,733 25,227 31,954 36,978 44,891 62,682 80,714 Petroleum products 2,017 2,433 3,574 5,024 5,970 7,710 10,966 Quantity (000 tons) 9,966 9,995 11,050 11,478 11,213 12,850 12,964 Average Unit Value (US$/ton) 202 243 323 438 532 600 846 Fertilizers 477 628 824 641 687 1,000 1,473 Quantity (000 tons) 3,824 4,119 4,079 2,877 3,189 3,792 3,035 Average Unit Value (US$/ton) 125 152 202 223 216 264 485 Steel and Irons 1,334 1,657 2,573 2,931 2,936 5,112 6,721 Quantity (000 tons) 4,951 4,574 5,186 5,524 5,707 8,027 8,264 Average Unit Value (US$/ton) 269 362 496 531 515 637 813 Others Machinery and Equipment 3,793 5,359 5,249 5,281 6,628 11,123 13,994 Textile fiber and yarn 314 298 339 340 544 741 775 Cotton 97 106 190 167 219 267 467 Material for garment & footwear 1,711 2,034 2,253 2,282 1,951 2,152 2,355 Motor vehicles and pats 604 834 904 1,193 672 1,881 3,228 Motorbikes 422 329 452 541 557 725 764 Pharmaceutical material 83 76 100 116 133 158 158 Medicine 320 374 410 502 548 703 864 Paper of all kinds 193 230 248 362 475 600 753 Chemicals 406 510 683 865 1,042 1,466 1,776 Chemical products 482 582 706 841 1,007 1,285 1,604 Plastic materials 617 785 1,191 1,456 1,866 2,057 2,945 Computer and Electronic components 664 975 1,342 1,706 2,048 2,958 1,785 Wood - sawn and log 179 274 539 651 775 1,016 1,098 Milk and dairy products 122 164 206 311 321 462 534 Animal feed and materials 234 421 475 594 737 1,181 1,747 Source: GSO (2009) 183 Table A4.1: MONETARY SURVEY rev prel 2002 2003 2004 2005 2006 2007 2008 (in VND trillion, end of period) Net Foreign Assets 117.4 131.4 145.8 191.1 287.9 410.4 429.0 Foreign assets 135.9 150.5 172.3 220.5 327.0 472.3 404.8 Foreign liabilities -18.4 -19.1 -26.4 -29.4 -39.1 -61.9 24.2 Net Domestic Assets 211.7 279.8 390.3 499.6 634.7 937.9 1,193.2 Domestic credit 239.9 316.9 435.2 585.6 730.3 1,096.8 1,400.7 Net claims on government 8.8 20.1 14.9 32.5 36.5 29.1 61.4 Credit to the economy 231.1 296.7 420.3 553.1 693.8 1,067.7 1,339.3 Claims on state enterprises 89.5 105.4 142.9 181.3 218.5 334.2 Claims on other sectors 141.6 191.3 277.4 371.8 475.3 733.5 Other items, net -28.2 -37.0 -44.9 -86.0 -95.6 -159.0 -207.5 Total liquidity (M2) 329.1 411.2 536.2 690.7 922.7 1,348.2 1,622.2 of which: total deposit 254.9 320.6 427.1 559.5 763.9 1,127.7 1,385.3 Dong liquidity 235.5 314.1 408.1 531.5 723.2 1,089.6 1,291.8 Currency outside banks 74.3 90.6 109.1 131.2 158.8 220.5 Deposits 161.2 223.6 299.0 400.3 564.4 869.1 Foreign currency deposits 93.6 97.1 128.1 159.2 199.5 258.6 330.4 (Annual change in percent ) Net Foreign Assets -0.2 11.9 11.0 31.0 50.7 42.6 4.5 Net Domestic Assets 30.5 32.2 39.5 28.0 27.0 47.8 27.2 