VietnamRIAonLaw

8/6/2019 VietnamRIAonLaw

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REGULATORY IMPACT ANALYSIS OF THE DRAFT LAW ON

PROMULGATION OF LEGAL NORMATIVE DOCUMENTS (REVISED)

Contents

I. Introduction 1

II. REGULATORY IMPACT ANALYSIS FOR LEGAL NORMS AND USE OF RIA FOR THE DRAFTLAW ON LAWS 3

1. RIA can help legal normative document drafting achieve better results...................... .................. .................... 3 2. Process of doing the RIA – consultations and method ........................... .................... .................. .................... 4

III. Assessing the impact of six reform issues in the draft Law on Laws 6

1. Issue 1: Include a preliminary RIA in the Annual Legislative Program...................... ................. .................... 7 1.1 Defining Issue 1....................................................................................................................................... 7 1.2 Current situation ...................... ..................... ..................... .......................... ................. ..................... ..... 7 1.3 Policy goals............................................................................................................................................. 7 1.4 Options for Issue 1................................................................................................................................... 7 1.5 Doing RIA for the options .............................. ................. .................. .......................... .................. ........... 8 1.6 Conclusion and Recommendations........................................................................................................... 9

2. Issue 2: Codification of legal normative documents issued by central state agencies ....................... ................. 9 2.1 Defining Issue 2....................................................................................................................................... 9 2.2 Current situation ...................... ..................... ..................... .......................... ................. ..................... ..... 9 2.3 Policy goals........................................................................................................................................... 10 2.4.Options for Issue 2................................................................................................................................. 10 2.5 Doing RIA for the options .............................. ................. .................. .......................... .................. ......... 11 2.6 Conclusion and Recommendations......................................................................................................... 13

3. Issue 3: Improve legal consistency and transparency through more rapid implementation of conforming

changes by simultaneously revising parts contradicting to parts contained in draft legal instruments and byusing an omnimbus law to change multiple legal norms simultaneously....... ......................... ................... ......... 13

3.1 Defining Issue 3..................................................................................................................................... 13 3.2 Current situation ...................... ..................... ..................... .......................... ................. ..................... ... 14 3.3 Policy goals........................................................................................................................................... 14 3.4 Options for Issue 3................................................................................................................................. 14 3.5. Doing RIA for the options ....................... ................. ........................ ....................... ..................... ......... 15 3.6 Conclusion and Recommendations......................................................................................................... 16

4. Issue 4: Require regulatory impact analysis for new legal norms .......................... ................. ..................... ... 17 4.1 Defining Issue 4..................................................................................................................................... 17 4.2 Current situation ...................... ..................... ..................... .......................... ................. ..................... ... 17 4.3. Policy goals.......................................................................................................................................... 18 4.4. Options for Issue 4................................................................................................................................ 18 4.5. Doing RIA for the options ....................... ................. ........................ ....................... ..................... ......... 18 4.6 Conclusion and Recommendations......................................................................................................... 21

5. Issue 5: Reduce the categories of legal normative documents (simplifying forms of legal norms)................... 21 5.1 Defining Issue 5..................................................................................................................................... 21 5.2 Current situation ...................... ..................... ..................... .......................... ................. ..................... ... 21 5.3 Policy goals........................................................................................................................................... 22 5.4 Options for Issue 5................................................................................................................................. 22 5.5 Doing RIA for the options .............................. ................. .................. .......................... .................. ......... 22 5.6 Conclusion and Recommendations......................................................................................................... 24

6. Issue 6: Expand mandatory public consultation to all legal norms ............................. ..................... ............... 25 6.1 Defining Issue 6..................................................................................................................................... 25 6.2 Current situation ...................... ..................... ..................... .......................... ................. ..................... ... 25 6.3 Policy goals........................................................................................................................................... 25 6.4 Options for Issue 6................................................................................................................................. 26 6.5 Doing RIA for the options .............................. ................. .................. .......................... .................. ......... 27



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6.6 Conclusion and Recommendation …………………………………………………………………………………..29

IV. General conclusion 31

V. The consultation process 32

IV. Annexes 33

Annex 1- Summary of Scoring Criteria for Priority Issue (Table A)Annex 2 - Scoring Selected Issues against the Scoring Criteria (Table B) Annex 3 - Analytical approach to the six priority issuesAnnex 4 - Data sheet 1. Annex 5 - Costs and Benefits of Options in the Law on Laws, Summary……………………………………



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REPORT ON REGULATORY IMPACT ASSESSMENT OF THE DRAFTLAW ON PROMULGATION OF LEGAL NORMATIVE DCUMENTS

(revised)

I. IntroductionThe Law on Promulgation of legal normative documents (the Law on Laws, or LoL), first

adopted in 1996 and revised in 2002, is being revised to address weaknesses in Vietnam’s currentlaw development and legal system. The goals of the reform are to enhance the quality of legal

normative documents, to ensure transparency, efficiency, and accountability of preparation of legal normative documents; and to improve transparency of policies and regulations, and to

strengthen the streamlining and rationalizing of the legal normative document system.

This revised Law on Laws is a key legal reform that will improve the legal system, strengthen therule of law, the capacities of the National Assembly to make policies and of ministries to

implement public policy, and compliance by businesses and citizens with legal obligations.

Nevertheless, there are yet debates on options to revised parts of the draft Law on Laws. In thiscontext, the Regulatory Impact Analysis of draft legal normative documents (RIA)

1can help find

common ground for solutions that produce best benefits. The immediate goals of the RIA on theLaw on Laws are to support transparent discussions of the content of the draft Law on Laws, and

to assist the National Assembly in documenting the relative benefits and costs of options underconsideration. This RIA report identifies concrete options, assesses the positive and negative

impacts of those options, and presents the results so that options can be clearly compared.Towards those goals, the Ministry of Justice (lead LoL drafting agency as assigned by theGovernment) established a Research group (including some members from the drafting

committee and the editing team with the technical assistance from international consultantsspecializing in RIA and regulatory reform) to conduct RIA.2

RIA will focus on important reforms to the LoL in terms of quality of law (although RIA was

conducted quite late, from February till April 2008 after being put forth by the Government toNA for comment in October 2007). In addition, a secondary goal is to use the experiment of

preparing any RIA for the draft law to strengthen the capacity of the drafting committee andediting team to prepare RIA for draft legal normative documents in future. In this sense, the RIA

exercise will function as a pilot project. The lessons learned from the pilot will be useful indeveloping a robust RIA strategy for the Research group.

RIA has been conducted on the draft law presented to the National Assembly for comment by the

Government in October, 2007. Many options were considered for various parts of the law. Animportant input into the final decisions on the content of the law was better information on the

actual impacts -- positive and negative – of the options being discussed. Such information is

1In countries such as US, RIA is even considered an inflation-reducing tool. In the Netherlands, a similar tool has

been used to implement a strategy to reduce 25% of regulatory compliance costs.2

This activity is conducted with assistance from USAID-funded VNCI and STAR projects and VIE/02/015 Project

« Support implementation of legal system development strategy for Vietnam up to 2010 » jointly funded by UNDP,Sweden, Denmark, Norway and Ireland



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particularly valuable where there are large differences of opinion about the content of the law,even if there is substantial agreement about the desired impacts of law.

After comparing the costs and benefits of different options (see Part III and IV of this report) , the

research group found that if options that can bring the best benefit for Vietnam are to be choosen,the draft Law on Laws should contain provisions as follows:

(1) Including a preliminary RIA and policy statement with each proposal for law,

ordinance contained in the Annual Legislative Program;

(2) Creating mechanisms for codification and simulatenously replacing, eliminating theregulations on legal normative document systemization

3and stipulating the

regulations on codification shall have same applicability as legal normativedocuments, i.e. can be searched, referred to by users/citizens as with legal normative

documents published on the Official Gazette;

(3) Assigning to issuing agencies, on issuing new legal normative documents, the

responsibility to revise parts of legal normative documents which they have issuedcontradicting to parts of new legal normative documents (or revised, supplementedlegal normative documents) and using an omnibus law to change multiple legal

normative documents to address expeditiously inconsistencies in the legal system andto comply with international commitments;

(4) Requiring regulatory impact analysis for all draft legal normative documents instead

of for selected categories of legal normative documents, differiating the categories forpreliminary RIA and detailed RIA

4;

(5) Reduce the categories of legal normative documents in a manner that agencies

competent for issuing legal normative documents should issue one form of legalnormative documents, except the NA (responsible for issuing the Constitution and

laws); and

(6) Expand mandatory public consultation to all legal normative documents; requiremandatory publication of legal normative documents on a specified website within 60

days5.

3The draft presented by the Government specifies that the systemization shall exist in parallel with the codification.

4The draft law presented by the Government only requires RIA for legal instruments issued by the National

Assembly, the Standing Committee of the National Assembly and the Government.5

The draft law presented by the Government only requires 60-day publishing for draft legal normative documents of

the National Assembly, the Standing Committee of the National Assembly relating to or affecting goods trading,services and intellectual property, while other draft legal instruments do not specify time.



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II. Regulatory impact analysis for legal normative documents and useof RIA for the draft Law on Laws

1. RIA can help legal normative document drafting achieve better results

The method used in most countries to assess the impacts of new laws and policies is Regulatory

Impact Assessment. RIA is a tool that is used to assess the potential positive effects (benefits) andnegative effects (costs) of proposed government action in order to help decision makers identify

the best and worst options. RIA, if it is done well, greatly improves the results of legalinstruments, and reduces the risk of costly mistakes that damage citizens and the economy.

The Law on Laws is both an important legal reform towards improved legal stability and quality

of legal normative documents, and a vital national economic and governance reform. Improvingthe quality of legal normative instruments will bring about two major benefits: 1) it will boost

economic growth, and 2) it will improve the efficiency and effectiveness of the designing andimplementing important public policies such as health, safety, and environmental quality.

Economic benefits: Vietnam is paying a high economic price for poor legal instruments.

Economic growth is slower where the costs for drafting legal normative documents andimplementing regulations are unnecessarily high and unpredictable. High regulatory costs and

risks increase the cost of business production and the cost of capital, reducing Vietnam’scompetitiveness. These effects reduce investment and job creation, and lead to higher rates of

inflation. Businesses in Vietnam are facing with high regulatory costs and risks as a result of theuncertain, unstable and ineffective legal and regulatory environment. The revised Law on Laws

will play an important role in reducing costs and risks for businesses, directly contributing tohigher levels of investment, faster job growth, and expanding shares of regional and global

markets. Some elements of the draft law are also needed to bring Vietnam into compliance withWTO commitments.

Public policy benefits: Legal instruments that are inefficient, badly designed, and poorly

implemented reduce the quality of life for Vietnamese by failing to protect public interests. Lowquality regulation and its implementation increases health and safety risks such as to consumers,

damages the environment by failing to stop those who pollute, and reduces governmenteffectiveness in every policy that it adopts. The revised Law on Laws should boost the quality of

regulatory instruments, directly assisting enforcement and compliance activities amonggovernment enforcement agencies and in the business sector. Increased compliance with legal

instruments will save lives, clean up the environment, and reduce corruption in the governmentand business sectors.

Due to the complexity of the draft law and the time constraint for a RIA preparation for the entiredraft law, priorities were set to identify key issues that will be applied RIA within the timeframe.However, the RIA is likely to have most value in those areas where there is continued

disagreement about the approach to be taken, that is, where there is still flexibility to choosebetween options. One of the important criteria for selecting the content of the RIA was the degree

of controversy and disagreement around particular issues. Therefore, the research group hasdecided to assess issues against the core goals of the draft LoL and RIA assessment criteria (see

Annex 1 at Part IV of this report).



