Support for Task Force on Implementation of Investment Law and Enterprise Law

UNITED NATIONS DEVELOPMENT PROGRAMME PROJECT OF THE GOVERNMENT OF VIET NAM DETAILED PROJECT OUTLINE Project title: Support for the Task Force on Implementation of Investment Law and Enterprise Law Line agency: Ministry of Planning and Investment/Task Force on Implementation of Investment Law and Enterprise Law Project focal point: Central Institute for Economic Management (CIEM), 68 Phan Dinh Phung Str., Hanoi, Viet Nam Other participating agencies: Estimated start and end dates: 20/08/2007 – 31/08/2010 Estimated budget 6.1 Total ODA grant: a Committed funds: US$ 830,300 a.1 Regular resources: US$ 400,000 a.2 Co-financing: US$ 430,300 b Other resources: 6.2 Government contribution: a In cash: b In kind: US$ 126,000 Project implementation sites: Ha Noi (with possible travel to provinces) Government priority areas to be addressed: Institutional capacity strengthening and human resources development; technology transfer; enhancing the research and development capability Support for Task Force on Implementation of Investment Law and Enterprise Law ACRONYMS ADB APR CIEM EL FDI GC GDP IL MoJ MPI NBIN NEX NPD NPM OOG PCI PR PSD RIA SBBA SME SOE SG TF UNDP VCCI VCP WTO - Asian Development Bank Annual Project Review Central Institute for Economic Management Enterprise Law Foreign Direct Investment General Corporation Gross Domestic Product Investment Law Ministry of Justice Ministry of Planning and Investment National Business Information Network National Execution National Project Director National Project Manager Office of the Government Provincial Competitiveness Index Public Relations Private sector development Regulatory impact assessment Standard Basic Assistance Agreement Small and Medium size Enterprise State Owned Enterprise Steering Group Task Force United Nations Development Program Vietnam Chamber of Commerce and Industry Vietnam Communist Party World Trade Organization Support for Task Force on Implementation of Investment Law and Enterprise Law Table of Contents I PROJECT JUSTIFICATION Brief situation analysis and assessment Relevant Government strategies and policies Lessons learned from previous cooperation Development cooperation with other donors in related sectors .7 Comparative advantages of UNDP Statement of issues to be addressed by the Project II PROJECT OVERVIEW .9 Summary statement of the Project Project structure 11 III INDICATIVE BUDGET STRUCTURE 11 Project budget (consisting of UNDP TRAC and cost share) 11 Government contributions 15 IV PROJECT IMPLEMENTATION STRATEGY .15 Overall strategy and approach 15 Strategic approach to address cross-sectoral issues .17 V PROJECT IMPLEMENTATION STRUCTURE 17 National Implementing Partner 17 Government Aid Coordinating Agency and UNDP Country Office 18 VI PROJECT COORDINATION 19 Partnerships 19 Special coordination arrangements .19 Stakeholder Participation 20 Monitoring, Evaluation and Reporting 20 VII OTHER CONSIDERATIONS .21 Anticipated impact on social and gender equity 21 Anticipated environmental impact 21 Sustainability 21 Risk Analysis 21 Legal Context 23 APPENDIX 1: JOB DESCRIPTIONS 25 APPENDIX 2: PROJECT RESULTS AND RESOURCES FRAMEWORK .29 ANNEX 1: SOME LESSONS LEARNT FROM EARLIER PROJECTS 35 ANNEX 2: TASKS OF THE TASK FORCE 38 ANNEX 3: MEMBERS OF THE TASK FORCE 39 ANNEX 4: MATRIX OF DONORS’ SUPPORT FOR PRIVATE SECTOR DEVELOPMENT 40 ANNEX 5: KEY LAWS GOVERNING BUSINESS LEGISLATION IN VIETNAM .49 Support for Task Force on Implementation of Investment Law and Enterprise Law I PROJECT JUSTIFICATION Brief situation analysis and assessment Both the Investment Law and the Enterprise Law were approved by the National Assembly on 29 th November 2005, and came into effect on 1st July 2006 A handful of implementing decrees were issued during the latter part of 2006, intended to guide the practical implementation of the two laws The new Enterprise Law replaces the 1999 Enterprise Law, and entails a strengthening of legislation on how companies should conduct business The Enterprise Law currently applies to domestic, private companies Foreign-invested enterprises have until st July 2008 to incorporate under the Enterprise Law State-owned enterprises (SOEs) have until st July 2010 to likewise The Investment Law replaces both the Domestic Investment Promotion Law and the Foreign Investment Law The passing of the Investment Law and the Enterprise Law is widely considered to be an important milestone in Vietnam’s ongoing process to improve the business enabling environment for companies For the first time in 20 years of reform efforts, the Vietnamese legal framework pertaining to business and investment activity is broadly (but still not entirely) uniform in its applicability to all business sectors, regardless of ownership status (i.e whether they be local or foreign, private or state-owned) The two laws will serve as the two main pillars of business legislation in Vietnam in the coming years Effective enforcement of and consistent compliance with both the contents and the general spirit of the Investment Law and the Enterprise Law should make the Vietnamese business environment much more conducive to companies of all kinds This in turn should help increase the aggregate number – as well as the individual scale and operational scope – of enterprises, thereby leading to the creation of more jobs and have a positive impact on income levels Effective implementation of the two laws should particularly serve to benefit smaller enterprises, enterprises located in rural