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RIA in Viet Nam: Why and key issues?


RIA in Viet Nam: Why and key issues? .. pro-competitive [regulatory] reforms tend to increase both investment and multi-factor productivity [and] higher growth in ... – PowerPoint PPT presentation

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Title: RIA in Viet Nam: Why and key issues?

RIA in Viet Nam Why and key issues?
  • .. pro-competitive regulatory reforms tend to
    increase both investment and multi-factor
    productivity and higher growth in GDP per
    capita (OECD 2005).
  • Presentation by GTZ
  • to the Ministry of Justice
  • 21 December 2005

Outline of presentation
  • Introduction to RIA (Why)
  • What RIA involves (What)
  • Implementation issues (How)
  • Next steps (Next)
  • Brief look at Australian and other international
    approaches to reducing regulatory costs of doing

Why. What is Regulation
  • Regulation are instruments by which governments
    set requirements on enterprises and citizens.
  • Regulations include laws, formal and informal
    orders, and sub-ordinate rules issued by all
    levels of government
  • Regulations include quasi-regulations. Rules,
    instruments and standards used to influence
    business behaviour, but not be reflected in
    official regulations (i.e., not published in Cong

Why. What is Regulatory Reform?
  • OECD defines regulatory reform as
  • changes that improve regulatory quality, that
    is, enhance the performance, cost-effectiveness,
    or legal quality of regulations and related
    government formalities. Achieved through a mix
    of regulation, deregulation and re-regulation
  • Implementing regulatory reform requires
  • High level statement of principles/policies
  • Institutions
  • Incentives (at all levels)
  • Tools (RIA, consultation, communication, periodic
    reviews etc.)

Why? Procedural Complexity and Corruption
Why. What is a Regulatory Impact Assessment (RIA)?
  • A process to assess likely impacts of a policy
    change and the range of options to implement it.
    It can be used to assess
  • All potential impacts social, environmental,
    financial and economic.
  • All regulations formal legislation and quasi
    regulations (e.g. guidance or codes of practice,
    public awareness campaigns, etc.)
  • Distribution of impacts to consumers, business,
    employees, rural-urban, or other groups.

Why. Aim and Use of RIA?
  • Better regulations gtmore competitive economy,
    and higher growth (OECD 2005 for evidence).
  • RIAs gtbetter regulation gtmore equitable
  • RIA recognized as a key element of good
    regulation (e.g. OECD). Now required in most OECD
  • Some developing and transition countries. (e.g.
    Hungary, Korea, and Peru) now require RIAS.
  • Not a panacea. Also need political commitment to
    act (e.g. slow productivity growth in Netherlands

Why. Less risk of policy mistakes
  • Helps define objectives of proposed policy
  • Assess full impact of the proposed change,
    including unintended impacts on non-target groups
  • Identify and assess options for achieving policy
  • Ensure consistency with other policy instruments
  • Assess whether benefits exceed costs.
  • Ensure a transparent efficient consultation
  • Help ensure compliance with international

Why? Ameliorating regulatory inflation
  • Without accountability there is a tendency to
    over-regulate. Viet Nam still has a relatively
    complex and at times overlapping regulatory
    system. There may be value in establishing an
    independent office with responsibility for
    improving regulatory quality.
  • Donors contribute to the problem with ad hoc new
    regulation frequently specified as project and
    program lending conditions. RIAs requires that
    everyone justify the need for regulations.

What. RIA Statement (RIAS) Process
  • RIAS is typically prepared in several stages
  • An initial RIA is prepared when a proposal is
    first considered as a first step in deciding
    whether to proceed.
  • A partial RIA should be prepared prior to formal
    consultations, and included with consultation
  • A full RIA will include more detailed analysis,
    and reflect the findings from the consultation
  • Dont need to be overly complex documents

What. Sorts of Questions asked in RIAS
  • Nature of the problem.
  • Regulation and regulatory failure.
  • Alternative solutions to problem.
  • Benefits of regulating.
  • Cost of regulating.
  • Public consultation.
  • Support for regulation.
  • Impact on competition.