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The goals of conducting RIA for the LoL are relevant to the RIA exercise, which include:

Assist lawmakers to develop options that re-allocate the limited resources of the publicadministration away from overly complex and unnecessary legal issues, solutions, and

methods;

Identify those options that are most likely to reduce risks and mistakes in public policy;

Increase the flexibility and future relevance of the Law on Laws in a rapidly changingeconomic and legal environment;

Improve the effectiveness of legal normative documents in producing the desired resultsin terms of public policy goals;

Support the competitiveness of the economy;

Increase the transparency of Vietnam’s policies and regulations.

2. Process of doing the RIA – consultations and method

The RIA process was organized into the ten following steps:

1. Select priority issues according to clear criteria;

2. Identify the goals for each priority issue;3. Identify the options for resolving each issue;

4. Identify the RIA method for each issue by identifying major cost and benefit elements;5. Identify the data needs for the analysis;

6. Identify the methods for data collection method consultation;7. Collect the data and consult using the agreed methods from step 6;

8. Conduct the analysis using the data collected;9. Agree on the interpretation of the analysis and the conclusions in the drafting committee;

and10. Write the RIA Report.

The research group took a systematic approach to choosing the priorities. The research group

scored a list of potential issues for consideration (8 issues, see Annex 2) against the core goals of the draft Law on Laws. As a result of this scoring mechanism, the research group selected the six

most important issues to include in the RIA. Options were identified for each of these issues. Atotal of 23 options will be considered in the RIA. An option for every issue is the baseline or

status quo option, that is, no change to the existing situation. The baseline option is alwaysincluded in RIA because RIA analysis is marginal. This means that the impacts of all options for

change must be compared to the baseline option to understand the marginal effects of takingaction.

In the research group’s opinion, the six issues to be assessed are issues which are important inlegal reform and associated with the goals of the draft LoL, which are: to ensure good state

policies, ensure good drafting and issuing of legal normative documents, strengthen democracy inlaw making and norm making, improve transparency, consistency and accessibility of the legal

normative document system. The six issues are:



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1. Include a preliminary RIA and policy statement with each proposal for law, ordinancecontained in the Annual Legislative Program

2. Codification of legal normative documents (issued by central agencies)3. Improve legal consistency and transparency through more rapid implementation of

conforming changes by simutaneously revising parts contradicting to parts contained in newlegal instruments (or revised, supplemented legal instruments) and by using an omnibus law

to change multiple legal normative documents simultaneously4. Require regulatory impact analysis for draft legal normative documents

5. Reduce the categories of legal instruments (simplying the forms of legal normativedocuments)

6. Expand mandatory public consultation to all legal normative documents; require mandatorypublication of legal normative documents on a specified website.

Development of the RIA on the LoL was based on good international practice: defining the

problems, identifying options, gathering data, validating data through consultation, and using thedata in a transparent analysis. The most difficult phase was gathering information. To complete

the analysis, the research group gathered more than 250 data elements from across many sources

in the ministries, the business sector, and international experience.

The RIA on the Law on Laws is difficult because the law is a procedural law, and hence many of

the effects are not direct effects but second order or even third order effects. For example,codifying laws will have a direct effect in increasing budget costs, since this is a major task that

will require investment, but the secondary effects on government and businesses as they gainaccess to a more transparent, secure, and easily accessible source of law is likely to reduce

overall budget costs.

The standards for the analysis set by the research group are that for each option, the RIA presentsa mix of quantified and qualified impacts, using quantified measures to the extent possible given

time and resources. However, the research group recognized that some important impacts couldnot be quantified, but would have to be described qualitatively as precisely as possible, giving the

logic and assumptions supporting the conclusion. The benefits and costs of each option arecompared, and a recommendation is reached based on the balance of positive and negative

impacts for each option.

This analytical method for the RIA is called soft benefit-cost analysis, because it integrates avariety of qualitative and quantitative measures into a single framework that can provide anorderly and consistent comparison of options. The technique requires that the analysts comply

with two quality methods:

Assumptions should be transparent, that is, clearly stated;

Conclusions do not require precise data, but must be reasonably based on availableinformation.

The research group developed a model (based in Excel) of the process in Vietnam that is used todevelop new legal documents. This model was used to estimate the benefits and costs to both the

public sector and the business sector of each option. The data elements used in the model arepresented in the annex of this report (Annex 3).



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III. Assessing the impact of 6 priority issues in the draft Law on Laws

There is little question that the reforms in the Law on Laws, if fully implemented, will boost

investment, job creation, and growth. International experience with law development reforms inmany countries, such as South Korea and Europe, show the effects of reducing regulatory costs

and risks on economic performance. Using estimates of effects of national regulatory reformprograms in other countries, the RIA estimates that the six reforms in the Law on Laws will, if

the best options are chosen, will create over a million new jobs in the business sector over 10years, and reduce business production costs by almost 1% of GDP per year. The effects are

shown in Table 1:

Table 1: Macroeconomic effects of six reforms in the Law on Laws

Cost savings to the business sector,annually, in VND

10,924,760,648,668

Cost savings to the business sector,annually, as % of GDP, per year

0.98%

Number of new jobs created over10 years due to lower legal

compliance costs

731,569

Number of new jobs created over

10 years due to lower legal risks370,031

Total jobs created over 10 years 1,101,600

The dynamic and longer-term effects of these impacts on sustained economic growth in Vietnamshould be even larger. These reforms will generate large gains for consumers and exporters as

price levels drop and the variety and quality of services improves in Vietnam. Declining prices, inturn, mean greater consumer income and demand. In other words, the Law on Laws can be a

useful tool for the country in the current fight against price inflation. The demand effects,complementing the supply side effects of these legal reforms, will help to sustain growth over the

longer run.



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1. Issue 1: Include a preliminary RIA in the Annual LegislativeProgram

1.1 Defining Issue 1

The annual legislative program and the 5-year legislative program are adopted by the National

Assembly as a list of laws, ordinances to be issued. More often, NA adoption is made withoutsufficient information on the need of legal normative documents and their impact; and the

program adopted fails to identify policy statements and goals that should pertain to legalnormative documents, therefore creating cost-incurring confusion for drafting agencies. The lack

of a quality control mechanism for legislative programs, policy orientation leads to extension of the drafting process, greater risks and difficulties which in turn affects the drafting quality and

progress.

1.2 Current situation

At present, policy making in law proposals, legislative program development has been given lessinappropriate attention as it should. Many proposals which do not include justification statements

or are not well grounded are put in the legislative program. Most of proposals do not include RIAfor legal normative documents/policies to be issued or the RIA, if included, is not adequate and

practical. Proposing agencies often fail to estimate potential costs and benefits of legal normativedocuments if they are to be promulgated, and fail to make independent RIA report even if at the

slightest degree. This makes it difficult for reviewing agencies to make a decision on whether toput such proposals in the legislative program, which in turn leads to inappropriate prioritization

and inclusion of proposals, or low feasibility of proposals due to immature reviews of proposals.

Due to unclear goals of legal normative documents and policies, the National Assembly does notadopt policies associated with the (tentative) legal normative documents but only decides to issue

legal normative documents according to proposed list. As such, the National Assembly still has toadopt the legislative program of which it cannot assess the usefulness and the effectiveness for

governance and development if promulgated until draft laws are presented to itself and theStanding Committee.

1.3 Policy goals

The goals of the reform are:

Ensure serious study of and proposals of laws, ordinances, expecially in quality control of proposals by preliminary RIA exercise;

Reduce NA’s time for review and approval of policies and for drafting, appraisal of policieswhich are clearly written, well-grounded and practical, and have conducted adequate RIA;

avoid issuing laws “at any cost” (which means legal normative documents are to be issuedat all cost, without taking into account costs and benefits);

Ensure the legislative program is reasonably arranged by order of need-based priority;promulgation priority is arranged in ways that policies, documents which are the mostneeded are to be issued first and the National Assembly shall decide on the list of priorities.

1.4 Options for Issue 1:



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Three options are identified for this issue:

Option 1A. Status quo (as stated in item 1.2)

Option 1B. Proposals for law in the legislative program approved by the National Assembly will

be accompanied by a justification statement, an explanation of key policy issues, and apreliminary RIA. The policy issues and RIA are to be consulted with the public using the Internet

or other consultation methods.

Option 1C . Same as 1B, but without public consultation.

1.5 Doing RIA for the options

The experience of other countries shows that more careful analysis and details of proposals in theannual program will assist the National Assembly in determining which proposals are fully

justified and necessary for the country, and which are not. More information on the expected

results of new laws will result in fewer new laws (estimated at 5% using experiences in countrieswith these approaches) as unjustified or unnecessary proposals are rejected.

A successful reform could also save the time of the National Assembly by reducing costlyrevisions caused by lack of forward planning. Moreover, review and drafting new laws should be

faster and more precise with clearer policy directions. More precise drafting of new laws will, inturn, make compliance activities easier for both the public and business sectors, with significant

benefits that were not quantified in this RIA.

Public consultation is an essential element of this reform, because the assumptions and statementsmade to the National Assembly should be validated and checked with stakeholders to be sure

they are correct. Without consultation with the public to understand the situation and the need forlaws, the ministries will be at high risk of making mistakes, and the information contained in the

legislative program will be less reliable. In fact, without the quality controls of consultation, it isunlikely that the new information provided in the legislative program will be of much value in

understanding the real situation.

Assumptions: 50 proposals for law are included in each year’s legislative program, which wouldrequire preparation of 50 preliminary RIAs (PRIAs). Better vetting and quality control wouldreduce the number of laws in the program by 25% (using experiences from Korea, Netherlands in

first year of RIA).

Below is the analytical table for this issue. For more details on the data and calculation of costand benefit for all the 6 issues, please see Annex 3 of this report.

Table 2 - Annual Costs and Benefits of Preliminary RIA in

the Annual Legislative Program

Costs to

Gov (VND)

Costs to

Businesses

Benefits to

Gov (VND)

Benefits to

Businesses

Benefits – Costs

(VND_



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(VND) (VND)

Option1 187,500,000 250,000,000 5,222,070,000 700,000,000,000 704,784,570,000

Option2 125,000,000 0 VND 0 VND 0 - 125,000,000

1.6 Conclusion and Recommendations

The research group found the best option for Vietnam should be for the LoL to include a

preliminary RIA and policy statement into the annual legislative program (Option 1B). Duringthe NA’s review of the legislative program for ratification, the NA should discuss to pass core

contents of laws, ordinances to provide a ground for lead drafting agencies to implement drafting.

RIA indicated that Option 1B is the only one that brings about benefits to the quality of new laws,

while 1C creates human costs for ministries, agencies but does not help the National Assembly inidentifying unnecessary laws.

2. Issue 2: Codification of legal normative documents issued bycentral state agencies


Transparency of a regulatory system is essential to establish a stable and accessible regulatory

environment that promotes competition, trade, and investment. Access to law has improvedsignificantly in Vietnam in recent years with enhancement of the Official Gazette. But there is no

secure, reliable reference source for the stock of laws and other legal normative documents. Lawsand other legal normative documents are revised rapidly, without little clarity about which

requirements are invalidated by later revisions. Businesses face high search costs, and continuinguncertainty and regulatory risk due to lack of security in understanding legal obligations. Public

administrations, including enforcement staff, also face high search costs and uncertainty indiscovering which legal normative documents are valid at any one point in time.


The currently applied systemization is not legally secure and legally reliable. To ensure legalreliance, legal normative documents are published in the Official Gazette. But it is easy to seethat legal normative documents are not published in an orderly or systematic manner such as by

topic but by time, i.e. when the Gazette receives legal texts. Different and unrelated issuesprovided for in legal normative documents are published in the same edition. This results in

inconsistencies, contradictions, repetitions and gaps between different norms which address thesame issue or related issues.