areas, and enterprises headed by groups that typically have less access to the bureaucracy, including ethnic minorities and women Further, the contents of these laws are congruent with the principles of a market economy and are broadly in conformity with international best practices governing the regulation of business activity Therefore, on the one hand, these two laws are expected to improve the gradual institutionalization and strengthening of the market economy in Vietnam On the other hand, as the laws, in principle, are in line with basic principles of WTO, their effective implementation will enable Vietnam to better fulfil its obligations as a WTO member Recognizing the importance of these two laws in improving the business climate in Vietnam and anticipating difficulties which may arise including but not limited to a lack of an organization for (i) monitoring and instructing ministries and localities to implement the two laws, (ii) timely identifying good typical examples for dissemination and violations for prevention during the implementation of the two laws, (iii) partly improving legal business environment including the removal of unreasonable business licences and conditions, (iv) and timely making recommendations to the Prime Minister on the implementation of the two laws, in late 2006 the Prime Minister established a Task Force on Implementation of the Investment Law and Enterprise Law (hereafter referred to as the Task Force) In broad terms, the Task Force is tasked to assist the Prime Minister in enforcing State agencies’ Support for Task Force on Implementation of Investment Law and Enterprise Law implementation of, and corporate sector compliance with, the Enterprise Law and the Investment Law (See Annex for details about specific tasks of the Task Force) The Task Force is an inter-ministerial, relatively ad hoc entity, comprising of officials from relevant (mostly State) agencies Its core structure includes nine representatives from the Ministry of Planning & Investment (MPI) and Central Institute of Economic Management (CIEM), eight from the Office of the Government (OOG) and Ministry of Justice (MoJ), and one from the Vietnam Chamber of Commerce & Industry (VCCI) (See Annex for details about members of the Task Force) Key individuals involved in drafting the Enterprise Law and Investment Law, and implementing decrees, are represented in the core Task Force In addition to the core, there are additional experts and relevant stakeholder organisations attached to the Task Force There is also a Secretariat to the Task Force, which is housed within CIEM The Task Force reports directly to the Prime Minister’s office Past experience gained from implementation of the 1999 Enterprise Law clearly shows that the activities of the previous Task Force on implementation of the [first] Enterprise Law played a critical role in converting the contents and spirit of this law into a tangible reality, and guarding against inappropriate distortion and back-sliding It is anticipated that the new Task Force could —and hopefully will – play a similarly critical role as its predecessor Relevant Government strategies and policies A Project that directly supports effective implementation of the Investment Law and Enterprise Law, as well as the respective guiding regulations, would undoubtedly contribute towards fulfilling the Government’s policies for economic reform and development for the period 2005-2010 In particular, it should make an important contribution to the following policy objectives, as articulated by the VCP: “Vigorously liberating and developing the production and population living standards; promoting poverty reduction and hunger eradication; encouraging the population to good business, and assist each other to escape poverty and become rich step by step.”1 “Establishing favourable legal environment, policies and mechanism to capitalize resources of the society for development and a playing field for fair, healthy, public, transparent and orderly business competition.”2 “Removing every barriers; igniting favourable social attitudes and business environment for types of enterprise from private sector to be developed unrestrictedly in all sectors, professions, even the important production areas of the economy which are not prohibited.” “Eliminating all discrimination treatment; ensuring a truly fairness.”4 “External forces play an important role in development … to capitalize [these] external resources, it is necessary to have suitable strategy and healthy business and investment environment, firstly a uniformly Vietnam Communist Party: Documents of the Party’s 10th Convention, Hanoi, 2006, National Publishing House of Politics, p 77 Ibid., p 78 Ibid., p 86 Ibid., p 237 Support for Task Force on Implementation of Investment Law and Enterprise Law regulatory and policy systems and an administration which is transparent, enforceable and efficient.” “Foreign invested business is a significant part of Vietnam’s economy, which is to be treated equally as Vietnamese ones in business They are provided good conditions to participate more in development of the sectors and territories which are suitable with our country’s commitments.” “A system of business conditions which are transparent, reasonable, and unified should be constructed, so as on the one hand to meet the demands of governmental management, and on the other hand to ensure clarity, and time and costs reduction for the population and businesses from all sectors.” Based on these policy objectives, the Government of Vietnam has pursued