What. Who should prepare RIAs?
  • The agency responsible for proposed policy change
    should be responsible for preparing the RIA (but
    may contract work to specialist organizations
    and/or firms).
  • A separate agency can oversee compliance with RIA
    requirements and ensure the quality of RIAs.
    Integration of RIA into the decision-making
    processes will require sustained political,
    administrative and public support.

What. How to ensure RIA quality?
  • A separate agency should be responsible for
    monitoring the quality of RIAs. In most countries
    this agency IS NOT directly involved in
    regulatory development and preparation of RIAs.
  • Participatory approaches -- including ensuring
    that RIAs are easily accessible by the public
    (e.g., summaries in the press, full RIAs on the
    internet) -- can help increase pressure on
    government agencies to produce quality RIAs.

How. Key Steps in the RIA process
  • Identify/Assess Problem
  • Prepare Partial RIA
  • Stakeholder Consultations
  • Data Collection Analysis
  • Prepare Full RIA Statement
  • RIA Approval

How. Indicative Contents of a RIAS
  • Introduction
  • Purpose and Nature of Proposed Regulatory Change
  • The Consultation Process
  • Review Options for Resolving the Problem
  • Benefits and Costs of Proposed Change
  • Compliance, Enforcement and Monitoring
  • Summary and Recommendations

How. Assessing benefits and costs
  • Assess benefits, costs and distributional impacts
    of each option -- including the doing nothing.
  • Where feasible, major costs and benefits should
    be quantified. RIAs should include full economic
    costs and benefits (e.g. social, environmental,
    and health and safety ). Compliance levels need
    to be assessed in order to assess likely
  • However, full quantification is not always
    possible, even in developed countries. (Full CBA
    often missing from RIAS in UK and Australia).

How. Analytical problems with RIAs
  • Alternative methodologies can be applied, but
    none is entirely satisfactory.
  • Frequent limitations in the data.
  • Those proposing reforms can be over-optimistic in
    evaluating reform benefits.
  • RIA is not for fine-tuning policies. More for
    identifying good and bad options.

How. Problems, but never mind the process itself
is useful
  • Major benefits from RIA derive from adopting a
    process of structured thinking and consultation.
  • Need to get processes right and focus analytical
    resources on the key issues.
  • Limited resources should not be diverted to
    unnecessarily complex methodology.
  • Particularly true in Viet Nam given limited
    resources in many national agencies.

How. Summary Matrix for RIAS
  • Problem/Objective of proposed change
  • Proposed options
  • Anticipated impacts of proposed changes
  • Key intended benefits
  • Costs
  • Distribution of Impacts
  • Summary of key concerns raised during

Next OECD best practices in implementing RIA
  1. Maximise political commitment to RIA
  2. Allocate responsibilities for RIA program
    elements carefully
  3. Train the regulators
  4. Use a consistent, but flexible analytical method
  5. Develop and implement data collection strategies
  6. Target RIA efforts
  7. Integrate RIA with the policy-making process
  8. Involve the public extensively
  9. Communicate the results

Next. What might be needed for implementation?
  • NA/Government adopt national principles of good
    regulation to guide regulators and inform the
  • Government prepare and adopt guidelines on RIAS
    preparation. Require ministries (and provinces)
    to prepare RIAS for new laws, ordinance and
  • Develop oversight agency reporting to government
    (or NA) to assist and direct ministries in RIA.
  • Develop and implement a national training program
    on RIA.
  • Work with private sector and media to improve
    consultations and accountability mechanisms

Next. Possible Short Term Follow-up
  • Organize workshops to present and discuss draft
    RIAS guidelines.
  • Prepare pilot RIAS of topical issues at central
    and provincial levels.
  • Use workshop feedback and pilot RIAS to improve
    draft RIAS guidelines.
  • Consult with NA, government agencies and public
    to build support for RIA process

  • International context some Australian

Regulatory issues concern business everywhere
Regulatory Reform What Tools?