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Furthermore, the regular collection, review and systemization of legal normative documentsevery 10, 20 or 30 years are such tremendous and costly work which, to the contrary, can cause

uncertainty as over a long period the government, lawmaking agencies and the public have beenuncertain about the effective time of a legal norm. This problem re-emerges after the collection,

review and systemization have been completed and even before new legal normative documentsare issued and published unsystematically. The problem will keep recurring after several years or

decades. The current systemization is not enabling for searching, citation and scarcely referableas it is not timely updated due to frequent changes in legal normative documents.

2.3 Policy goals

There are two core goals of codification, which are:

To facilitate fast and convenient searching and referencing of all laws and by-laws relatingto specific areas

To maintain a collection of all prevalent regulations organized by area in form of codes byway of regular compiling revisions, supplements, and eliminating ambiguous, inconsistent

and inaccurate regulations in legal normative documents, whereby reduce or eliminateinconsistencies, contradictions, gaps and repetitions between legal normative documents; onthe other hand, to prevent cost, constraints and uncertainty caused by the regular

systemization.

2.4. Options for issue 2

Three options are identified for this issue:

Option 2A: Status quo. No requirement for codification. Laws continue to be revised severaltimes. For example, each law can have several revisions, each revision invalidates a certain

number of earlier articles. It is difficult to know which one is valid, although there is now effortto list invalid laws in new laws. Websites continue to list laws and rules, but not systematically

(See 2.2).

Option 2B: Codes are created by subject matter but they do not have legal effect as legalnormative documents. During codification, lawyers remove invalid regulations, clarify

contradictions, and identify overlapping norms for further remedial action by responsibleagencies. This codification is for information purposes and not legally secure, for legal texts

which are not included in the Code are legally valid and the codifications are not reliable to users,especially when updates are not regular.

Option 2C : Same as 2B, but, as in United States, code is legally secure (as positive security).Codification, as in the US approach, means organizing laws, by-laws into codes by topic toconsolidate all prevalent legal regulations, documents into systematic codes , not to issue

traditional codes such as the criminal code, the civil code or the labor code, etc; the use of ITenables regular, continuous review and elimination of legal texts no longer in effect, rapid

revision of outdated regulations and timely update for the codes (the codes will be circulatedmainly in electronic format, printed editions of codes will be limited for use in universities,



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research agencies, etc.) Codes, therefore, will have legal effect, and are an reliable and securesource of information on legal requirements in Vietnam.

Codification will be undertaken by an agency or unit who will be officially designated. This

agency will re-organize all legal normative documents issued by central state agencies into legalcodes by area without changing the legal effect or nature of those legal normative documents.

The codifying agency will be in charge of codification and publishing and regular updating,monitoring revisions and replacing old pages with revised ones.

In order to implement its duties, the codifying agencies will be assigned the authority to make

technical and language changes to remove inconsistencies, include and divide legal normativedocuments into different codes (such as investment, tax, environment, land, construction, etc.)

All legal documents in effect will be entered into a computerized central legal database. Entriesand registries into the database will be conducted as soon as possible. Codified versions of legal

normative documents must not change the legal meaning or effect from original versions, thelanguage of revised versions of legal normative documents must have higher value than original

versions in case of conflicts or inconsistencies.


Option2A: (option “take no action” or “status quo”) if codification is not be implemented thatmeans greater costs for concerns and uncertainty due to the lack of an effective and systematic

approach to identify and eliminate regulations contained in legal normative documents that are nolonger valid, has been superseded, or inconsistent, creating obstacles for the current legal system;

costs for wasteful time and ineffective lawmaking due to the failure to maintain a multi-volumeand referable code of laws, by-laws still in effect. This does not include high costs for

implementation of the periodical systemization that are very time-consuming and cost-incurring(but may be outdated after only several months or years when there are changes, replacements or

abolishments).

Option2B: Same as Option 2A, this option will not bring about benefits as citizens do not searchwhen they are not sure if a document is the latest. This option produces high costs but low effect.

Option 2C : The benefits of Option 2C are that when regulations and related legal topics are

included in a chapter or part of a code, the consistency of the legal system will increase andinconsistencies, contradictions, overlappings, gaps will be identified easily, therefore enablingcontinous reduction and elimination. When related regulations are put together and regulations in

effect are published in collection instead of in pieces scattering in thousands of legal normativedocuments (of which many legal normative documents contain regulations still and no longer in

effect), legal uncertainty will decline significantly. The benefits from codification will onlybecome visible after several years. RIA estimates it would be 10 years, including the lag time for

business adaptation.

Law development will be easier as revising parts or issuing new documents are no longerrequired but only change or elimination to individual articles of a code. Legal search from

lawmakers, civil servants and citizens will be easier.



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As a result of better-organized legal normative documents and more reasonably-arranged legalregulations, public confidence in the legal system and respect of law will be increased, which in

turn leads to higher compliance among law enforcers, citizens and businesses.

Codification will make the legal system more simplified, accessible, easy to understand.Beneficiaries to codification will be lawmakers, administrative officers, social organizations,

businesses, citizens, foreigners, foreign organizations, lawyers, judges, etc. Concretely,codification will facilitate supervision and application of legal regulations by organizations,

businesses and individuals, implementation by administrative officers, law development andfinalization by lawmakers and drafters (easy search and remedy of oversights, gaps in a particular

area, timely revision and supplementing).

Codification will lower legal search and access costs for organizations, businesses andindividuals, lower risks for businesses and reduced court cases. Improved transparency will also

increase investment into Vietnam.

Codification can potentially reduce human, time, financial costs for legal access by state officers,

cost for law enforcement due to better regulatory understanding; cost for regular revisions of laws(long term benefit); cost for regulatory compliance due to more stable legal system (long termbenefit) (see Annex 2).

Codification, at the same time, can increase state budget revenue due to increased speed and

efficiency in civil servants’ performance as a result of more accessible legal system; increasecorporate income due to reduced regulatory risks in legal access, long-term business planning and

strategy which become more effective (long-term benefit); increase revenue due to higher FDI asa result of a more transparent, stable, consistent and accessible legal system.

Implementation of codification towards development of a legal code may bring about developing,

printing, and maintenance costs; maintenance requires regular reviews. In terms of benefit,however, due to lower legal search costs by businesses, individuals and organizations and lower

regulatory costs for both the public and private sectors, codification will produce significantbenefit as shown in the balance of benefit and cost (see Annex 3).

Codification is one of the most important reforms in the Law on Laws, based on the large number

of complaints from public and business sectors about confusion in legal requirements.Codification will reduce the legal research costs for both government officials and the privatesector by creating a single source of information, if the Code is in fact reliable. Codification will

also help reduce litigation stemming from confusion and inconsistency in legal text, and soreduce the case load on the judiciary system.

The impacts of Option 2B differ substantially from the impacts of Option 2C. If the code is not

secure, legal research must continue to search multiple sources of information and there will becontinuing uncertainty and risk about the actual legal requirements. Therefore, the benefits to

government and businesses of a Code that is not secure and not reliable are likely to be close tozero (but the government still has to bear the costs for developing this Code).



13

One of the benefits of codification that was not quantified in the RIA is the positive effect oncompliance by businesses. Confusion and uncertainty about legal text increases noncompliance,

reducing the benefits of public policies that are designed to save lives or protect the environment.Reducing the level of noncompliance also reduces unfair competition for honest businesses,

increasing the expected rate of return on investment for honest businesses, further increasinghigh-quality investment and job creation.

Table 3: Annual Costs and Benefits of Codification

Costs to Gov

(VND)

Costs to

Businesses(VND)

Benefits to Gov

(VND)

Benefits to

Businesses (VND)

Benefits – C

(VND_

Codificationwithout

legalsecurity -

Option2B 25,104,450,000 0 182,022,780,000 3,679,814,847 160,598,144,84

Codificationwith legalsecurity –

Option2C 25,104,450,000 0 775,852,505,000 2,127,870,453,834 2,878,618,508,

2.6 Conclusions and Recommendations

In the authors’ opinion, the best option for Vietnam should be for the LoL to stipulate on amechanizm for codification and, at the same time, eliminate regulations on LND systemization.

The LoL should also provide codes with the same legal applicability as legal normativedocuments, i.e. legal normative documents published in the Official Gazette can be cited or

referred. Among the reforms to the draft law, codification as in Option 2C brings about highesteconomic benefits, greater investement and employment.

The authors found that the revised LoL should create a legal basis needed for codification by an

agency or organization officially designated for regular reviewing and codification as its soleduty, staffed with well trained codification experts.

3. Issue 3. Improve legal consistency and transparency through morerapid implementation of conforming changes by simultaneouslyrevising parts contradicting to parts contained in draft legalinstruments and by using an omnibus law to change multiple legalnormative documents simultaneously




14

The need for developing a unified, consistent, clear and accessible legal system is internal innational law development process. Now that Vietnam has entered the WTO playground in which

competition and risk of exclusion are harsh, the need becomes pressing.

One of the major difficulties posed to businesses in Vietnam, including local and foreign, is thatthey cannot access the LND system. Our legal system is judged as unstable, fast changing, low in

quality though large in number, and inconsistent. Inconsistencies and overlappings exist indifferent and even the same document.

A legal document when promulgated contains policy change. This is necessary because if current

policies have shortcomings relevant agencies must make change to address the situation.However, policy change in legal documents creates contradictions between regulations relating to

that policy contained in a number of legal documents and the new change. What is in question isthat revisions should be made timely to related policies in legal documents to facilitate law

enforcement and legal search by those affected by such legal documents.

Nevertheless, revision of legal normative documents, as the law development fact shows, has

been unduly responsive, or even too late in cases where revisions to update new policies takesseveral years. This causes inconsistency to the legal system as a whole, which in turn leads to lowtransparency, access and as a result, those affected, especially businesses, face with confusions in

making business decisions. Consequently, this causes loss to not only business but also the entireeconomy. It can be affirmed that the inconsistent and inaccessible legal ystem is one of the core

factors which increase risks and costs for businesses, and on a broader extent, distract marketsigns, constraint the economic dynamics, therefore resulting in Vietnam’s lower competitiveness

than other economies.

In such context, improving transparency and consistency of the legal system is an urgent need, asa legal system which is clear, user friendly and accessible is one of the key factors to enhance

business competitiveness and foreign investment.


Current lawmaking techniques have shown certain limitations, among which is failure to timelyremedy shortcomings in legal normative documents. In the drafting stage, drafting committees

draft and issue individual documents. Drafting committees, while drafting new documentscontaining provisions which are contradictory to previous documents, still issue individualdocuments even though they are well aware of such contradictions and their issuing agency.

Contradictions contained in previous documents are revised later to update new policies. Mostnew documents do not contain norms on revising other related documents. For which to be

revised, it will be included into the legislative program first, and then the need for revision has tobe explained and a drafting committee set up, appraisal conducted, and finally discussion by the

National Assembly has to be held to ratify issues which should have been addressed in theprevious ratification session. As such, this increases cost and time but fails to ensure the

consistency between new documents and the whole legal system, therefore affecting thecomprehensiveness of the legal system.

3.3 Policy goals



15

The core goals of the implementation of a mechanism for enhancing legal consistency are:

To resolve contradictions, overlappings, inconsistencies between regulations contained inlegal documents, making the legal system clear, accessible and easy to understand.

To improve the efficiency of law development in ways that accelerate revisions and make

them better responsive to practical need, time and cost saving.

To reduce risks and costs for businesses whereby increase productivity.

3.4 Options for Issue 3

Three options were identified for this issue:

Option 3A. Status quo.