Domestic credit 25.5 32.1 37.4 34.5 24.7 50.2 27.7 Credit to the economy 22.2 28.4 41.7 31.6 25.4 53.9 25.4 Claims on state enterprises 12.3 17.8 35.6 26.9 20.5 53.0 Claims on other sectors 29.4 35.1 45.0 34.0 27.8 54.3 Total liquidity (M2) 17.6 25.0 30.4 28.8 33.6 46.1 20.3 of which: total deposit 19.4 25.8 33.2 31.0 36.5 47.6 22.8 Dong liquidity 23.2 33.4 29.9 30.2 36.1 50.7 18.6 Currency outside banks 12.0 22.0 20.4 20.2 21.1 38.9 Deposits 29.2 38.7 33.7 33.9 41.0 54.0 Foreign currency deposits 5.6 3.7 32.0 24.3 25.3 29.6 27.8 Note: Data from 1999 onwards comprise the SBV, six SOCBs and 83 non-state banks Source: SBV and IMF 184 TABLE A5.1: STATE BUDGET REVENUES (VND billion) final account rev est 2002 2003 2004 2005 2006 2007 2008 A Total revenues and grants 121,716 158,057 198,614 238,687 264,261 315,914 416,783 I Current revenues 118,346 145,823 180,197 219,439 244,043 282,565 377,444 II Taxes 106,154 127,948 155,579 191,725 230,565 265,862 359,109 1 Corporate income tax 36,826 47,410 56,987 75,847 100,820 103,054 135,361 2 Individual income tax 2,338 2,951 3,521 4,234 5,181 7,422 12,940 3 Land and housing tax 336 359 438 515 592 711 902 4 License tax 407 778 657 726 794 881 1,031 5 Tax on the transfer of properties 1,332 1,817 2,607 2,797 3,363 5,690 7,404 6 Tax on land use right transfer 327 408 640 984 1,250 2,331 3,017 7 Value added tax 25,916 33,130 38,814 45,878 54,773 69,899 90,197 8 Special consumption tax 7,272 8,851 12,773 15,716 17,144 17,454 21,556 9 Natural resources tax 8,543 9,719 17,398 21,236 20,232 19,922 26,676 10 Agricultural tax 772 151 130 132 120 113 98 11 Export & import tax 21,915 22,374 21,614 23,660 26,296 38,385 59,927 12 Other taxes 170 III Fees, charges and non-tax 12,192 17,875 24,618 27,714 13,478 16,703 18,335 Revenue from discrepancy of 13 168 133 40 0 0 0 0 import prices Fees and charges (include 14 6,016 6,483 7,765 8,135 8,008 8,516 11,170 gasoline fee) 15 Rental of land 459 513 1,035 1,004 1,596 2,017 2,591 16 Others 5,549 10,746 15,778 18,575 3,874 6,170 4,574 IV Capital revenues 1,120 9,265 15,540 15,459 16,600 29,093 32,064 VIII Grants 2,250 2,969 2,877 3,789 3,618 4,256 7,275 B Brought forward revenue 2,145 19,353 26,162 45,161 8,510 26,987 11,617 Source: MOF (2009) 185 TABLE A5.2: STATE BUDGET REVENUES (share of GDP) final account rev est 2002 2003 2004 2005 2006 2007 2008 A Total revenues and grants 22.7 25.8 27.8 28.4 27.1 27.6 28.2 I Current revenues 22.1 23.8 25.2 26.1 25.0 24.7 25.5 I.1 Taxes 19.8 20.9 21.7 22.8 23.7 23.2 24.3 1 Corporate income tax 6.9 7.7 8.0 9.0 10.3 9.0 9.2 2 Individual income tax 0.4 0.5 0.5 0.5 0.5 0.6 0.9 3 Land and housing tax 0.1 0.1 0.1 0.1 0.1 0.1 