a legislative agenda that seeks to turn such a vision into a tangible reality This has included: a revision of the 1999 Enterprise Law; the merging of investment laws for domestic and foreign companies, so as to create a single investment regime; a new Commercial Law (2006); a Securities Law (2007); the effective phasing out of the SOE Law; and an extensive body of sub-laws and regulations intended to embed these laws in the actual practices of both the corporate sector and the State agencies mandate to oversee corporate behaviour (i.e compliance and enforcement) These efforts have been enacted in parallel with, and supported by, a number of external commitments, culminating in Vietnam’s accession to the WTO in January 2007 This accession comes with a spectrum of ‘conditionalities’ intended to ensure that Vietnam’s regulatory environment for business is equitable, and compliant with the terms of WTO membership In this context, effective implementation of the Investment Law and Enterprise Law, as led by the Task Force, will be a key component in on-going efforts to improve the business enabling environment – and particularly the regulatory environment for businesses – in Vietnam in the years to come Lessons learned from previous cooperation The substantive focus of the technical assistance will be defined, in part, by the results and lessons learned from past experience and ongoing cooperation on pro-business regulatory reform In particular, lessons that can usefully be learnt from UNDP Project VIE/01/025 (which supported the drafting of the Enterprise Law, Investment Law and implementing decrees) include the following: First, passing laws and supporting regulations is only the first step; the more difficult part in Vietnam tends to be effective implementation in practice There is thus a continued critical need for an effective and dynamic reform champion, with the means and resources to push and monitor the implementation process Therefore, this Project would aim primarily at supporting effective implementation of the two laws through its support of the Task Force as a focal point and ‘champion’ Ibid., p 180 Ibid., p 238 Sub-project 2: Simplification of business conditions, Decision No 30/QĐ-TTg, 10 th January 2007, of the Prime Minister on the approval of the Project for administrative procedure simplification in Government management fields from 2007-2010 This implementation phase is a logical continuation of the larger business policy and regulatory reform process, which typically comprises three stages, each of which contain different implications for technical assistance and external support: 1) The policy discussion and formulation stage, when new ideas and concepts and options are debated and weighed by the relevant circles of advisors and decision makers in government, academia, institutes and think tanks 2) The policy ‘operationalization’ stage, when policy is translated into laws and other normative documents 3) The policy implementation stage, when the policy, as articulated in various legal documents, is implemented through various institutions and organizations Also see: Improving the quality of business laws – a Quickscan of Vietnam’s Capacities & Introduction of International Best Practices, PMRC/GTZ/UNDP, 2005 6 Support for Task Force on Implementation of Investment Law and Enterprise Law Second, for the project to be effective in supporting the wider process of economic reform, and specifically in realising implementation of both the contents and spirit of both laws, its design needs to satisfy the following requirements: - The Project’s principal outputs and activities have to be congruent with the priorities set out in the Government’s plan for legislative implementation in particular, and policy reforms in general; - The Project must be perceived as a ‘process-oriented Project’, with the kind of inherent flexibility that this typically entails; - The Project’s result-resource frame needs to be structured in relation to this process orientation, as the type and form of TA, outputs and outcomes will need to be tailored accordingly Third, the Project’s goals will sometimes be ‘soft’ in nature, and therefore tricky to define and evaluate in measurable terms Judging the degree of traction and achievement can be relative, and may furthermore depend on prior (subjective) expectations and perspectives Elements of the schedule, priorities and pace of the Project will be partly outside the direct control of the Project, as various external variables will have an impact, including the characteristics and modalities of the Task Force itself Nevertheless, when the Project’s priorities are defined, a highly visible (and easily recognisable) goal can be a powerful tool to steer a process-oriented project Fourth, outcomes are the key level Activities and specific outputs are secondary in a process-oriented Project of this kind, and have no intrinsic value per se, other than as steps towards meeting the key outcomes and set goals Fifth, with regard to project management, the project needs to be managed both proactively and flexibly, with rapid decision-making when necessary, coupled with a strong focus on the priority goals Experience gained from Project VIE/01/025 also suggest that informal and soft interaction skills of project managers, program officers and advisors are essential in managing process-oriented projects successfully – attributes and soft skills that are often not readily identifiable from conventional CVs Finally, also with regard to project management, attention needs to