Option 3B6 . In this option, in case of contradictions, overlappings which are not too complex

7

and may be addresses instantly in new documents, issuing agencies will be responsible for

revising instantly documents which they issued are contradictory to new documents (whichmeans it gives rise to a responsibility on the part of a lead drafting agency to propose a remedial

option of simutaneously revising parts contradicting to parts contained in new legal instruments

or policies expected to promulgate and present it to relevant agencies for promulgation). Only in

cases where instant revising is not possible due to technical or objective reasons or too complexnature of legal instruments, revisions will be made before legal instruments come into effect to

ensure legal consistency.If a new legal instrument contains too many contradictions, overlappings against other current

instruments, relating to too many different areas which makes impossible simultaneous revisingduring drafting individual legal instrments, the technique “omnibus law” will be used.

Option 3C. This option uses “omnibus law” but do not use the simultaneous revising mechanism.This option differs from Option 3B in that when a new regulation/policy is promulgated, previouslegal instruments (containing old regulation/policy which has become contradictory) are not

required to be revised instantly in that new legal instrument but may be revised later at anunspecified date. This option does not require revisions to be made before the effective date of

legal instruments.


Options 3A. Status quo. There are always inconsistencies in the legal text due to inconsistent,untimely revisons to legal normative documents as new legal instruments are drafted and

promulgated individually, and revisions to previous legal instruments take years. During whichtime, the inconsistencies in the legal system creates confusions for businesses and difficulties in

legal exercise for state agencies and the courts, in legal search for lawyers, state officers andcitizens.

6As set forth by the Government.

7It is necessary to set criteria to identify this issue, such as documents having the same issuing agency, drafting

agency and appraising agency.





17

Option3C 438,750,000 0 0 0 - 438,750,000

3.6 Conclusions and Recommendations

After comparing the impacts of different options, the authors found that the best option for

Vietnam should be for the LoL to assign responsibility to issuing agencies to include in new legalnormative documents revisions to previous legal normative documents which they have issued

are contradictory to new (or revised, supplemented) legal normative documents and to apply the“omnibus law” to rapidly address the contradictions in legal texts and comply with international

commitment (options 3B).

The RIA shows that only option 3B is meaningful for business and the government as it ensuresinconsistencies will be resolved before new legal normative documents take effect, dirrectly

addressing confusions and risks of the current legal system. Option 3C will increase drafting costwithout addressing the current key issues.

4. Issue 4. Require regulatory impact analysis for new legal normativedocuments


A core competence of a modern regulator is to understand the consequences of actions before adecision is taken so that the best option can be chosen. The tool that is used in most countries to

inform regulators and decision makers is regulatory impact analysis (RIA). Vietnam does nothave a RIA process today, and officials have little tradition of assessing the economic and social

impacts of legal normative documents. This contributes to the high cost and risks of regulation inVietnam, because regulators are unable to identify high cost and inefficient regulatory solutions

in advance, and often identify problems only after a legal norm is adopted when businesscomplaints are received.


RIA is not applied in Vietnam as a mandatory instrument during the drafting and issuing process.

This contributes to high risks and compliance costs of legal instruments which lawmakers cannotpredict and often come to know after legal instruments have been implemented for some time

8. In

the future, when issuing legal instruments in Vietnam is still in great demand, lack of effective

quality control mechanisms and instruments for new legal instruments will continue to reduce thequality of laws and create more risks. Therefore, it is highly recommended that mandatory RIAshould be conducted before and after drafting.

8Typical weaknesses in the Vietnamese legal system have been pointed out in many recent studies. For example, a

study reviewing and assessing 300 types of licenses conducted by CIEM –GTZ in 2007 ; assessment of compatibility

between Investment law and Land Law, Construction Law and Environment Protection Law conducted by the

Enterprise Law and Investment Law Implementing Workgroup ; review and assessment of Enterprise Law andInvestment Law by CIEM-GTZ in 2008, etc.



18

4.3. Policy goals

The goals of requiring mandatory RIA for drafting are:

To improve the quality of draft legal normative documents to issue; requiring good lawsmeans requiring goals to be achieved at lowest risks and compliance costs.

To provide more information for regulators (the Government, National Assembly and itscommittees) to speed up the discussion and ratification process; hence improve the

regulators’ performance.

To establish a process for screening and eliminating low-quality draft legal normativedocuments before presentation to relevant regulators’ ratification.

4.4. Options for Issue 4

Below are five options (including a non-RIA option/no action option) which can be included in

the draft law in ways that require mandatory RIA for new legal normative documents.

Option 4A. Status quo.

Option 4B: RIA is mandated for some legal normative documents (laws, ordinances, decrees). Inother words, RIA is mandated for the three categories.

Option 4C: RIA would be required for the legal normative documents as in Option 4B, and

would add RIA to resolutions of the National Assembly and Standing Committee. This wouldrequire RIA for 5 legal instruments.

Option 4D: RIA is mandated for all legal normative documents with impacts on private sector

and/or state budget. This would add circulars, joint circulars, PM decisions and other documents

to the RIA requirements.

Option 4E: Same as Option 4D, but would add an important international practice that reduces

the cost of RIA without reducing its effect. RIA would be required for all legal normativedocuments, but most legal normative documents would have only a light RIA that is shorter and

less quantitative. The most important legal normative documents (estimated as the top 20%) thatimpose significant costs on businesses or the government would require a full RIA that is longer

and more detailed. This approach of Light RIA/Full RIA allocates scarce resources for analysis atthe most important legal instruments, therefore getting the most benefit out of investments in

RIA.

4.5. Doing RIA for the options

It is nearly impossible to evaluate the effects and costs of RIA without including the effects andcosts of public consultation. This is because RIA and consultation are closely linked in the

information gathering and quality control phases, as international experience demonstrates. Thissection examines the costs of RIA, but assumes in assessing the benefits of RIA that consultation

(issue 6) is required along with RIA.



19

Each option produces different benefits and costs, which can either be monetized or unmonetized.Details on respective costs and benefits of each option are shown in the table below. However, it

should be noted that these calculations are based on the following assumptions:

RIA is understood as a process with 5 basic elements: defining issues; identifying optionsfor those issues; analysis of the costs and benefits of each option; comparing costs and

benefits with consultation.

Preliminary RIA will have as its output a 3-5 page report which analyze available data. FullRIA report will be 20-25 pages with more quantitative analysis of cost and beneft. Full RIA

will take much longer time than preliminary RIA.

Legal normative documents that impose significant costs on businesses or the governmentwould account for around 25% of total legal normative documents.

The adoption of RIA is one of the most far-reaching reforms to the law-drafting process. RIA

transforms the drafting process from one of writing legal text to one of identifying options,comparing results, and deciding on the best solutions to the problems that face Vietnam. Drafting

committees will become more accountable and transparent in their work, and will document withfacts why they had chosen to propose some solutions and not others. The effect of RIA on the

quality of legal text has been repeatedly demonstrated. Even in countries where RIA is newlyadopted, and therefore a blow technical quality, the results have included:

A reduced number of laws and other regulations since unnecessary regulations areidentified more easily in the drafting process;

Lower costs for legal texts that are adopted, since solutions are more cost-effective; Higher effectiveness in policies as legal texts are better targeted and easier to comply with

by citizens and businesses.

Carrying out RIA requires investment in the ministries and National Assembly. The extra costsare for developing RIA as part of the drafting process, and other costs such as training, and the

creation of a central RIA quality control unit to assist the ministries in producing high quality

analysis. The RIA for the draft Law on Laws shows that annual costs of adopting RIA are over 2billion VND for the cheapest option, and more then 9 billion VND for the most expensive option.

One of the costs of RIA is more time needed for drafting. However, it is estimated here that aRIA can be a carried out in 8-10 weeks if staff are trained. Given the current length of time

needed to draft legal instruments in Vietnam, this additional period of time does not substantiallyincrease the drafting period. In fact, the research group believed that good RIA could well speed

up the drafting process by clarifying options and reducing the time needed for inefficientdiscussions.

A key assumption made in estimating the impacts of RIA is that RIA will be accompanied by

public consultation. Experience in other countries shows that RIA that is not consulted with thepublic has little value since its results are unvalidated and unreliable.

Table 5: Annual Costs and Benefits of RIA for New Legal normative documents

Costs to Gov

(VND)

Costs to

Businesses

(VND)

Benefits to

Gov (VND)

Benefits to

Businesses

(VND)

Benefits – C

(VND_



20

4B: RIA for 3instruments 3,067,000,000 35,530,000,000 Unquantified 660,496,613,995 621,899,613,94C: RIA for 5

instruments 3,247,000,000 38,930,000,000

Unquantified

723,702,031,603 681,525,031,6

4D: RIA forall legalnormative

documents 9,160,000,000 150,620,000,000

Unquantified

2,800,000,000,000 2,640,220,000

4E: RIA for all

legalnormativedocuments,

with LightRIA and Full

RIA 2,037,800,000 80,803,200,000

Unquantified

2,800,000,000,000 2,717,159,000

Considering cost and benefit as shown in the above table, RIA exercise would bring about, inaddition to monetized costs and benefits, other important benefits which cannot be monetized.

Potential benefits may include:

RIA exercise would create a legislative culture in which lawmakers, including appraising

agencies and approval agencies, will pay more attention to the least expensive optionswhich still achieve predefined goals; this new legislative culture will replace the “at any

cost” culture (i.e. legal normative documents are to be issued at any cost, regardless of costsand benefits). Furthermore, RIA improves policy transparency and encourages more

engagement from the civil society into policy making.

Creating legal normative documents with low costs of compliance and risks can increase

business profit which in turn leads to increased competitiveness (due to reduced productioncosts), increased budget revenues and increased salaries and wages.

9

RIA contributes to less legal normative documents which are issued. Internationalexperience shows that after the first year of RIA exercise, legal normative documents to

issue reduce by 15-25%.

Regarding cost for RIA implementation, the Government may, as the table shows, need toprovide a fairly big budget to ensure RIA implementation. Nevertheless, it should be noted that

the RIA implementation cost as shown above includes training and consultation costs, thereforewill reduce over next years as training cost becomes lower and knowledge and experience

regarding RIA get better. In addition, international experience has shown RIA implementation

cost to be incurred is much smaller than compliance cost saving due to RIA.10

We can see from the above table that any options that require RIA before and after drafting bring

about large benefits, of which the fourth and fifth options produce bigger benefits than the second

9In countries such as US, RIA is even considered an inflation-reducing tool. In the Netherlands, a similar tool has

been used to implement a strategy to reduce 25% of regulatory compliance costs.10

For instance, in Britain, RIA exercise resulted in a minor change in the requirement of food preservationtemperature which save 40 million pounds for businesses per year.



21

and third ones. In addition, the benefits of the second and third options, remarkably, may declineover time (unquantified impacts) as requiring RIA for only a number of LND categories can lead

to the situation in which ministries and agencies shift from the legal normative documentscovered by RIA to legal normative documents for which RIA is not required.

After considering the fourth and fifth options, it can be seen that they have equal benefits but

significantly different costs. The fifth option incurs lower cost for the government.


All of the options for RIA show positive results for Vietnam. However, the fifth option is clearlythe best because it produces the highest benefits at lowest cost. In fact, the fourth option shows

that adoption of good international RIA practices can result in more RIAs produced per year atmuch lower cost.

5. Issue 5: Reduce the categories of legal normative documents(simplifying forms of legal normative documents)


Vietnam’s regulators deploy a wide array of legal instruments – 23 in total. Agencies withdifferent competence issue documents, of which 2 to 3 kinds are legal normative. This maze of

legal instruments has produced an overly complex regulatory system that is nontransparent,overlapping, confusing, and difficult to control for quality. Forms and relations of documents are

difficult to distinguish. Law enforcers, citizens, lawyers, academias all complaint about thecomplexity of the legal system. Foreign investors in particular complain that they face a

regulatory maze where they cannot identify differences between legal normative documents. Inaddition, the situation that agencies issue many different kinds of documents leads to late

implementation.


