Integrity and transparency in administrative procedures performance creates trust for firms

Compliance costs are still high

According to the Vietnam Chamber of Commerce and Industry (VCCI), to reach the target of having 1.5 million enterprises by 2025, the growth of the number of enterprises in the five years 2021-2025 must be between 12 and 14% per year, on average, there must be 100,000 to 150,000 newly established enterprises annually. However, to achieve the above target, VCCI said management authorities need to continue to have stable policies, support taxes, fees, and more favourable administrative procedures.

According to a recent announcement in the report on the Administrative Procedure Compliance Cost Index (APCI) 2020 done by the Administrative Procedure Reform Advisory Council of the Prime Minister, among administrative procedures surveyed, the group of administrative procedures on construction and the environment "consume" the most costs for businesses. Specifically, to implement administrative procedures in the environmental group, on average, each firm has to spend 61.5 hours, the direct cost is VND 3.1 million. For the group of administrative procedures on construction, firms have to spend more than VND 25 million to carry out the procedure, with an average time of about 21.2 hours per company, direct cost is VND 4.7 million for the costs of copying, verifying dossiers, fees as prescribed (including appraisal fees and granting construction license fees) and part of the unofficial costs.

In fact, that number could be much higher. Sharing with reporters about procedures in the construction field, a representative of an enterprise said it took more than 26 working days for enterprises to amend and supplement their dossiers, including receiving notice of fixing and resubmit the application. Businesses still apply and receive direct results. Along with that, many businesses also shared, there were many cases where firms have to pay VND 15-20 million for copies, for verification for an appraisal dossier. Even, businesses also have to pay many unofficial cost to train and transport the inspection team under procedure of granting construction license.

Along with the above costs, businesses are still spending a lot of on roads and traffic. According to Truong Van Cam, General Secretary of the Vietnam Textile and Apparel Association, although firms have recovered from the pandemic, they are still very weak, while many types of costs that businesses have recommended many times but it has not changed anything. For example, road charges, BOT fees, and seaport charges are still high or only marginally reduced after many proposals. The union costs of 2% are also significant for businesses in this context, so reducing or exempting fees will be a huge support to the business. Sharing the same point of view, Pham Thi Hong Thuy, Chairman of Vinh Phuc Business Association, suggested that 2% of the trade union fees should be exempted for businesses during the pandemic.

Still afraid of unofficial fees

Also according to results from the APCI 2020 report, the group of tax administrative procedures has the lowest average cost of compliance. The reason is the taxation sector has electronicised the implementation of administrative procedures to simplify the implementation, reducing time and saving costs for businesses when performing the procedure. In particular, many other administrative procedures have also made progress such as cross-border trade transactions, investment and starting a business due to the change from "pre-inspection" to "post-audit".

These results have shown the reform efforts of the Government and authorities in the State apparatus from the central to local levels in recent years. However, cutting costs to the lowest possible level is always the desire of many firms. Ms. Pham Thi Hong Thuy suggested banks should continue to consider, restructure the time of debt payment, reduce loan rates by 1.5-2% for all loan packages and land rent reduction for two years.

Not only asking to reduce official costs, businesses also want to thoroughly solve the "problem" related to unofficial costs. The research of APCI 2020 showed unofficial costs are found in all groups of administrative procedures and all stages of the implementation of administrative procedures and in many localities. Enterprises said unofficial fees not only increase compliance costs, but also causing the business environment unhealthy, less competitive and concern for foreign businesses that want to do business, compete fairly in Vietnam and cooperate with Vietnamese firms.

Talking more about this issue, Nguyen Manh Thao, Director of Our Tour Group, said many administrative procedures would be simpler and more convenient if the management authority decentralised to the operation units. Therefore, many firms have to wait for the guidance document for 6-7 months that has not been issued yet, causing damage to businesses with significant financial numbers. Therefore, issues related to administrative procedures need integrity, transparency, shortening to create opportunities for enterprises to expand their investment and business.