Legal Document Promulgation in Vietnam: More Effective with RIA

“Behind each legal document issued are its impacts related costs that affect a wide range of issues concerning investment, income, employment and others. Therefore, whenever a [legal] document is going to be issued, it must pass the regulatory impact analysis (RIA) stage,” Mr Scott Jacobs, Senior Institutional Advisor for USAID/VNCI project said at a recent workshop titled “Better regulation for economic growth and sustainable development” hosted by the Central Institute for Economic Management (CIEM) in Hanoi.

 

In 2004 Vietnam in issued 1,245 legal documents but the volume soared to 8,520 documents in 2009, compared with the United States with only 1,500 documents. In 2010, the number of normative legal documents created in Vietnam dropped to 5,810 but this remained relatively large.

 

According to Mr Scott Jacobs, the continuous rise of legal documents in Vietnam indicates growing interventions of the Government. When a legal document is issued, the two entities must bear costs. If the State Budget must expend on drafting, administration and enforcement of these regulations, non-state sectors (e.gi. companies and households) must incur compliance costs, which are not usually “weighed or measured.”

Mr Michael Foster, Acting Director of USAID Vietnam, affirmed that ineffective and unnecessary regulations are wasting precious resources of the State and increasing burdens and costs on citizens and businesses. Therefore, having an effective institutional environment with high quality provisions is extremely important, not only in Vietnam but also all over the world.

 

According to calculations, costs used by non-State sectors to build normative legislations reached US$2,000 billion in the United States, equal to 15 percent of the world’s largest economy’s GDP. But, Vietnam may pay an equivalent of 20 percent of its GDP for this job, a too big figure. Businesses and families bear these costs. Businesses must accept lower profits or raise selling prices, and consumers - households - will suffer. This will lead to a drop in living quality of people and will affect investment attraction and employment. After all, these adverse things are put on the economy.

 

Regulatory Impact Analysis or Regulatory Impact Assessment (RIA) is a documentary tool created before a new government regulation is introduced. Its major contents include: Defining inadequacies of new policies, policy objectives and solutions to such shortcomings; appraising economic, social, health, safety, environmental and legal impacts of policy measures; presenting evidence and data to prove arguments and justifying government interventions; conveying information to policymakers and relevant stakeholders.

 

Institutional reform and regulatory impact assessment are considered useful tools to the formulation of legal documents. RIA will help reduce low quality and unnecessary legislations. It also helps enhance transparency of decisions, intensify public consultation and participation of affected groups. It also strengthens cohesion within the Government and exchange information among ministries. Currently, RIA is being applied by 60 countries and territories, which account for 70 percent of the global GDP. These governments increasingly recognise benefits when they use RIA as a tool to free more resources for the society.

 

Mr Scott Jacobs said the full RIA application will require a cost of some US$500 but it helps the private sector save many times more than this thanks to a less burdened but more effective institutional system. After Vietnam launched the Project 30, it had simplified 77 percent of legal documents. This move saves US$1.4 billion for businesses a year, equal to 1.5 percent of the country’s GDP and generates 1 million jobs a year.

According to CIEM, lawmaking process in Vietnam is generally short of public participation or public consultation and is lack of policy analysis tools to ensure that laws are good for people. Law drafting panels usually lack sufficient knowledge issue-defining methods, policy options, cost-benefit balance of each project, and alternative project for ineffective ones. Therefore, using RIA is an effective solution to address these shortcomings.

 

Currently, Vietnam makes light of regulatory impact assessment in drafting legal documents or it does this poorly, with primary focus on bright sides, not the flip side. Most ministries and other authorities uncaringly respond to RIA. Meanwhile, RIA is the very soul of [legal] documents, even more important than the drafting. Therefore, it is very necessary to build an effective institutional environment with high-quality regulations. Importantly, legislation must go together with RIA and criticisms from social organisations and citizens.

 

RIA is a tool for those who do not make policy or directly build policy to raise their voices to the issue or abolition of a new legal document. Early forecast evaluation will help improve the quality of legislation. Vietnam will not need to waste time "testing" in practice before modifying it - a move proven to take more times and costs of authorities and citizens. Building legal regulations are not creating new documents but solve a social matter. Therefore, it does not means that more documents are better but weaken economy.