0.1 4 License tax 0.1 0.1 0.1 0.1 0.1 0.1 0.1 5 Tax on the transfer of properties 0.2 0.3 0.4 0.3 0.3 0.5 0.5 6 Tax on land use right transfer 0.1 0.1 0.1 0.1 0.1 0.2 0.2 7 Value added tax 4.8 5.4 5.4 5.5 5.6 6.1 6.1 8 Special consumption tax 1.4 1.4 1.8 1.9 1.8 1.5 1.5 9 Natural resources tax 1.6 1.6 2.4 2.5 2.1 1.7 1.8 10 Agricultural tax 0.1 0.0 0.0 0.0 0.0 0.0 0.0 11 Export & import tax 4.1 3.6 3.0 2.8 2.7 3.4 4.1 12 Other taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 I.2 Fees, charges and non-tax 2.3 2.9 3.4 3.3 1.4 1.5 1.2 Revenue from discrepancy of import 13 0.0 0.0 0.0 0.0 0.0 0.0 0.0 prices 14 Fees and charges 1.1 1.1 1.1 1.0 0.8 0.7 0.8 15 Rental of land 0.1 0.1 0.1 0.1 0.2 0.2 0.2 16 Others 1.0 1.8 2.2 2.2 0.4 0.5 0.3 II Capital revenues 0.2 1.5 2.2 1.8 1.7 2.5 2.2 III Grants 0.4 0.5 0.4 0.5 0.4 0.4 0.5 B Brought forward revenue 0.4 3.2 3.7 5.4 0.9 2.4 0.8 Source: MOF (2009) 186 Table A5.3: STATE BUDGET EXPENDITURES (VND billion) final account rev est 2002 2003 2004 2005 2006 2007 2008 A Total expenditures 129,434 162,150 187,353 229,092 267,575 341,418 433,222 I Current expenditures 84,216 102,521 121,238 149,893 181,491 229,258 297,311 1 Administration expenditure 8,599 11,359 15,901 18,761 18,994 29,214 32,855 Expenditure on economic affairs & 2 7,987 8,164 10,301 11,801 15,010 20,082 25,423 services 3 Social expenditures 40,747 50,185 55,185 74,458 91,409 115,837 144,050 3.1 Education 13,758 17,390 20,401 22,031 33,822 43,396 51,465 3.2 Training 4,086 5,491 4,942 6,580 8,376 10,378 12,082 3.3 Health 4,656 5,372 6,009 7,608 12,685 16,426 19,918 Science, technology & 3.4 1,852 1,853 2,362 2,584 3,235 3,667 3,859 environment 3.5 Culture 1,066 1,258 1,584 2,099 2,024 2,346 2,713 3.6 Radio and television 681 1,056 1,325 1,464 1,140 1,410 1,550 3.7 Sports 586 648 883 879 943 1,005 1,126 3.8 Population and family planning 841 666 397 483 533 612 1,072 3.9 Social subsidies 13,221 16,451 17,282 30,730 28,651 36,597 50,265 4 Interest payment 5,330 6,395 7,217 6,621 8,913 11,100 15,477 5 Defence 13,058 14,409 16,278 22,892 28,922 34,848 6 Public security 5,745 6,576 7,266 11,150 13,817 16,920 7 Others 21,553 7,615 11,649 14,708 13,123 10,286 27,738 II Investment expenditure 45,218 59,629 66,115 79,199 86,084 112,160 135,911 1 Capital expenditure 40,740 54,430 61,746 72,842 81,730 107,440 124,664 2 Others 4,478 5,199 4,369 6,357 4,354 4,720 11,247 B Brought forward expenditure 4,443 16,390 34,439 10,475 22,515 20,695 26,455 Source: MOF (2009) 187 Table A5.4: STATE BUDGET EXPENDITURES (share of GDP) final account rev est 2002 2003 2004 2005 2006 2007 2008 A Total expenditures 24.2 26.4 26.2 27.3 27.5 29.9 29.3 