be paid to ‘knowledge management’ The Project should serve the Task Force as a disinterested and neutral knowledge manager analyzing, synthesizing and distilling the range and diversity of facts, options and arguments from sources inside and outside the Project, into actionable information at the right time, transforming ineffective reports into useful briefs This helps ensure that support provided is better focused and more effective more rapidly Development cooperation with other donors in related sectors There is fairly considerable work being undertaken by various donor-assisted SME development and PSD-related projects that pertain to the implementation of the Investment Law and Enterprise Law The donor assistance ranges from improving the country’s policy framework for SMEs (ADB, GTZ, UNIDO, USAID (VNCI), EU, etc.) and trade (USAID (STAR)) as well as developing national capacity to provide training on local economic development (SIDA, MPDF, etc.) at central level to creating an enabling business environment, implementing essential promotional policies and activities, removing barriers to establishment and development of business, training entrepreneurs and other stakeholders, improving access to capital (DANIDA, GTZ, SIDA, EU, WB, SECO, etc.) at local level (See Annex for further details of donor assistance) Support for Task Force on Implementation of Investment Law and Enterprise Law The assistance of donors at central level remains relatively limited in comparison with that at local level Furthermore, support for SME development and Enterprise Law-related issues accounts for a large share in total assistance Support for monitoring the whole implementation process of both Enterprise Law and Investment Law to (i) promptly respond to obstacles faced by provincial authorities and businesses in implementation of and compliance with the two laws respectively and (ii) quickly feed implementation experience in the revision/iteration process of the two laws and their implementation guidelines to improve the regulatory framework is now absent Moreover, whilst extensive support has been put on training for stakeholders directly involved in the implementation of the two laws (e.g SME managers, local officials, lawyers, etc.), not much has been provided to training of trainers for these laws to develop a core force of trainers at local level The Task Force on implementation of Investment Law and Enterprise Law which is tasked as the central inter-agency group monitoring overall implementation process of the two laws as well as advocating widely the two laws at all levels is in need of external technical assistance to perform its tasks However, there is now no project directly providing support to it Thus, the UNDP-supported project will help fill the gap in the donor assistance picture Comparative advantages of UNDP UNDP is widely perceived as a neutral donor organization that has provided substantial levels of technical assistance to Vietnam for more than two decades UNDP’s support and advice in sensitive areas of business policy and regulatory reforms will be valuable With experience in assisting the Government of Viet Nam in the drafting and implementation of the Enterprise Law 1999 as well as the drafting of the Enterprise Law 2005 and Investment Law 2005, UNDP is in a good position to provide useful and effective support to address remaining constraints to business development Furthermore, through such earlier assistance, UNDP has demonstrated that it is prepared to commit to the longer-term provision of technical assistance needed to affect and sustain the institutional change required in realizing tangible improvements in the regulatory and policy environment, as it is implemented at the enterprise level UNDP has shown that it understands that there is much more to regulatory and policy reform than simply drafting new policy and regulatory documents UNDP has shown its willingness to support sustained efforts to ensure effective consultations with all stakeholders, and to raise public awareness and understanding of key issues The proposed Project is consistent with priorities identified by both UNDP and the Government, for UNDP support to Vietnam Statement of issues to be addressed by the Project Following the issuance of the Investment Law and Enterprise Law, the important task of the Government of Viet Nam now is effectively implementing the two laws Passing laws and supporting regulations is only the first step, the more difficult and challenging part in Viet Nam tends to be implementation in practice The traditional gaps in law implementation of authorities among different levels, the variety in law enforcement and interpretation among different provinces across the country, and the overlap and inconsistency of existing regulations are posing difficulties to the effective implementation of the Investment Law and Enterprise Law The absence of a regular information channel from local to central Support for Task Force on Implementation of Investment Law and Enterprise Law level to timely report the implementation problems and initiatives in the field to policy-making level and share such problems and/or initiatives among localities hinders the progress of implementation process Moreover, the lack of an information channel between the government and business community makes it impossible, on the one hand, for enterprises to get prompt help from government agencies to solve their problems relating to the two laws, and on the other hand, for government agencies, especially policydrafting ones, to