Too Many Administrative Procedures for Projects Having Construction Works

10:48:32 AM | 12/11/2020

Surveys by Vietnam Chamber of Commerce and Industry (VCCI) show that administrative reform, if considered separately in each field, has basically changed positively. However, the responses from businesses through surveys and conferences conducted by VCCI, as well as through many other channels, show that currently, businesses still face troublesome administrative procedures when implementing projects related to many fields, typically construction projects.

Many procedures in many different agencies

VCCI’s quick review of the interdisciplinary administrative procedures in construction permits and related administrative procedures from corporate perspective shows that, for such construction projects, businesses and investors have to carry out administrative procedures at many different State management agencies, at many different levels, involving many stages namely investment policy approval, land, ground clearance, commencing. Overlaps and conflicts in the law on procedures, records, authority cost businesses a lot of time and money. The Government agencies themselves are also very confused in the application of the law and have faced many legal risks in recent times.

Currently, State management agencies on construction include the Ministry of Construction, provincial/municipal People's Committees and the People's Committees of districts, towns and cities of the province (all referred to as district-level People's Committees). Specialized construction agencies are agencies directly under the Ministry of Construction, other ministries managing specialized construction works, departments of construction, departments of specialized construction management and relevant functional departments of district-level People's Committees.

Agencies involved in resolving administrative procedures for businesses will depend on the classification of works in construction investment projects. Depending on the classification of works and specific activities in the construction process, enterprises will carry out administrative procedures with the agencies dealing with relevant procedures. Some other relevant agencies may include ministries or departments in the natural resources - environment, defense, police or finance sectors. According to the decentralized State management, the settlement of administrative procedures in construction activities tends to be more concentrated at the local level. Survey results also show this, with the department of construction being the most frequently interacting business agency (55% of enterprises), followed by the district-level People's Committee (32%) and provincial/municipal People's Committee (20%). The Ministry of Construction and other related agencies handle administrative procedures for 7% and 6% of enterprises, respectively.

Only for State management agencies on construction, the number of administrative procedures governing construction activities is already relatively large. Currently, according to statistics from the Ministry of Construction's online public service portal and one-stop shop, the number of administrative procedures for construction activities of the Ministry is 10 groups of procedures (divided into 22 small procedures, of which, there are 09 procedures related to implementing construction investment projects).

At the local level, many provincial/municipal People's Committees have also issued a list of administrative procedures under the State management function of the department of construction and district-level People's Committees. For example, Decision 1072/QD-UBND dated March 16, 2020 of the Chairman of the Hanoi People's Committee lists 13 administrative procedures in the field of construction activities under the charge of the Department of Construction and 9 procedures under the authority of the district-level People's Committee.

Private enterprises have more difficulties than FDI enterprises

Since the administrative procedures related to construction works are diverse in number, involving many ministries and local authorities at all levels, the report by VCCI selected 13 administrative procedures for evaluation including: (1) decision on investment policy; (2) land and land clearance procedures; (3) procedures related to construction planning, urban planning; (4) appraisal and approval of fire prevention and control; (5) appraisal of environmental impact assessment reports; (6) certification of the environmental protection plan; (7) basic design appraisal, construction design; (8) connecting power supply; (9) water supply and drainage; (10) inspections and examination on construction; (11) inspection and examination of fire prevention and control; (12) inspection and certification of environmental protection works; and (13) registration of construction ownership certificate.

The main findings of the report show that businesses’ experience is different from groups of administrative procedures. According to Mr. Dau Anh Tuan, Director of Legal Department - VCCI, two procedures that businesses feel easier to follow are water supply and drainage, and power supply. Meanwhile, with the remaining administrative procedures, a significant proportion of enterprises (ranging from 32.5% to 58.4%) still have difficulty. The procedures related to fire prevention and control are carried out most often by enterprises, but the implementation of these two procedures still faces many difficulties. The proportion of enterprises having problems with these two procedures is quite high, at 38.3% and 34%, respectively. Ranking highest in the proportion of businesses that have encountered difficulties are procedures for land, ground clearance, and procedures for construction planning and urban planning. 58.4% and 52.2% of enterprises, respectively, have difficulty in implementing these two groups of procedures. Construction inspections and examinations also create a heavy burden on businesses. The survey results show that 38.2% of enterprises are not satisfied with this activity of State agencies.

The experience of private enterprises is significantly less positive than that of FDI firms. The proportion of private enterprises having difficulty in implementing construction investment projects is higher than foreign-invested enterprises in 12/13 surveyed administrative procedures. This difference is significant in procedures for "investment policy decision", "land and ground clearance", "procedures related to construction planning, urban planning" and "power supply connection”.

Micro and small businesses are the group that feels the most obvious obstacles. In 12 out of 13 groups of procedures, micro enterprises with less than 10 employees rank first in the proportion of problems. This rate is significantly higher than businesses of other sizes, especially in the procedures of "investment policy decision", "basic design and construction design appraisal", " power supply", "registration of construction ownership certificate".

Meanwhile, informal fees are the top troubling issue for businesses. Approximately 30% of enterprises admit they have to pay this kind of expense when performing one or several certain procedures in the course of implementing a construction investment project. The processing time limit generally needs to be further shortened. Businesses still take a lot of time to learn the regulations and prepare the documents.

To reduce time and costs for businesses, VCCI believes that State management agencies should continue to review the legal system of construction and related fields; building coordination mechanisms among the concerned agencies to concurrently settle administrative procedures. At the same time, it will study to reduce the actual implementation time for the procedures of fire prevention and control appraisal and approval, construction permits, power supply connection, water supply connection, land and land attached asset registration.

In order to support information and guidance on administrative procedures, State management agencies consider developing detailed and illustrative documents to understand the implementation process; and collaborating across sectors to develop information sites on administrative procedures in the construction sector, regularly updating legal documents and illustrating situations often encountered by businesses and specific solutions.

To minimize unofficial costs, according to VCCI, it is necessary to strictly comply with the Government's directives such as Directive 10/CT-TTg and Resolution 139/NQ-CP; to widely develop forms of online payment at level 4 for administrative procedures so that businesses can make non cash payments.

In order to increase transparency and integrity in receiving and processing records, it is necessary to strengthen and improve the quality of information application in administrative procedure settlement, as well as in monitoring progress in handling procedures and public evaluation of document processing officers.

By Anh Mai. Vietnam Business Forum