I Current expenditures 15.7 16.7 16.9 17.9 18.6 20.0 20.1 1 Administration expenditure 1.6 1.9 2.2 2.2 1.9 2.6 2.2 2 Expenditure on economic affairs & services 1.5 1.3 1.4 1.4 1.5 1.8 1.7 3 Social expenditures 7.6 8.2 7.7 8.9 9.4 10.1 9.7 3.1 Education 2.6 2.8 2.9 2.6 3.5 3.8 3.5 3.2 Training 0.8 0.9 0.7 0.8 0.9 0.9 0.8 3.3 Health 0.9 0.9 0.8 0.9 1.3 1.4 1.3 3.4 Science, technology & environment 0.3 0.3 0.3 0.3 0.3 0.3 0.3 3.5 Culture 0.2 0.2 0.2 0.3 0.2 0.2 0.2 3.6 Radio and television 0.1 0.2 0.2 0.2 0.1 0.1 0.1 3.7 Sports 0.1 0.1 0.1 0.1 0.1 0.1 0.1 3.8 Population and family planning 0.2 0.1 0.1 0.1 0.1 0.1 0.1 3.9 Social subsidies 2.5 2.7 2.4 3.7 2.9 3.2 3.4 4 Interest payment 1.0 1.0 1.0 0.8 0.9 1.0 1.0 5 Defence 2.1 2.0 1.9 2.3 2.5 2.4 6 Public security 0.9 0.9 0.9 1.1 1.2 1.1 7 Others (including salary increase in 2007) 4.0 1.2 1.6 1.8 1.3 0.9 1.9 II Investment expenditure 8.4 9.7 9.2 9.4 8.8 9.8 9.2 1 Capital expenditure 7.6 8.9 8.6 8.7 8.4 9.4 8.4 2 Others 0.8 0.8 0.6 0.8 0.4 0.4 0.8 B Brought forward expenditure 0.8 2.7 4.8 1.2 2.3 1.8 1.8 Source: MOF (2009) 188 Table A5.5: EXTERNAL DEBT (US$ million, unless otherwise indicated) rev est 2002 2003 2004 2005 2006 2007 2008 Public and Publicily 9,413 11,383 13,505 14,208 15,641 19,253 21,817 Guaranteed Official Creditors Multilaterals 3,256 4,490 5,323 5,540 6,149 7,594 8,086 Of which IDA 1,693 2,474 3,050 3,236 3,593 4,609 4,863 Bilaterals 5,427 6,162 7,294 7,070 7,772 9,032 10,747 Private Creditors 730 731 888 1,598 1,721 2,626 2,983 Bonds 382 382 382 1,113 1,095 1,076 1,057 Commercial Banks 184 184 350 362 516 1,407 1,782 Other Private 165 165 156 122 110 144 144 Total Long-Term DOD 9,413 11,383 13,505 14,208 15,641 19,253 21,817 Disbursement 986 1,751 1,845 2,455 1,477 2,825 3,104 Payment (Debt services) 849 776 612 698 765 886 1,104 Principal 642 573 327 435 436 505 679 Interest 207 202 285 263 329 381 424 Source: MOF (2009) Table A6.1A: MONTHLY CHANGE IN CONSUMER PRICES (in percent) est. Month/ Year 2002 2003 2004 2005 2006 2007 2008 January 1.1 0.9 1.1 1.1 1.2 1.1 2.4 February 2.2 2.2 3.0 2.5 2.1 2.1 3.6 March -0.8 -0.6 0.8 0.1 -0.5 -0.2 3.0 April 0.0 0.0 0.5 0.6 0.2 0.5 2.2 May 0.3 -0.1 0.9 0.5 0.6 0.7 3.9 June 0.1 -0.3 0.8 0.4 0.4 0.9 2.1 July -0.1 -0.3 0.5 0.4 0.4 0.9 1.1 August 0.0 -0.1 0.6 0.4 0.4 0.5 1.6 September 0.2 0.1 0.3 0.8 0.3 0.5 0.2 October 0.3 -0.2 0.0 0.4 0.2 0.7 -0.2 November 0.3 0.6 0.2 0.4 0.6 1.2 -0.8 December 0.3 0.8 0.6 0.8 0.5 2.9 -0.7 Source: GSO (2009) 189 Table A6.1B: MONTHLY CONSUMER PRICE INDEX (January 1995 = 100) est. Month/ Year 2002 2003 2004 2005 2006 2007 2008 January 130.4 135.3 139.6 152.9 166.0 176.6 201.4 February 133.2 