In the current system of legal normative documents, some types/categories of documents aremerely general administrative documents but not legal normative documents but drafting and

issuing of which have to comply with the formalities required for legal normative documents(e.g. directives to supervise implementation of legal normative documents, circulars that only

guide the implementation of laws/ordinances but not detailed regulations on implementation of

laws/ordinances).

In fact, many Government resolutions, Prime Minister directives, decisions and Minister

directives, decisions are documents to manage, supervise which do not contain legal normativedocuments but still have to comply with drafting and issuing procedures required for legal

normative documents. This causes delays in management and governance, and unnecessary costs.On the other hand, some resolutions of the National Assembly and its Standing Committee which

have contents similar to ordinances/laws and contain legal normative documents are not



22

announced (as the Constitution provides that the State President shall announce only laws andordinances). This again causes difficulties for implementation of legal normative documents.

5.3 Policy goals

The goals of simplification of forms/categories of legal normative documents are as follows:

To improve the accessibility, transparency and understandbleness of the legal system tofacilitate compliance, implementation, enforcement and application.

To facilitate timely management and government through clearly defining legal normativedocuments from other legal documents (managing documents, application documents,

administrative documents), whereby ensuring strict compliance of the drafting and issuingprocess for legal normative documents and better control of which process.

To ensure the consistency of the legal system, addressing overlappings, repetitions amonglegal normative documents.

To clearly define the order for legal effect of legal normative documents in the legal system.

5.4 Options for Issue 5:

Four options were identified for this issue:

Option 5A. Status quo. Maintain 23 categories of legal instruments.

Option 5B. The total categories of legal instruments can reduce to 10, as in the Proposal sent tothe Government in October 2007, and competent agencies issue only one category of legal

normative documents. The National Assembly, in addition to the authority to promulgate theConstitutions, issue only ordinances; the Government issues decrees, the Prime Minister

decisions, and ministerial agencies circulars.

Option 5C . As in the National Assembly Law Committee’s appraisal report in October 2007, thecategories reduce to 14: types of legal normative documents issued by the Government, the Prime

Minister, Ministers, the Chief Justice of the Supreme People’s Court, the Director of the SupremePeople’s Procuracy will be reduced while the National Assembly and its Standing Committee still

issue resolutions.


The analysis for this issue is difficult, because it is a somewhat abstract legal reform. But it willhave real effects on both the process of lawmaking and on users of law.

Assumptions: As many types of legal normative documents are issued, most of them are likely to

undergo less quality control and escape interministerial ordination, review by the Ministry

of Justice, RIA and public consultation. Legal normative documents in the simplifiedsystem are more likely to undergo such quality controls. The simpler the legal system

becomes, the higher the degree of quality control, and therefore the higher is the quality of outputs.



23

The effect of this reform is to shift regulatory requirements to higher quality instrumentsundergoing more intensive quality control. We can estimate this as shown in the

illustrative table below:

Option % of instruments undergoing full quality control procedures

5A 50 %

5B 70%5C 75%

5D 80%

Option 5A. Status quo (Take no action Option). If no action is taken, there will often be

contradictions, overlappings between legal normative documents, late issuance andimplementation and potential delays in issuing decisions of managing nature (due to confusions

in which such decisions are taken as legal normative documents, therefore drafting and issuingthereof apply the procedures applicable for legal normative documents. For example, directives

to supervise implementation of legal normative documents, circulars that only guide theimplementation of laws/ordinances but not detailed regulations on implementation of

laws/ordinances. Many Government resolutions, Prime Minister directives, decisions andMinister directives, decisions are documents to manage, supervise which do not contain legal

normative documents but still have to comply with drafting and issuing procedures required forlegal normative documents. This causes delays in management and governance, and unnecessary

costs.)

Confusions will continue and cause difficulties for the enforcement and execution of legal normativedocuments because documents containing legal normative documents are not made public,

transparent and suitable to reality (legal normative documents should have been drafted followinga strict process and with consultation with related subjects but in fact drafted not in accordance

with such process as legal normative documents and management, administrative documents are

confused). This confusion affects the quality and the feasibility of legal normative documents,and concurrenty makes legal normative documents subject to many changes.

Option 5B. The impact of this reform on law development process and law users is considerable.

Benefits of Option 5B:

Impacts on the public sector : public policies will become more effective, administrative

management will be more responsive as simplified categories of legal normative documents willenable the drafting and issuing of management document to be more sensitive, timely and

responsive to state management requirements. The quality of legal normative documents will

enhance and legal normative documents will respond better to public expection, to statemanagement targets and to the reality, therefore the feasibility of which will increase. Asimplified legal system will facilitate the efficiency of control, inspection and supervision of legal

normative documents (as a result of reduced confusions about administrative documents andlegal normative documents). When the legal system becomes simple, transparent, less

inconsistent and stable, then regulatory compliance will be improved and cost savings will belower for inspection and control, therefore reducing corruption.



24

Eliminating some categories of legal normative documents are likely to decrease reviews, controland supervision of legal normative documents by agencies such as the Ministry of Justice,

making quality control of legal normative documents more comprehensible. Many categoriesneed reviews, public consultation and RIA, the impact of which will be greater drafting cost but

with higher quality and reduced intransparency caused by many overlapping types of legalnormative documents as is the case now. This report assesses general impacts in terms of costs

and benefits as high.

Impacts on the private sector: The above analysis shows that simplifying the legal system willcontribute to higher quality of legal normative documents. Businesses and citizens can access

more reasonable, transparent and clearer policies, save time for legal search and undergo lowerrisks in trading and manufacturing due to reduced risks stemming from confusion and uncertainty

about related legal obligations, more stable legal system (which is one of the key factors for amarket economy where investment can only be secured if the legal system is stable).

In addition to that, a simplified system of legal normative documents improves legal

transparency, whereby increasing business compliance rate, reducing cost for litigation, legal

search for businesses, and lowering breaches of laws and court cases, creating more jobs andattracting more investment.

Costs incurred if Option 5B is applied:

For the public sector, if this option is applied, cost for drafting will increase as publicconsultation is required. In addition, compliance with the processes and regulations will also

increase costs and time.

For the private sector, time cost for businesses and individuals to study and comment on draftdocuments will increase.

Option 5C: The same costs incurred compared to Option 5B, however, less benefits earned (see

the table below for analysis)

Table 6: Annual Costs and Benefits of Reducing the Categories of Legal Instruments

Costs to Gov

(VND)

Costs to

Businesses

(VND)

Benefits to

Gov (VND)

Benefits to

Businesses

(VND)

Benefits –

Costs (VND_

Reduce to

10categories 14,096,565,000 3,447,360,000 487,500,000 417,873,568,325 400,817,143,325Reduce to

14categories 15,103,462,500 3,693,600,000 522,321,429 447,721,680,348 429,446,939,277




25

The above analysis indicated that the simpler and more transparent the legal system the moreconsistent it will be (as too many categories of legal normative documents at different levels will

lead to higher risks of overlapping and inconsistency). If the legal system is simplified, it will beeasier for the public to understand, access and more user-friendly, at the same time, its stability

will increase and public confidence in the legal system will grow. Consequently, foreigninvestment will also increase due to the transparency, clarity, sustainability and easy-accessibility

of the legislation system.

Comparison of cost-benefit impacts of different options showed that draft LoL must includeregulations on reduction of a number of categories of legal documents which are issued by each

responsible agency (for example, each responsible agency is only allowed to issue one categoryof legal documents, except the National Assembly who is allowed to issue Constitutions and

Laws). This is the optimal option for Vietnam’s context, i.e. Option 5B.

6. Issue 6. Expand mandatory public consultation to all legal

normative documents


Transparency is the core of a modern regulatory system because it reduces risks for affected

parties, corruption, and abuses of the regulatory system. Public consultation before a newregulation is adopted provides advance notice to affected parties and permits the regulators to

bring in new information and validate assumptions about the need and design of the regulation.Vietnam has had no systematic approach to consultation or to ensuring that state agencies are

responsive to the information collected in consultation. This new provision would require, for thefirst time, consultation for every new regulation, and set down some minimum standards for

timing in response.

In practice, law development activities over the past years showed that for draft legal normativedocuments which are open for public consultation, as the public is well-informed of such drafts

and of potential appreciation of their comments and have sufficient time to review such draft,comments will greatly help drafting agencies timely identify and adjust important contents of the

drafts. As a result, quality of draft documents will be improved and it will be more effective whenthe legal normative documents come into effect. On the contrary, if draft legal normative

documents are not required for public consultation or public comments are not appreciated, suchdrafts are often found containing mistakes, impractical and requires amendments once issued and

implemented.


Basically, key requirements relating to public consultation during the drafting have beenstipulated in current regulations, however, such regulations are inadequate, unclear and not

binding in terms of accountability and responsibility. This creates gaps for drafting agencies toneglect or dishonor public consultation, leading to the impracticality and ineffectiveness of legal

normative documents. There are no clear regulations on responsibilities of related agencies in



26

respect of making law projects and draft legal normative documents public and enabling thepublic to access to drafts and comment. Response time is usually short, and responsibility of

public consultation organizing agencies to study, absorb comments have not been expresslyprovided for.

Public consultation on draft legal instruments, as in current laws, is normally conducted late (for

example, gathering public comments or comments from members of the National Assembly isconducted at later stage when the National Assembly is preparing discuss drafts); time for

response is very short, therefore, it is just formal consultation that produces low effect at highcost. In addition, drafting agencies do not have in place a convenient, user-friendly public

consultation mechanism. Public consultation is not transparent as there is no mechanism forfeedback (few agencies can do this on an irregular basis). In 2007, about 800 draft legal

normative documents were issued, of which 100% of draft laws and ordinances, nearly 90% of draft Government decrees and 50% of draft decisions, instructions and circulars were sent for

consultation from related agencies and organization, but few sent for public consultation.11

6.3 Policy goals

To create opportunities for every citizen (including those affected by draft legal instrumentand those interested) to involve in the drafting process by commenting on such drafts. Thiswill improve democracy, fairness and good cooperation between the state and citizens

To enable all stakeholders (citizens, reviewing agencies, appraising agencies and theNational Assembly members) to know about such drafts at an early stage and to studyrelated information in advance;

To create an additional important channel to gather input to support drafting legalnormative documents.

To make comprehensive and higher-quality analysis of draft legal normative documents,whereby identifying more suitable and practical solutions which are accepted and supported

by the public which in turn increase the effectiveness of legal normative documents.

To include mandatory public consultation in more draft legal normative documents to, onone hand, meet the requirements of a transparent and effective drafting process, and on the

other hand, meet the requirements of international commitments Vietnam has signed.

6.4 Options for Issue 6

Five options were identified for this issue:

Option 6A: Status quo. According to the current Law on Laws, consultation is conducted throughconferences, workshops and sending drafts, and in some cases, posting drafts on websites or

publishing in the mass media to related agencies, organizations and individuals. The law does notrequire draft laws/ordinances to be posted on websites for any comments. For draft resolutions

and decrees of the Government, decisions and instructions of the Prime Minister, depending on

11In 2007, although over 800 legal normative documents were issued, of which 100& of draft laws, ordinances,

nearly 90% of draft Government decrees and 50% of draft decisions, instructions and circulars sent for consultation

with related agencies, organizations, only few draft legal normative documents were publicized for publicconsultation.



27

the nature and contents of each draft the Prime Minister assigns the Office of Government to postsuch draft on some specified websites for agencies, organizations and individuals’comments.