collect real problems and obstacles occurred on the spot to reflect in the revision process of the laws and their sub-law regulations Besides, the scattered support of donors for advocacy and education activities on the two laws leads to overlaps and also gaps in advocacy Looking from a wider context, the membership of WTO presents significant challenges to the Government of Viet Nam and the development of private sector The Government has to improve the business regulatory framework as well as business-related State management to fulfil WTO commitments Moreover, the Government may have to cope with negative impacts on environment caused by economic development in the era of WTO membership through, among others, sound businessrelated laws and regulations The private sector will face with severe competition pressure A fair and transparent business environment, which depends very much on the implementation of the Enterprise Law and the Investment Law, will facilitate the development of this sector The current internal capacities of relevant State agencies to implement the two laws remain weak Even the capacity of the Prime Minister’s Task Force on Implementation of Investment Law and Enterprise Law, the central group to oversee the implementation process, promptly identify where difficulties are encountered in the ‘rolling out’ of these two laws, and promptly provide recommendations on how the difficulties can be surmounted, is also relatively low Besides, the Task Force is an ad hoc mechanism which has a definite life span, thus its functions and tasks must be mainstreamed into the government system to ensure the continued effective implementation of the two laws after its disbandment II PROJECT OVERVIEW Summary statement of the Project 1.1 Project results/ outcomes The project aims to improve effectiveness of the implementation of Investment Law and Enterprise Law through support for the Task Force on implementation of the two laws This will be achieved through the accomplishment of four project outputs: (i) Strengthened organizational structure (notably in terms of staffing and work modalities) of, and institutional back-up for, the Task Force (ii) Improved capacity of the Task Force in monitoring, supervising, accelerating, and facilitating implementation of the new Enterprise Law and Investment Law, at both the national and subnational levels (iii) Intensified advocacy efforts relating to the two laws (at both the national and provincial/municipal levels) (iv) Consolidated effort to institutionalize the Task Force’s work as part of a sustainable legal implementation and enforcement process Through its support to the Task Force, the Project has an inherent focus on simplifying administrative procedures, broadening consultative mechanisms, and reducing administrative discretion, which should Support for Task Force on Implementation of Investment Law and Enterprise Law help reduce an inherent bias against disempowered groups who have less access to bureaucratic decision makers Thus the Project’s work will help empower business people from the most disadvantaged groups and areas in society This should help ensure that the disadvantaged have better access to the benefits of increased employment and output growth Consequently, the Project is consistent with the very high priority attached to poverty alleviation in both UNDP’s and the Government’s strategies for providing technical assistance UNDP support through this Project will contribute to increased, and ensure more equitable distribution of, business investment and employment 1.2 Key groups of activities a Strengthened organizational structure (notably in terms of staffing and work modalities) of, and institutional back-up for, the Task Force itself - A detailed diagnostic study of the Task Force is conducted - Internal operational guidelines for the Task Force are produced - A knowledge management system is designed and implemented - Capacity and skills gaps in the Task Force (as identified by the diagnostic study) are addressed b Improved capacity of the Task Force in monitoring, supervising, accelerating, and facilitating implementation of the Enterprise Law and Investment Law, at both central and local levels - A system is designed and established to allow the Task Force to monitor, collate, and report on the Enterprise Law and Implementation Law implementation There will be an emphasis on improving the data collection towards more sex-disaggregated - A vehicle for donor coordination and information-sharing is created - Data processing and analysis skills are developed - An information dissemination and recourse mechanism specifically pertaining to the Enterprise Law and the Investment Law implementation is created - A Task Force sub-group to monitor the issuance of new regulations is established c Intensified advocacy efforts relating to the two laws (at both the central and local levels) - A general advocacy campaign in support of the Enterprise Law and Investment Law is developed - An inter-provincial mentoring/buddy system is established - An Enterprise Law and Investment Law one-stop information portal is established and maintained - A specialist training programme is enacted for provincial officials on the Enterprise Law and Investment Law - A specially tailored training programme is enacted for smaller, rural, ethnic minority, and femaleheaded SMEs - A special advocacy campaign on the Enterprise Law and the Investment Law is enacted, for smaller, rural, ethnic minority, and female-headed SMEs 10 Support for Task Force on Implementation