138.2 143.8 156.7 169.5 180.4 208.5 March 132.2 137.4 144.9 156.8 168.7 180.1 214.8 April 132.2 137.4 145.6 157.7 169.0 180.9 219.5 May 132.6 137.2 146.9 158.5 170.1 182.2 228.1 June 132.7 136.8 148.1 159.1 170.7 183.8 233.0 July 132.6 136.4 148.8 159.8 171.4 185.5 235.6 August 132.6 136.3 149.6 160.3 172.1 186.5 239.3 September 132.8 136.4 150.1 161.5 172.6 187.5 239.7 October 133.2 136.1 150.1 162.2 172.9 188.8 239.3 November 133.7 137.0 150.4 162.7 173.9 191.1 237.4 December 134.1 138.0 151.2 164.0 174.6 196.7 235.8 Annual Index 132.7 136.9 147.4 159.3 171.0 185.0 227.7 Annual Growth Rate 4.0 3.2 7.7 8.1 7.3 8.2 23.1 Dec/ Dec Growth Rate 4.0 3.0 9.5 8.5 6.5 12.6 19.9 Source: GSO (2009) Table A6.2A: CONSUMER PRICE BY COMMODITY GROUPS (monthly change in percent) Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- GOODS and SERVICES Jan-08 08 08 08 08 08 08 08 08 08 08 08 General Index 2.4 3.6 3.0 2.2 3.9 2.1 1.1 1.6 0.2 -0.2 -0.8 -0.8 Food & foodstuff 3.8 6.2 3.9 3.1 7.3 3.3 1.0 0.5 0.0 -0.4 -0.1 -0.1 of which: Food 3.3 3.3 10.5 6.1 22.2 4.3 -0.4 -1.1 -1.8 -1.9 -3.1 -3.1 Foodstuff 3.8 7.5 1.4 2.2 2.6 3.1 1.3 0.5 0.3 0.0 0.9 0.9 Beverage & tobacco 1.8 1.9 0.7 0.7 1.9 1.1 1.0 0.7 0.5 0.7 0.9 0.9 Garment, hats, footwear 1.4 1.4 0.9 1.0 1.0 0.9 1.4 1.0 0.7 0.7 0.9 0.9 Housing & construction 2.9 1.4 3.6 2.6 1.2 1.9 1.7 2.2 -0.6 -1.1 -4.9 -4.9 materials Household appliancies 0.8 0.7 1.5 1.0 0.9 1.3 1.5 1.1 1.1 0.7 0.7 0.7 Healthcare, pharmaceutical 0.7 0.5 0.7 0.8 0.5 0.7 2.0 1.2 0.8 0.6 0.3 0.3 items Transport & 0.0 1.5 5.8 2.3 0.3 0.3 0.5 9.1 -0.5 -0.9 -4.4 -4.4 Telecommunication Educational items 0.2 0.1 0.3 0.4 0.5 0.7 1.0 1.2 1.4 0.7 0.1 0.1 Cultural and recreation items 0.1 2.3 1.3 0.5 0.6 0.4 0.8 1.1 1.5 0.4 0.3 0.3 Goods and other services 2.6 3.4 0.1 0.5 0.3 1.0 1.1 0.9 0.4 0.8 0.4 0.4 Gold 5.1 5.9 6.5 -2.1 -3.9 4.4 3.2 -3.0 -6.4 3.2 -5.8 -5.8 US Dollar -0.3 -0.1 -1.5 1.2 1.0 4.7 1.8 -3.0 -0.8 0.0 2.1 2.1 Source: GSO (2009) 190 TABLE A6.2B: CONSUMER PRICE INDEX BY COMMODITY GROUPS (December 2007 = 100) GOODS and Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 SERVICES General Index 102.4 106.0 109.2 111.6 116.0 118.4 119.8 121.6 121.9 121.6 120.7 119.8 Food & foodstuff 103.8 110.2 114.4 118.0 126.6 130.7 132.0 132.7 132.7 132.1 132.0 131.9 of which: Food 103.4 106.7 117.9 125.1 152.9 159.4 158.9 157.1 154.4 151.4 146.7 142.2 Foodstuff 103.8 111.6 113.1 115.6 118.5 122.2 123.8 124.4 124.8 124.8 125.9 127.1 Beverage & tobacco 101.8 103.7 104.4 105.1 107.1 108.2 109.3 110.0 110.6 111.3 112.3 113.3 Garment, hats, 101.4 102.8 103.7 104.7 105.7 106.7 108.2 109.2 110.0 110.8 111.8 106.3 footwear Housing & 102.9 104.3 108.0 