Option 6B: This option recommends that consultation should be conducted at the beginning stage

of the drafting process. Accordingly, such drafts are made public for comments from ministries,ministerial-level agencies, governmental agencies, related agencies and organizations, and

subjects to such legal normative documents. Drafting agencies are responsible for posting draftlegal instruments on their websites not less than 20 days to gather comments from agencies,

organizations and individuals.

Option 6C: This option recommends that consultation is conducted during the drafting processnot only on draft legal instruments but also RIA reports. Accordingly, such drafts and RIA

reports are made public for comments from ministries, ministerial-level agencies, governmentalagencies, related agencies and organizations, and subjects to such legal normative documents.

Drafting agencies are responsible for posting draft legal instruments and RIA reports on theirwebsites not less than 20 days to gather comments from agencies, organizations and individuals.

Option 6D: Same as 6.C. with 60 days for all.

Option 6E: 6C, with 20 days, and option to extend on request.


Assumptions:

The most frequent concern about public consultation is the time needed needed and thepotential delay in making new norms. But the drafting process already takes months or

years, and adding 2-3 months for consultation does not seem like a high marginal impact. The following table sets out some key parameters and assumptions needed to assess the

impacts of mandatory consultation.

Table 8: Assumptions on the impact of public consultation

Options

6A 6B 6C 6D 6E

Number of instruments

consulted

150 750 750 750 750

Time

needed to

consult onenorm

Max 20 days

using a

website

Max 60 days Might need

more than

60 days tocollect soliddata

60 days 20 days,

with X%

extended to60 days

Methods of consultation

Website 70-80

decrees –cost of 3

websites

750 norms,

on 2websites

750 norms,

on 2websites

750 norms,

on 2websites

750 norms,

on 2websites



28

Workshops/ meetings

150-300 300-600 300-600 300-600 300-600

Focusgroups/test

panels

5-10 5-10 5-10

Newspaper

publication

1-2 0 0 0 0

Like RIA, the systematic use of public consultation early in the drafting process is one of the keyfactors of a modern regulatory system. The use of public consultation to collect inputs and to test

ideas and options greatly improves the quality of legal normative documents. The benefits of consultation are amplified if RIA exercise is required of public consultation. Requiring public

consultation in the drafting process will bring about the following impacts:

Strengthening democracy: Requiring posting draft legal normative documents on officialwebsites of drafting agencies during the drafting process will increase the number of legal

instruments open for consultation which in turn increases public participation into the

drafting process of legal normative documents. Public consultation on a wider scale willspeed up the process of democratizing law development and make it a more transparent andeffective process.

The transparency and democracy of the process of developing legal normative documentsincreases when drafting agencies’ responsibility to receive, absorb and feedback to

comments is written clearly in the draft law. As a result of such regulation, theresponsibility of agencies conducting public consultation will increase, and the quality and

effect of the public consultation process will become higher. Benefits for the public: Public consultation during drafting process is an effective approach

to inform the public about policies, laws being proposed and provide opportunities for thepublic to participate in policy-making, whereby building up their awareness and

understanding of issues draft documents address which affect their own rights andobligations. As businesses are well-informed of issues and options to address such issues in

draft documents, they can save cost for regulatory compliance by preparing their bestpossible conditions to satisfy requirements in draft documents. As a result, businees

compliance rate increases. In addition, risks for businesses decline as warnings on suchrisks have been given to them and opportunities to present appropriate, least costly solutions

to competent government agencies have been provided to them during public consultationprocess.

Benefits for the State: State agencies include all agencies that are related to thedevelopment, promulgation and implementation of legal normative documents. Through

public consultation, drafting agencies and issuing agencies can acquire necessary

information about impacts of draft documents on the public for their further study, andassessment, and selection of best options in order to reduce mistakes, infeasibleregulations and to improve the legal system in terms of quality, stability and suitability.

As such, public consultation process, if done early, will be highly effective since itsresults can be used right at the start of the drafting process.

Apart from its benefits for regulatory development and improvement, public consultation

required for legal normative documents create an enabling ground for implementation once



29

documents are issued. In fact, there have been evidences that public comments on a wide scalehave contributed to make draft documents better drafted, more practical and make policy

effects improved. Good implementation and compliance have always been the aims of anylegal system.

Moreover, through public consultation, the relation between the government and its people is

strengthened and reinforced. As a result, the role and the management effect of the Stateenhance which in turn increases the confidence of the people in the government.

According to the research group, requiring public consultation in Law on Laws will probablypush public consultation in various forms, such as sending drafts to concerned agencies and

parties, holding meetings, workshops, collecting opinion through the mass media andpublishing on official websites of the drafting agency. Posting draft documents on drafting

agencies’ official websites early during the drafting process is considered the basic

consultation method and should be applied for all draft documents.

It is clear that there will be cost for public consultation, and benefits which are unquantified in

this report. However, the research group has seen many benefits for the government through

public consultation in the process of drafting the legal normative documents which are: policiesand regulations become more effective; reducing drafting mistakes and reducing the number of documents to be amended; documents issued can address issues which they are intended to due

to clear and suitable regulations after being consulted with businesses and citizens.

The consultation period turned out to be an important variable, because most countries withexperience in consultation methods are extending the minimum consultation from 20 or 30 days

to 60 or more because they believe that 20 days is inadequate to permit informed and usefulfeedback. The Research group assumed in the RIA that 60 days would double the number of

comments, and double the benefits of consultation, compared to 20 days.

Table 9: Annual Costs and Benefits of Expanding Public Consultation

Costs to Gov

(VND)

Costs to

Businesses

(VND)

Benefits to

Gov (VND)

Benefits to

Businesses

(VND)

Benefits – Cos

(VND_

Option 1 8,960,815,000 ,315,050,000 Unquantified 1,400,000,000,000 1,386,724,135,00Option 2 8,963,057,500 8,660,000,000 Unquantified 2,800,000,000,000 2,782,376,942,50

Option 2 8,963,057,500 8,660,000,000 Unquantified 2,800,000,000,000 2,782,376,942,50


Apart from its benefits for regulatory development and improvement, public consultationrequired for legal normative documents create an enabling ground for implementation once

documents are issued. In fact, there have been evidences that public comments on a wide scalehave contributed to make draft documents better drafted, more practical and make policy

effects improved. Good implementation and compliance have always been the aims of any



30

legal system. Moreover, through public consultation, the relation between the government andits people is strengthened and reinforced.

Requiring public consultation for draft legal normative documents during the drafting process

brings about important benefits for both the government and the people. It is an effective methodto promote the role and the participation of the people in state management; representing a

democratic regime, building social consensus which is the premise for drafting and issuingpopular, practical legal normative documents and for implementation of policies and laws once

issued, and for a reinforced relation between the government and the people.

All of the options, compared against Option 6A, produce significant benefits for Vietnam,compared to the current practice. The RIA would support adoption of any of the other four

options. However, the 60 day comment period and mandatory website publication (Option 6D)are likely to produce substantially more benefits, and very minimal cost to the government. It

would allow stakeholders to generate higher-quality and more relevant information, and wouldsubstantially increase the level of participation in the consultation process.



31

IV. General conclusion

The RIA results are presented for each option, but should not give the impression that the six

reforms are unrelated. In fact, the benefits for the RIA and public consultation requirements arebased on the assumption that Bowles reforms are adopted. Each of these reforms amplifies the

benefits of the other. The benefits of RIA without consultation, or of consultation without RIA,would be much lower. The Research group believes that the RIA supports the adoption of these

reforms as a package to produce the most positive results for Vietnam's state officials, businessesand citizens.

An issue that was not be explicitly included in the RIA, but that is important for assessing the

impacts of the other issues, is the process for streamlined procedures for certain kinds of laws toaddress legal issues such as WTO commitments, and to make conforming changes, such as

changing the name of a ministry. In other countries with such streamlined procedures (mostly foremergencies), ambiguous or unclear criteria have resulted in abuse, as ministries attempt to use

the streamlined procedures to avoid quality control. Clear criteria are needed to ensure that onlythose laws that are intended to be covered in these procedures actually use them. One approach is

to use the streamlined procedures only if a relevant agency approves their use, so that there isindependent control on potential abuse. The research group found that the streamlined procedures

should be written clearly in the draft law and with little scope for abuse so that all laws andregulations with major costs and benefits go through the quality control procedures of

consultation and RIA.



32

V. The consultation process

The research group has made direct interviews with several lawyers, professional state officers

who involve in the drafting, appraising, and examining process; lawyers from domestic andforeign law firms, judges, enterprises and international consultants specializing in codification

and RIA.

The research group also referred to the information and data from several websites, results andavailable reports of the Office of the Government’s Inspector, the People’s Supreme Court, the

Ministry of Justice, the General Statistics Office, the Vietnam Chamber of Commerce andIndustry and the research results of several international organizations and international

experience relating to RIA issues for the draft Law on Laws.



33

IV. Annexes



34

Annex 1 – Summary of Scoring Criteria for Priority Issues (Table A)

Goal of the Law on Laws anddrafting committee

Scoring Criteria to select priority issues.

Potential effects on:

Democracy A. Public participation

B. Responsiveness by public sector to views ofthe public

Need to clarify options C. Controversy and disagreement over options

Improve impacts on business

sector

D. Costs to businesses

E. Risks for businesses

F. Compliance rates by businesses

Improve impacts on publicsector

G. Efficiency (speed, cost) of lawmaking

H. Effectiveness of public policies in reachinggoals

I. Effectiveness and efficiency of compliance and

enforcement activities

J. Budget costs



1

Annex 2 - Scoring Selected Issues against the Scoring Criteria (Table B)

Options Democracy Need toclarifyoptions

Impact on Private sector Impact on public sector

A Public

participation

B

Responsivess bypublicsector

C. Extent of

controversyanddisagreement

D Costs

tobusinesses

E.

Risks

F.

Compliancerates

G.

Efficiency(speed,cost)

H.

Effectiveness of publicpolicy

I.

Compliance,enforcementeffectiveness

J. Budge

costs

1. Includepolicystatement andpreliminaryRIA in theannuallegislativeprogram

Up, butonly ifconsultation isincludedindraftingpolicystatement.

Up, willincreaselevel ofcare

High Down, ifcanreducenumberof newlawsbeingprepared

Down Unclear Up, if itreduces thenumber oflaws.

Unclear.Eitherneutral orpositive.

Unclear Down. Cwill increin annuaprogramwill bereduced draftingprocess.

2. Codificationof laws

No effect No effect High. LawCommitteebelieves it isnot feasible.Definition ofcodification iscontroversial.

Down.Easier toaccesslegalnorms

Down Up Up Up Up Up initiallbut downover themediumterm.

3. Ministriesable to justifyproposalsbefore theNationalAssembly

No effect Unclear High Unclear Unclear

Unclear Unclear Unclear Unclear Unclear



2

4. Ensuringconsistency by

fasterconformingchanges andusing anomnibus law

Up.

Businesses

moremotivated

to identify

conformity

problems

Up High. NAremoved

article asinfeasible

Down Down Up Up Up Up Down

5. MandateRIA

Yes Yes Low. RIAwas acceptedby the NA,but costs arestill a

concern.

