The Worthiness Is Invaluable

The Worthiness Is Invaluable

By Tan Duc

At a taxation office in HCM City. The time needed to pay taxes every year has plunged from more than 1,000 hours to about 600 hours, but it is still to slow

In an interview with VnExpress, Nguyen Xuan Phuc, head of the Government Office, said that if the State phases out and amends 256 out of the over 5,700 existing administrative procedures, enforcement costs will fall by about VND6 trillion.

Phuc contends that if the remaining 5,500 procedures undergo an overhaul as well, the financial burden that enterprises and the Government have to shoulder will drop drastically.

However, the damage inflicted by red tape extends far beyond monetary costs. In reality, bureaucratic inefficiency also breeds a severe waste of time and effort, which could be channeled into more productive uses.
For instance, the director of a medium-size private company says that, on average, he spends more than 70% of his working time dealing with onerous administrative procedures, meeting inspection teams and conducting meetings.

While Nguyen Xuan Phuc says that administrative procedures aim to pave the way for businesses to flourish, they actually spell trouble for the corporate world. In a World Bank report on the business environment in 2010, Vietnam slid two more notches to the 93rd position. Among the 10 ranking criteria, contract enforcement procedure was the only factor to post an improvement while the others all deteriorated. Among them, the procedures involved in setting up enterprises, applying for licenses and loans, paying taxes, declaring bankruptcy and registering properties were the most cumbersome.

Indubitably, the Government has exerted tremendous efforts to reduce red tape. For example, the time needed to pay taxes every year has plunged from more than 1,000 hours to about 600 hours. However, the pace of reform remains slower than in other countries, pulling down Vietnam’s score on this criterion.

Red tape is not just time-consuming and troublesome but also offers a fertile ground for corruption to breed. The provincial competitiveness index announced in early 2010 indicated that half of the respondents had to pay commissions when bidding for state-funded projects. This is merely the tip of the iceberg. In fact, enterprises also face many informal charges to clear administrative hurdles.

The Government plans to weed out at least 30% of the unnecessary administrative procedures in 2007-2010. If this goal is met, not only will enforcement costs plummet but many daunting hurdles that plague both the public and businesses will vanish, too.

However, that target alone is inadequate. The Government should entirely obliterate administrative bottlenecks, so that the remaining procedures will serve as a tool to foster economic development and social security, rather than a perennial nightmare for enterprises and the public alike.