110.8 112.2 114.3 116.2 118.8 118.0 116.8 111.1 111.8 construction materials Household 100.9 101.6 103.1 104.1 105.1 106.4 108.0 109.2 110.5 111.3 112.0 112.3 appliancies Healthcare, 100.7 101.1 101.9 102.7 103.2 103.9 105.9 107.3 108.1 108.7 109.1 104.3 pharmaceutical items Transport & 100.0 101.5 107.3 109.8 110.2 110.6 111.2 121.3 120.7 119.6 114.3 114.4 Telecommunication Educational items 100.2 100.3 100.6 101.0 101.4 102.1 103.2 104.4 105.8 106.5 106.7 107.0 Cultural and 100.1 102.4 103.7 104.3 104.9 105.3 106.2 107.3 108.9 109.3 109.6 110.0 recreation items Goods and other 102.6 106.1 106.2 106.8 107.1 108.1 109.4 110.4 110.8 111.7 112.1 112.1 services Gold 105.1 111.3 118.5 115.9 111.4 116.3 120.0 116.4 109.0 112.5 106.0 99.9 US Dollar 99.7 99.6 98.1 99.3 100.3 105.0 106.9 103.8 103.0 102.9 105.1 107.3 Source: GSO (2009) 191 Table A7.1: AGRICULTURAL PRODUCTION (VND billion at current prices) rev prel 2002 2003 2004 2005 2006 2007 2008 Gross Output 145,021 153,955 172,495 183,342 197,855 236,935 363,324 Crop Cultivation 111,172 116,066 131,552 134,755 145,808 175,007 259,469 Livestock 30,575 34,457 37,344 45,226 48,487 57,803 97,859 Services 3,275 3,433 3,599 3,362 3,560 4,125 5,997 Source: GSO (2009) Table A7.2: AGRICULTURAL PRODUCTION (VND billion at constant 1994 prices) rev prel 2002 2003 2004 2005 2006 2007 2008 Gross Output 122,150 127,628 132,888 137,112 142,711 147,847 156,682 Crop Cultivation 98,061 101,763 106,423 107,898 111,613 115,375 122,376 Food Crops 59,619 61,029 63,621 63,853 64,186 65,194 29,580 Industrial Crops 22,247 24,175 25,612 25,586 28,422 70,060 31,015 Livestock 21,200 22,907 23,439 26,108 27,907 29,196 30,939 Services 2,890 2,958 3,027 3,107 3,191 3,276 3,368 Memorandum Items: Paddy Ouput (000 tons) 34,447 34,569 36,149 35,833 35,850 35,943 38,725 Cultivated Area (000 ha) 7,504 7,452 7,445 7,329 7,325 7,207 7,414 Yield (ton/ ha) 4.59 4.64 4.86 4.89 4.89 4.99 5.22 Source: GSO (2009) 192 Table A7.3: INDUSTRIAL CROP PRODUCTION AND YIELDS rev prel 2002 2003 2004 2005 2006 2007 2008 Production (000 metric tons) Cotton 40 35 28 34 29 16 7 Jute 20 12 13 13 11 26 9 Sedge 88 96 90 81 90 99 85 Sugar cane 17,120 16,855 15,649 14,949 16,720 17,379 16,128 Peanut 400 406 469 489 463 510 534 Soya-beans 206 220 246 293 258 275 269 Tobacco 33 32 23 26 42 32 29 Tea - raw and fresh 424 449 514 570 649 706 761 Coffee 700 794 836 752 985 916 1,056 Rubber 298 364 419 482 555 606 660 Black pepper 47 69 73 80 79 89 98 Coconut 915 893 960 977 101 1,035 1,086 Area Cultivated (000 ha) Cotton 34 28 28 26 21 12 2 Jute 10 5 5 6 6 11 3 Sedge 12 14 13 13 12 14 12 Sugar cane 320 313 286 266 288 293 271 Peanut 247 244 264 270 