Down Down Up Unclear Up Up Increasefew yearsthen dowover longterm

6. Streamlinelawmakingproceduresand criteria incertain cases(such as forconformingchanges) tospeed up

needed legalrevisions

Unclear Unclear Unclear Unclear Unclear

Unclear Unclear Unclear Unclear Down

7. Reduce thenumber ofcategories oflegalinstrumentsfrom 23 to 10,11, or 12

No effect No effect No effect Down Down Up Up, someimprovementin legaldevelopmentand lessconfusion

Up. Willreduce theworst qualityinstruments,strictercontrol ofnorms

Up – easier,moreaccessiblelaw

Unclear.Draftingcosts wilincrease qualityincreasesprivatesectoractivityshouldincreaserevenues

8. Increasetransparency

Up Up Low Down Down Up Perhapsdown. 60-90

Up Up Up. Coulincrease



3

by mandatingpublic

consultation

days ofconsultation

could slowprocess

costs duecost of

consultat



Annex 3 – Analytical approach to the six priority issues

3.1. Include a preliminary RIA and policy statement with each proposal for law contained in the Annual LegislativeProgram

3.2. Codification

3.3. Improve legal consistency and transparency through more rapid implementation of conforming changes bysimultaneously revising parts contradicting to parts contained in draft legal instruments and by using anomnimbus law to change multiple legal norms simultaneously

3.4. Require regulatory impact analysis for new legal norms

3.5. Reduce the categories of legal instruments

3.6. Enhance transparency through expanding mandatory public consultation to all legal norms



Annex 4 - Data sheet 1

Data COST

Number of LNDs issued in 2007 886 VND 148,690,375,00

1 Law: 10 10 VND 12,266,250,0

2 Ordinance: 8 8 VND 9,813,000,0

3 Decree: 191 191 VND 70,789,375,0

4 Circular: 282 282 VND 21,643,500,0

5 Inter-circular: 118 118 VND 9,056,500,0

6 PM decision: 257 257 VND 25,121,750,0

7 NA resolution issued by NA 12 + Resolution by NA’s Standing Committee 8 20

Non-normative instruments issued in 2007

8 Non-normative documents 300

Salary costs9 Cost per hour in VN dong for ministry official VND 15,625

10 Cost per hour in VND for high level officials VND 31,250

11 Cost per hour in VND for Members of NA VND 37,500

Number of Pre RIAs prepared each year 5

12 Laws and ordinances included in annual legislative program (2007 number) 50

13 % of law proposals for which Preliminary RIAs are prepared 100%

Cost of drafting new law or ordinance (without RIA) VND 1,226,625,00Cost of drafting VND 121,875,0

14 Number of persons on average drafting committee 15

15 Number of persons working outside of drafting committee 10

16 Number of meetings for drafting committee 10

17 Number of hours per meeting 4

18 Number of days per person working on drafting outside drafting committee 90Cost of study tours and field surveys when drafting law or ordinance VND 262,500,0



19 Number of people for field survey 5

20 Number of days needed for field survey 20

21 Cost (non salary) per day of field survey (per diems, etc) VND 12,500,000MOJ examination of law or ordinance during drafting VND 3,750,0

22 Number of people 3

23 Days per person 10Cost of Government meeting VND 2,500,0

24 Number of people in the government meeting 20

25 Duration of government meeting, hours 4

Examination by NA VND 816,000,0

26 Assessment by the National Assembly’s committees 35 people for 2 days VND 21,000,000

27 Improvement of the draft: 10 meetings, 1 day, 20 participants/each meeting VND 25,000,00028 Assessment by the standing committee 2 meetings; 50 participants, 8 hours VND 30,000,000

29 Improvement of the draft: 10 meetings, 1 day, 20 participants/meeting VND 60,000,000

30 Assessment by the standing committee. 2 meetings; 50 participants; 8 hours VND 30,000,000

31 Consultation workshop that is organized by the NA’s committees 0

32 Discussion at provincial group of NA’s representatives: 550 persons + 1 8 hour-meetingVND

137,500,000

33Discussion of the draft law at the official meeting of the NA = actual cost = VND 500million/day 500,000,000

34 Technical and gramatical correction before publishing law. - 20 persons and 5 days VND 12,500,000

Cost of printing reports VND 20,000,035 Printing report on law or ordinance VND 20,000,000

Cost of drafting new decree (without RIA) VND 370,625,00Cost of drafting

12VND 78,750,00


37 Number of persons working outside of drafting committee 10

38 Number of meetings for drafting committee 6

39 Number of hours per meeting 4

40 Number of days per person working on drafting outside drafting committee 60Cost of study tours and field surveys when drafting law or ordinance

13VND 262,500,00


12As calculated by the drafting committee





43 Cost (non salary) per day of field survey (per diems, etc) VND 12,500,000

Consultation workshop inside ministry VND 2,812,544 3 half-day meetings with 15 participants

Consultation with stakeholders

See belowMOJ examination of law or ordinance during drafting VND 937,5


46 Days per person 1.5

Cost of Government meeting VND 5,000,0

47 Number of people in the government meeting 40

48 Duration of government meeting, hours 4Correction by drafting committee VND 625,0

49 5 people, 1 dayCost of printing reports VND 20,000,0

50 Printing report on decree VND 20,000,000

Cost of drafting new circular (without RIA) VND 76,750,00Cost of drafting

14VND 18,750,00


52 Number of days per person 30Cost of study tours and field surveys when drafting law or ordinance

15VND 52,000,00



55 Cost (non salary) per day of field survey (per diems, etc) VND 12,500,000

Consultation workshop inside ministry VND 6,000,0

56 3 half-day meetings with 30 participants VND 5,625,000

57 Written responses from other ministries 3 people 1 day VND 375,000

Consultation with stakeholders

58 See below

Cost of drafting new PM decision (without RIA) VND 97,750,00





Cost of drafting16

VND 18,750,00


60 Number of days per person 30Cost of study tours and field surveys when drafting law or ordinance

17VND 52,000,00



63 Cost (non salary) per day of field survey (per diems, etc) VND 12,500,000Consultation workshop inside ministry VND 6,000,0

64 3 half-day meetings with 30 participants VND 5,625,000

65 Written responses from other ministries 3 people 1 day VND 375,000Consultation with stakeholders

66 See belowMOJ examination of law or ordinance during drafting VND 375,0


68 Days per person 1Correction by drafting committee VND 625,0

69 5 people, 1 day

Cost of printing reports VND 20,000,0

70 Printing report on PM decision VND 20,000,000

Salary costs18

71 Cost per hour in VN dong for ministry official VND 15,625

72 Cost per hour in VND for high level officials VND 31,250

73 Cost per hour in VND for Members of NA VND 37,500

Issue 1 Pre-RIA

Number of Pre RIAs prepared each year 50

74 Laws and ordinances included in annual legislative program (2007 number)19

50

75 % of law proposals for which Preliminary RIAs are prepared 100%

76 Number currently published for comment at Leg Program stage 0%

Costs of Pre RIAs VND 437,500,00Cost to Government of Preparation VND 125,000,0




19Ministry of Justice



77 Time needed to prepare Pre RIA, hours 160Cost to Government of Consulting on Pre RIAs, Option 1B VND 62,500,0

78 Time needed to respond to comments 80Costs to Businesses of commenting on Pre RIAs, Option 1B VND 250,000,0

79 Number of comments per Pre RIA 10

80 Time to prepare each comment, hours 16

81 Cost to business per hour VND 31,250

Benefits of Pre RIAs, Option 1B VND 705,222,070,00Cost savings from fewer new laws and ordinances

20VND 1,103,962,50

82 Reduce number of laws and ordinances drafted, % 5%

Cost savings from faster drafting of new laws and ordinances VND 4,118,107,583 Reduced time needed to draft laws and ordinances, % 20%

Benefits to Businesses of 5% reduction in laws and ordinances

VND 700,000,000,00

Issue 2 Codification

Cost of Codification and Circulation of Codes VND 25,104,450,00Initial labor cost to developcode VND 457,500,0

84 Number of people 1585 Number of days per person 244

Initial software costs for code VND 1,280,000,0

86 Purchase, customizing registry software = $80,000 VND 1,280,000,000Initial training costs VND 442,200,0

87 Number of courses 3

88 Length of course, days 8

89 Number of participants 45

90 Number of international experts per course 1

91 Cost of international expert, per day VND 12,800,000Labor cost, annual, for maintaining code VND 168,750,0

92 Staff needed to develop code21

15

93 One expert for each of 30 codes 30

20International experience




94 Days needed per person, per year 30Cost of maintaining data base for codes VND 256,000,0

95 Annual maintenance costs 20% of initial cost VND 256,000,000Cost of printing hard copies VND 22,500,000,0

96 % of codes reprinted each year 100%

97 Number of copies printed 5000

98 Number of codes 30

99 Cost per code printed VND 150,000

Benefits of Codification and Circulation of CodesVN

2,920,353,083,83Search time saved for government

officials VND 591,351,600,00100 Search time, hrs, for government officials, per year22

48

101 Number of civil servants 1,971,172

102 % of civil servants who use legal text 50%

103 % reduction in search time due to online code 80%

Search time saved for legal staff in government VND 2,478,125,0

104 Hours saved per year per lawyer 244

105 Number of lawyers supporting public sector 650

Search and legal research time for judges and court staff VND 16,630,125,0

106 Number of judges23

4362

107 Hours saved per year, per judge 244Search time for citizens

108 ??Reduced litigation cases, savings for government VND 182,022,780,00

109 % of court cases due to inconsistencies between instruments24

1.00%

110 Number of administrative complaints25

96,852

111 Economic cases26

2614

112 People on each case inspectors, prosecutors, judges 6

22The draft Law on Civil Service

23Up to March 2008

24Interviews of judges and experts

25Complaints from all sources

26Average number of cases at the economic court between 2005 and 2008



113 Days spent on each case, per person 244Search time saved for businesses in Vietnam VND 2,124,190,638,98

114 Number of big businesses (more then 300 employees)27

3732115 Number of SMEs

28127,600

116 Legal fees per year for big businesses, $2000/month VND 384,000,000

117 % of businesses that are SMEs29

97.16%

118 Number of employees per SME30

25

119 Number of employess per big business31

819

120 Legal costs per year for big businesses, per employee32

VND 468,864

121 Legal costs per year for each SME (4 times higher per emp) VND 46,886,447

122 Total legal costs per year for SMEs VND 5,982,710,622,711

123 Cost per hour of VN lawyers, per hour33

VND 62,500124 Cost per hour of foreign lawyers = $150/hour VND 2,400,000

125 Number of lawyers needed each year by big business 3.15

126 % of foreign legal services by big businesess 20.00%

127 Number of lawyers needed each year by small businesses 0.38

128 % of foreign legal services by small businesess 0.00%

129 Reduction in search time, hours per year per lawyer34

244

130 Value of reduced search time, per year, per big business VND 368,797,377

131 Value of reduced search time, per year, per small business VND 5,860,806

132 Value of reduced legal cost for big businesses VND 1,376,351,811,148133 Value of reduced legal cost for SMEs VND 747,838,827,839

Reduced litigation cases, savings for businesses and citizens35

VND 3,679,814,84

134 Qualitative: Citizen working days, travel + study ??

135 Hours of legal time needed by big business for 1 appeal 40

136 Cost per hour legal time $150 foreign lawyers VND 2,400,000

27Business survey 2004-2006 by the General Statistics Office

28

Business survey 2004-2006 by the General Statistics Office29The General Statistics Office (GSO), end 2007

30GSO survey data

31GSO survey data

32GSO survey data

33As consulted with Mr. Tran Huu Huynh (VCCI) and Mr. Nguyen Duc Son, Business Legal Club

34Ministry of Justice’s tentative data

35Interview with VCCI and Business Legal Club



137 Hours of legal time needed by SMEs for 1 appeal 16

Issue 3 Identify and implement conforming changes when laws are draftedCost of conforming changes VND 438,750,00138 % increase in cost to drafting team for new laws 20%

139 Number of new laws and ordinances 18

Benefits of conforming changesVN

2,267,810,453,23Reduced legal search costs for government

140 Number of hours reduced search time per lawyer in gov 244 VND 2,478,125,00

141 Number of lawyers in gov 650Reduced number of laws drafted due to omnibuslaw

142 Number of instruments reduced, 5% in each category 5.00% VND 7,434,518,75

Reduced litigation for government VND 45,505,695,0

143 % number of cases avoided 0.25%Reduced legal search costs forbusinesses VND 2,124,190,638,98

