Private sector performing public services: Legal framework as key factor

	Private sector encouraged to drive growth
	Outlook for Vietnam’s economy remains sound in 2019: IMF
	Private sector expected to build sustainable aviation industry

The private sector’s participation in some public services will bring many practical benefits. Photo: Internet.

Reduce the burden on the public sector

If the State hold a monopoly on commercial sectors such as retail, transport, movies, notary, sports in the past, today almost all these sectors have been privatised and created an infrastructure network with facilities and technology in accordance with the world’s trend. An expert has asked if sectors related to human life and health such as health and education are still licensed for the private sectors to operate, why are public services related to registration, notification, trade and investment promotion, business connection, training connections by the private sector limited?

A concrete example of the benefits of private sector participation in public services is the socialisation of scientific services. In 2013, Department of Livestock Production (Ministry of Agriculture and Rural Development) deployed inspection for certification of imported animal feed quality but the Department did not have a laboratory. After socialisation was issued, the Department has more than 1,000 staff with more than 30 laboratories which are private, foreign and State-owned laboratories. These units and the Department have performed the quality control of nearly 20 million tonnes/year of of imported animal feed and over 20 million tonnes/ year of domestic animal feed.

In addition, these laboratories have met requirements of the State management and the Department in quickly analysing banned substances in food.

For the Justice sector, Dr. Tran Thi Quang Hong, Institute of Legal Science said ​​socialising activities of judicial support in Vietnam has been promoted and concretised when placed in the judicial reform process. As a result, as of November 20, 2018, the whole country has 1,003 notarisation organisations, including 128 notary divisions and 875 notary offices. The notarisation activities in our country have been developed towards professionalisation, becoming a specialised sector that has the function of ensuring legal safety for contracts and transactions.

Ensure the transparency

In general, experts say that public non-business services with participation of private sector has achieved positive results, creating competition in the direction of benefits; especially with public spending and the capacity of State agencies limited. However, according to Mr. Nguyen Huu Dung, General Secretary of Vietnam Laboratories Association (VinaLAB), Chairman, General Director of VinaCert Certification and Inspection Joint Stock Company, despite the positive results, there are still some limitations, in which the biggest risk is the instability of the law.

Dung said that before 2017, aquatic seed production establishments must be assessed for conformity with production conditions. But when the Law on Fisheries 2017 was issued, the conditions for producing aquatic breeds must be certified by a State management agency. In addition, before February 2, 2018, the food must be announced in conformity together with the certification of conformity. But after this date, Decree 15/2018/ND-CP regulates that the announcement of conformity for foods is not required. “To deploy these two conformity certification services, private certification organisations have invested in training experts and testing systems. But after only one night, all that investment has become meaningless because an administrative regulation is changed. So who dares to invest more?” Dung said.

Private sector growth - key to financing sustainable development: UNDP report Developing the private sector and expanding domestic private financial sources are the key targets for Vietnam in ...

Another issue that makes private enterprises hesitate to participate in public services is the discrimination between private organisations and State organisations. Law enforcement is inadequate and inconsistent between ministries and sectors, making it difficult for businesses. In addition, internal activities of enterprises when participating in public services also have problems. According to a survey by the Vietnam Chamber of Commerce and Industry (VCCI), there are concerns about the risks of the cost of services and difficulties in quality control, fraud in business, even monopoly and corruption.

Dau Anh Tuan, Head of VCCI Legal Department, said that the State should create a mechanism to protect property rights and business rights, offer initial investment incentives and support, monitor output rather than monitor the process; offer anti-monopoly measures and establish common standards. In addition, many experts said that regarding the selection of fields for private sector, the State should take some factors into account such as the permanence of the service, legal and policy limitations, the level of risk, the level of competition, the ability to change contracts or costs and the effectiveness of competitive bidding.