247 255 256 Soya-beans 159 166 184 204 186 187 192 Tobacco 27 23 16 17 27 19 16 Tea 109 116 121 123 123 126 129 Coffee 522 510 497 497.4 497 509.3 530.9 Rubber 429 441 454 482.7 522.2 556.3 631.5 Black pepper 48 51 51 49.1 48.5 48.4 50 Coconut 140 134 133 132 134 135 138 Average Yield (metric ton/ ha) Cotton 1.2 1.3 1.0 1.3 1.4 1.3 3.1 Jute 2.1 2.6 2.6 2.3 1.7 2.3 2.6 Sedge 7.2 6.8 6.9 6.4 7.3 7.2 7.2 Sugar cane 53.5 53.8 54.7 56.1 58.0 59.2 59.5 Peanut 1.6 1.7 1.8 1.8 1.9 2.0 2.1 Soya-beans 1.3 1.3 1.3 1.4 1.4 1.5 1.4 Tobacco 1.2 1.4 1.4 1.5 1.6 1.7 1.8 Tea - raw and fresh 3.9 3.9 4.3 4.7 5.3 5.6 5.9 Coffee 1.3 1.6 1.7 1.5 2.0 1.8 2.0 Rubber 0.7 0.8 0.9 1.0 1.1 1.1 1.0 Black pepper 1.0 1.4 1.4 1.6 1.6 1.8 2.0 Coconut 6.5 6.7 7.2 7.4 0.8 7.6 7.9 Source: GSO (2009) 193 Table A8.1: INDUSTRIAL PRODUCTION OUTPUT (VND billion at constant 1994 prices) rev prel 2002 2003 2004 2005 2006 2007 2008 Gross Industrial Output 261,092 305,080 355,624 416,613 486,637 568,141 647,232 State sector 105,119 117,637 131,655 141,117 149,332 156,789 163,120 Central 69,640 80,917 92,896 104,372 113,666 121,388 127,968 Local 35,479 36,720 38,759 36,745 35,666 35,400 35,152 Non-state sector 63,474 78,292 95,785 120,177 151,102 188,443 222,269 Collectives 1,668 1,770 1,893 2,019 2,151 2,249 2,331 Private, households and mixed 61,807 76,522 93,892 118,158 148,950 186,194 219,939 Foreign-invested sector 92,499 109,152 128,184 155,319 186,203 222,909 261,842 Key Industries Coal 3,189 3,689 4,752 6,111 6,941 7,587 7,064 Oil and gas 23,817 25,132 28,403 27,410 25,466 23,817 22,566 Mining and metal ores 281 344 467 476 622 727 737 Stones and other mining 3,039 3,597 3,842 4,354 4,775 4,954 5,421 Food and beverage 56,061 64,585 74,694 84,482 103,079 121,907 142,661 Cigarettes and tobacco 7,658 9,189 10,160 11,234 11,186 12,480 12,918 Textile products 12,338 14,214 16,626 19,079 23,736 25,627 26,952 Garment - apparel 8,182 10,466 12,792 15,304 19,166 22,444 26,217 Leather tanning and processing 11,096 13,535 16,018 18,920 22,496 24,361 26,191 Wood and wood products 4,488 5,485 6,570 8,120 8,765 10,935 11,319 Paper and paper products 4,877 5,655 7,140 8,311 9,419 11,354 13,102 Printing and publishing 2,876 3,515 3,774 4,626 5,205 5,887 6,701 Chemicals 14,714 16,323 19,029 23,848 28,688 33,420 38,477 Rubber products and plastic 9,706 11,291 15,169 18,237 21,373 26,453 31,879 Non-metallic products 25,913 29,855 33,483 37,055 43,793 47,569 48,906 Metal production 8,516 10,430 11,226 13,949 15,707 18,492 20,015 Metallic products 8,506 10,646 12,963 17,595 22,836 27,972 33,709 Machinery and equipment 3,711 4,612 5,371 5,495 5,561 7,228 9,025 Computer and office