Key initiatives (Australia)
  • Business licence reduction programs
  • Improving access to information
  • Regulation review process
  • National reforms

Reducing business licence (Australia)
  • Taskforce/agency identified licences for
  • Reported impressive reductions in licence numbers
  • Success difficult to measure

Improving access to information (Australia)
  • Business Entry Point
  • Single internet entry point for businesses
    seeking information from any level of Government
  • Business Licence Information Service
  • a one-stop shop for all government business
  • National Business Information Service
  • Provides information relating to all tiers of

Regulation review process (Australia)
  • Tests the need for regulation
  • Aims to improve the decision-making process and
    ensure more consistent, systematic and
    transparent process
  • RIS sets out the problem, objectives, options,
    impacts, consultation, conclusion, implementation
    and review
  • Must specifically address impacts on small

Managing Regulatory Reform
  • Many countries established central agencies to
    facilitate Broad based regulatory reforms
    Belgium gt the Agency for Administrative
    Simplification (ASA) in 1988 France gt the
    Commission on Administrative Simplification
    (COSA) in 1998 Italy . the Regulatory
    Simplification Unit (Nucleo) in 1999.
  • Securing national commitment to generalized
    administrative reforms can be time consuming, as
    demonstrated by experiences in Australia.

Australia Office of Regulatory Review (ORR)
  • ORR promotes best practice regulation making and
    vets agency compliance with (RIS). ORRs charter
    list the following principal activities
  • advise on quality control for regulation making
    and review
  • examine and advise on RISs prepared by central
  • provide training and guidance to officials
  • report annually on compliance to Government
  • advise Ministerial Councils and national
    standard-setting bodies on regulation
  • lodge submissions and publish reports on
    regulatory issues
  • monitoring regulatory reform developments at the
    state level, and in other countries .

Coordinating Central-State reforms
  • Cooperation obtained through Council of
    Australian Governments (COAG) and ministerial
  • Business groups applied pressure
  • Incentives for compliance. Some central-state
    fiscal transfers linked to RIS compliance.

Netherlands 11 Determinants of Compliance
  • Spontaneous compliance dimensions (factors that
    affect the incidence of voluntary compliance
    that is, compliance that would occur in the
    absence of enforcement)
  • T1. Knowledge of rules Target group familiarity
    with laws and regulations, clarity of laws and
  • T2. Cost-benefit considerations Material and
    non-material advantages and disadvantages
    resulting from violating or observing regulation.
  • T3. Level of acceptance Extent to which the
    target group (generally) accepts policy, laws,
    and regulations.
  • T4. Normative commitment Innate willingness or
    habit of target group to comply with laws and
  • T5. Informal control Possibility that
    non-compliant behaviour of the target group will
    be detected and disapproved of by third parties
    and the possibility and severity of sanctions
    that might be imposed by third parties (for
    example, loss of customers/contractors, loss of

Determinants of Compliance Netherlands
  • Control dimensions (the influence of enforcement
    on compliance)
  • T6. Informal report probability The possibility
    that an offence may come to light other than
    during an official investigation and may be
    officially reported (whistle blowing).
  • T7. Control probability Likelihood of being
    subject to an administrative (paper) or
    substantive (physical) audit/inspection by
    official authorities.
  • T8. Detection probability Possibility of
    detection of an offence during an administrative
    audit or substantive investigation by official
    authorities. (The probability of uncovering
    non-compliance behaviour when some kind of
    control is applied.)
  • T9. Selectivity The (increased) chance of
    control and detection as a result of risk
    analysis and targeting firms, persons or areas
    (that is, extent to which inspectors succeed in
    checking offenders more often than those who
    abide by the law).

Determinants of Compliance Netherlands
  • Sanctions dimensions (the influence of sanctions
    on compliance)
  • T10. Sanction probability Possibility of a
    sanction being imposed if an offence has been
    detected through controls and criminal
  • T11. Sanction severity Severity and type of
    sanction and associated adverse effects caused by
    imposing sanctions (for example, loss of respect
    and reputation).

Summary Conclusions for Sustaining Regulatory
Reform in VN
  • Aim to avoid, minimize or simplify regulations.
    Where regulations are needed, regulate well.
  • Be aware of the regulatory impact on business
    costs. Require regulators to include some formal
    assessment of regulatory benefits and costs, and
    of the distribution of costs and benefits, when
    submitting new regulations.
  • Study closely practical issues relating to the
    costs and probability of compliance and
  • Build public understanding and support for
    regulatory reforms. It is difficult and often
    impossible to implement top-down reform.
  • Develop national institutional capacity to
    implement an ongoing program of regulatory review
    and reform. Use new information technology
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