144 Number of hours reduced per year per lawyer 244

Reduced costs of court cases for businesses VND 88,201,475,5145 Days for lawyer per case 16

146 Cost per lawyer per hour VND 62,500

147 Court fee per case VND 700,000

148 Penalties for noncompliance VND 346,000,000

149 Number of cases avoided, % 0.25%

Issue 4 RIA

Costs of RIA

Cost for one full RIA VND 9,000,0150 Average number of days to conduct full RIA

3640

151 % of new regulations requiring full RIA37

20%

152 Hiring consultants to help on RIA, days per RIA 4





153 Consultants to help on RIA, cost per day VND 1,000,000Cost for one light RIA VND 625,0

154 Average number of days to conduct light RIA38

5155 % of new regulations requiring light RIA

3980%

RIA Training, annual cost

156 Number of people trained annually (10 per ministry) 260 VND 136,000,00

157 Days of training 4

158 Number of courses 6

159 Number of trainers per course 2

RIA quality control and central oversight VND 1,050,000,0

160 Central unit of 35 people fulltime40

Cost to businesses for RIA consultation, per full RIA VND 170,000,0161 Number of comments per RIA41

10

162 Time needed for businesses to prepare comments, days 2

163 Cost of labor to businesses, management, per day42

VND 10,000,000

164 Cost of labor to businesses, staff, per day VND 5,000,000

165 % of business time management, legal for comments43

70%Cost to businesses for RIA consultation, per lightRIA VND 71,500,00

166 Time needed for businesses to prepare comments, days 1

Benefits of RIACost savings to businesses from reduction new regulations

167 % reduction Option 4B 2.36% VND 330,248,306,99

168 % reduction Option 4C 2.58% VND 361,851,015,80

169 % reduction Option 4D 10% VND 1,400,000,000,00

170 % reduction Option 4E 10% VND 1,400,000,000,00

171 Annual cost increase of regulatory compliance, % GDP44

1.25%

Cost savings to businesses from revision of existing regulations



40Korea model is used as a stereotype

41Experience of VCCI 2007

42Interview with VCCI

43Experience of VCCI

44Legal cost estimate = 25% of GDP, 5% increase per year (by international forecast), or total cost increase 1.25% per year



172 Cost of stock of regulations, % GDP 25.00%

173 Revision of stock of regulations, % per year 5.00%

174 Reduction in cost of stock of regulations, 4B 2.36% VND 330,248,306,99175 Reduction in cost of stock of regulations, 4C 2.58% VND 361,851,015,80

176 Reduction in cost of stock of regulations, 4D 10.00% VND 1,400,000,000,00

177 Reduction in cost of stock of regulations, 4E 10.00% VND 1,400,000,000,00

Issue 5 Reduce the categories of legal instruments

Cost of reducing categories, Option 5B VND 14,096,565,00

Cost of reducing categories, Option 5C VND 15,103,462,50178 Non-normative docs becoming LNDs, per year45 54

179 % undergoing quality controls similar to decrees, Option 5B 70%

180 % undergoing quality controls similar to decrees, Option 5C 75%

181 Extra full RIAs needed per year, Option 5B 7.56

182 Extra light RIAs needed per year, Option 5B 30.24

183 Extra full RIAs needed per year, Option 5C 8.1

184 Extra light RIAs needed per year, Option 5C 32.4

Cost to businesses of more consultation

185 5B VND 3,447,360,000 VND 3,447,360,00186 5C VND 3,693,600,000 VND 3,693,600,00

Benefits of reducing categories, Option 5B VND 418,361,068,32

Benefits of reducing categories, Option 5C VND 448,244,001,77Cost savings to government from lower searchcosts VND 487,500,0

187 Number of hours reduced search time per lawyer in gov 48

188 Number of lawyers in gov 650

Reduced legal search costs forbusinesses VND 417,873,568,32

189 Number of hours reduced per year per lawyer 48

Issue 6 Consultation with stakeholders

45Ministry of Justice’s forecast



Cost of consultation to gov, Option 6B VND 8,960,815,00

Cost of consultation, Option 6D VND 8,963,057,50Cost of consultation to government

Additional circulation of drafts % not using method 2007 Increased % using metho

190 Draft laws, ordinances 0% 0

191 Draft decrees 0% 0

192 PM Decisions 20% 20

193 Circulars (current practice is to acquire comments within issuing ministry) 50% 50

194 Inter-ministerial circular 40% 40

Additional Meetings and workshops


196 Draft decrees 0% 0197 PM Decisions 10% 5

198 Circulars 35% 17.50

199 Inter-ministerial circular 30% 17.50Mass media




203 Circulars 100% 0

204 Inter-ministerial circular 100% 0Post draft on website with 20 days notice (option 6B)





209 Inter-ministerial circular 100% 100Post draft on website with 60 days notice (option 6D)


211 Draft decrees 100% 100212 PM Decisions 100% 100


214 Inter-ministerial circular 100% 100

Total number new consultation method, Option 6B 1204.Total number new consultation method, Option 6D 1207.



215 Additional circulation of drafts 239

216 Meetings and workshops 82.8

217 Mass media 19218 Post on Website, Option 6B 863.

219 Post on Website, option 6D 8

Costs of each consutlation method

220 Additional circulation of drafts 60 docs by 25000VND VND 1,500,00

221 Meetings and workshops 4 gov staff x 8 hours each + 200,000 VND costs VND 700,00

222 Mass media VND 400,000,0

223 Post on Website, Option 6B

224 Post on Website, option 6D

Total new cost by method225 Additional circulation of drafts VND 359,400,0

226 Meetings and workshops VND 57,995,00

227 Mass media VND 7,640,000,00

228 Post on Website, Option 6B VND

229 Post on Website, option 6D VND

Cost to government of responding to comments

230 48 hours for each new consultation, Option 6B VND 903,420,000 VND 903,420,00

231 48 hours for each new consultation,Option 6D VND 905,662,500 VND 905,662,50Cost of consultation to

business232 Cost to business per hour VND 31,250

233 Additional circulation of drafts - 60 x 16 hours response to draft VND 7,188,000,0

234 Meetings and workshops 80 people x 4 hours x 31250 hour VND 828,500,0

235 Mass media

236 Publication on website

237 Number of comments per document published, Option 6B 10 VND 4,315,050,00

238 Number of comments per document published, Option 6D46

20 VND 8,660,000,00

239 Number of comments per document published, Option 6E 20 VND 8,660,000,00

240 Time to prepare each comment, hours 16241 Cost to business per hour VND 31,250

46Number of people consulted will double if time for response is extended



Benefits of consultationBenefits in reducing cost of flow of regulation

242 10 % reduction in cost of regulation when combined with RIA 0.1 VND 1,400,000,000,0243 Option 6B = Option 6D - 50% 0.5 VND 700,000,000,0Benefits in reducing cost of stock ofregulation

244 Option 6D. See RIA estimates above data element 176 VND 1,400,000,000,00

245 Option 6B = Option 6D - 50% VND 700,000,000,00

Productivity and job increases in Vietnam due to lower regulatory compliance costsEstimates of job creation per unit of

investment

246 GDP (2007) VNDVN

1,120,000,000,000,0

247 2005: 16 % GDP in new investment created by FDI sector 1

248 Number of new jobs created by 2005 FDI sector 1,200,00

249 Jobs created for each 1% increase in GDP in FDI Sector 75,00

Method 1. Estimate cost reductions using Korea as a benchmark for Vietnam

250 Potential increase in GDP due to better regulation program, %, 10 years47

0.0857251 2007 GDP Vietnam VND 1,120,000,000,000,000

252 GDP increase per year of regulatory reform program 0.86%

253 Value per year in VDN for businesses due to lower regulatory compliance costs VND 9,598,400,000,000

254 Job creation per year due to lower regulatory compliance cost 64,275

255 Job creation over 10 years due to lower regulatory compliance cost 642,750

Method 2 Estimate cost reductions by using estimated cost savings in Vietnam

256 Net annual cost reduction to business sector in Vietnam VND 10,924,760,648,668

257 % GDP savings per year 0.9754%

258 GDP boost over 10 years 9.75%

259 Jobs Associated with lower compliance cost, per year 73,157

260 Jobs Associated with lower compliance cost, ten years 731,568.79

Economic effects of reduction in regulatory risk261 Ten year bond rate in Vietnam: 10.333% 10.333%

262 Ten year bond rate in Singapore: 2.439% 2.439%

47OECD forecast : percentage of GDP increase due to Korea’s regulatory reform program



263 Difference between Vietnam and Singapore 7.894%264 % due to regulatory and policy risk premium 20%

265 Risk premium due to regulatory and policy risk 1.578800%

266Reduced investment rate due to regulatory/policy risk, basis points per 1% ofpremium 0.63%

267 Reduced investment in Vietnam per year, % 0.9868%

268 Job losses associated with reduced investment, per year 74,006

269 Job losses associated with reduced investment, 10 years 740,063



Annex 5 - Costs and Benefits of Options in the Law on Laws, Summary

Background Information

Government costs and benefits

Total cost to government in VN of drafting new LNDs, per year VND 148,690,375,000

Total maximum new cost of drafting new LNDs, per year VND 58,518,470,000

Total savings to government associated with best options VND 837,015,235,179Total net savings to government, peryear VND 778,496,765,179

Business costs and benefits

Total maximum increase in business costs due to public consultation VND 163,223,600,000

Total savings to business associated with best options VND 11,087,984,248,668

Net annual cost reduction to business sector in Vietnam VND 10,924,760,648,668

% of GDP Annual cost reduction to businesses 0.9754%

Number of new jobs created over 10 years, Compliance cost reduction 731,569

Number of new jobs created over 10 years, Reduction in Risk Premium 740,063

Total jobs created 1,471,631

Options

Costs to Gov Costs to BusinessesQualitative

costsTOTAL Monetized

Costs Benefits to GovBenefBusine

Issue 1

Option 1B VND 187,500,000 VND 250,000,000 VND 437,500,000 VND 5,222,070,000 VND 700,0

Option 1C VND 125,000,000 VND 0 VND 125,000,000 VND 0

Issue 2Option 2B VND 25,104,450,000 VND 0 VND 25,104,450,000 VND 182,022,780,000 VND 3,6

Option 2C VND 25,104,450,000 VND 0 VND 25,104,450,000 VND 775,852,505,000 2,127,8



Issue 3

Option 3B VND 438,750,000 VND 0 VND 438,750,000 VND 55,418,338,750 2,212,3Option 3C VND 438,750,000 VND 0 VND 438,750,000 VND 0

Issue 4

Option 4B VND 3,067,000,000 VND 35,530,000,000 VND 38,597,000,000 VND 660,4

Option 4C VND 3,247,000,000 VND 38,930,000,000 VND 42,177,000,000 VND 723,7

Option 4D VND 9,160,000,000 VND 150,620,000,000 VND 159,780,000,000 2,800,0

Option 4E VND 2,037,800,000 VND 80,803,200,000 VND 82,841,000,000 2,800,0

VND 0

Issue 5Option 5B VND 14,096,565,000 VND 3,447,360,000 VND 17,543,925,000 VND 487,500,000 VND 417,8

Option 5C VND 15,103,462,500 VND 3,693,600,000 VND 18,797,062,500 VND 522,321,429 VND 447,7

Issue 6

Option 6B VND 8,960,815,000 VND 4,315,050,000 VND 13,275,865,000 1,400,0

Option 6C VND 0

Option 6D VND 8,963,057,500 VND 8,660,000,000 VND 17,623,057,500 2,800,0

Option 6E VND 8,963,057,500 VND 8,660,000,000 VND 17,623,057,500 2,800,0



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