equipment 1,003 1,538 1,846 3,206 5,223 6,702 8,606 Electric and electronic equipments 6,520 7,462 9,050 11,992 15,841 20,186 25,273 Radio, TV and telecom 6,169 7,162 7,956 9,137 9,138 12,462 15,105 Production & repairing motor 5,774 8,306 8,692 9,753 9,344 12,698 15,712 vehicles Production & repairing other 8,534 9,676 12,172 15,834 20,712 28,274 36,039 transport means Furnitures 6,057 7,846 10,179 13,411 18,130 21,708 25,727 Recycled products 174 204 261 267 321 409 490 Electricity and gas 15,741 18,071 20,385 23,427 26,134 29,060 32,521 Water supply 1,328 1,361 1,409 1,570 1,756 1,837 1,995 Source: GSO (2009) 194 Table A8.2: MAJOR INDUSTRIAL PRODUCTS rev prel Unit 2002 2003 2004 2005 2006 2007 2008 Assembled automobiles unit 29,536 47,701 50,954 59,152 47,576 71,892 100,076 Assembled motorbikes 1,000 1,052 1,180 1,828 1,982 2,147 2,729 2,880 Assembled tivi sets 1,000 1,597 2,188 2,660 2,515 2,446 2,928 3,367 Beverage mil. liters 940 1,119 1,343 1,461 1,547 1,655 1,850 Bicycle tires 000 Pieces 22,778 26,686 26,008 20,387 22,832 24,556 26,275 Bicycle tubes 000 pieces 24,032 36,083 32,386 26,848 28,964 27,499 26,018 Bricks mil. pieces 11,365 12,810 14,661 16,530 18,005 15,106 18,278 Cement 000 tons 21,121 24,127 26,153 30,808 32,690 37,120 40,047 Chemical fertilizers 000 tons 1,158 1,294 1,714 2,190 2,183 2,499 2,524 Cigarettes mil. packs 3,375 3,871 4,192 4,485 3,941 4,549 4,413 Coal mil. tons 16.4 19.3 27.3 34.1 38.8 42.5 39.8 Crude oil mil. tons 16.9 17.7 20.1 18.5 16.8 15.9 14.9 Diesel engines 000 pieces 32.6 184.4 182.4 201.6 170.0 229.4 275.2 Electric engines 000 pieces 64.1 95.8 132.3 194.4 120.9 152.2 165.3 Electricity mil. kWh. 35,888 40,546 46,202 52,078 57,917 64,147 72,100 Fabrics of all kinds mil. meters 470 496 502 561 570 700 771 Glass products 000 tons 115 147 154 163 240 215 258 Insecticides tons 20.7 40.9 54,523 45,877 53,113 59,485 65,433 Paper and paper products 000 tons 490 687 809 901 1,031 1,727 1,900 Porcelain mil. pieces 284 524 404 514 407 396 418 Rice mill equipment pieces 13,433 10,112 5,749 2,734 8,687 6,317 5,685 Salt 000 tons 974 909 906 898 842 857 847 Sawn wood 000 m3 2,667 3,291 3,009 3,232 4,322 4,441 5,329 Soap and detergent 000 tons 361 377 401 421 427 409 452 Steel 000 tons 2,503 2,954 3,280 3,403 3,837 4,612 5,073 Sugar (refine) 000 tons 790 1,073 1,191 1,102 1,099 1,312 1,417 Tea 000 tons 100 85 122 127 124 182 200 Textile yans 000 tons 227 235 241 259 269 385 481 Tin (billet) Tons 1,565 1,915 2,356 1,766 2,665 3,369 3,566 Transformers pieces 18,633 33,364 50,146 45,540 28,149 44,681 46,915 Water pumps for agriculture pieces 3,578 7,787 10,038 8,298 5,118 2,267 2,196 Source: GSO (2009) 195