of Investment Law and Enterprise Law ANNEX 1: SOME LESSONS LEARNT FROM EARLIER PROJECTS Supporting Reform is Risky Technical assistance to support economic and institutional reform can have potentially large impacts on economic output and employment growth, and poverty alleviation But given that the reform process is often contingent on both the economic and political environment in which it is being pursued, the speed of reform is changeable and support for reform can be difficult to design, implement and monitor There are considerable risks as to whether such projects can achieve their planned outputs and objectives, and further, whether the planned outputs and objectives will remain valid during the life of the technical assistance project Thus, it is critical to include flexibility in reform-oriented Project design, and to place special attention on Project management and monitoring arrangements and capability Securing Ownership of Initiatives Special effort is needed to ensure ownership during the Project design stage, and to include measures to build ownership of the reform process It is unlikely that an effective technical assistance project to support a reform process can be designed by a series of single short visits by external consultants A process of dialogue, including documentation of issues raised during dialogue, can help the NIA to clarify its needs and perceptions as to how the TA can help address these needs In most cases, ownership is unlikely to be achieved until the NIA and funding agencies have a fairly consistent view of needs and the potential broad scope of future assistance A shared vision of the NIA and funding agency may be a sufficient condition to expect progress with some institutional strengthening exercises But, there is also need to evaluate the priority given to change by other key stakeholders While it is unlikely that all vested interests will be committed to change, it is important to understand the positions of major interest groups in order to better address their concerns about change, and to build measures into the Project design aimed at promoting increased consensus on the need for reform and on the preferred options for reform Such consensus is important both in securing approval of reform and in subsequently implementing reform In terms of designing assistance, this implies a need to consider alternative consultative mechanisms and funding arrangements Funding may be required to publicise and discuss policy studies and recommendations, draft legislation, and other relevant documentation to get widespread feedback There is a need to take a long-term view in providing assistance Integrate into NIA Structure The commitment of the National Implementing Agency (NIA) to a project can be greatly enhanced if the Project is closely integrated into the existing organization structure of the NIA, and directly supports core responsibilities of the NIA To the extent feasible, there should be close integration in terms of Project activities, management, staffing and reporting Projects that are outside the existing structure of the NIA can impose additional burdens on the NIA, in terms of limited 35 Support for Task Force on Implementation of Investment Law and Enterprise Law financial and human resources A lack of integration, or dual organizational structures, frequently causes two sets of problems:  Difficulties with regular provision of counterpart staff, and delays in NIA decision-making  Lack of lasting impacts, in terms of institutional strengthening of the NIA These problems can be largely avoided through strong integration into the day-to-day activities of the NIA Be both Ambitious and Flexible Recognizing that it is unlikely that all proposed measures will be implemented as planned and that it is not possible to predict reform ‘winners’ in advance it is important for Project planners to be ambitious There can be tensions between pressures for external agencies to disburse ODA resources in line with these ambitious targets, even where it becomes apparent that some reforms will be delayed This tension can be most pronounced when supporting a national level reform program where the agenda (and requirements for external assistance resources) are subject to higher-level decisions of the Government and National Assembly For example, high-level decisions delayed implementation and disbursements for past donor activities supporting changes to the SOE Law At other times it can be useful to be able to reallocate resources to take advantage of emerging opportunities More budget flexibility can contribute to meeting disbursements targets and ensuring that ODA resources are used efficiently and cost effectively More generally, the nature of the reform process requires the NIA and its co-implementing agencies to be ready and able to act quickly to changing priorities of the Government and the National Assembly in order to capitalize on new opportunities to affect change A strong professional relationship between the NIA and the co-implementing agency can make a big difference in the Project’s capacity to responds to changing needs Comparative Studies are Valuable Comparative studies can be a useful tool in building support for reform Project planners should look for opportunities to assist domestic institutions to prepare comparative studies of regulatory and institutional arrangements for business, with a particular focus on regional and other transitional economies In many cases, strong practical comparative experience will be an important criterion in consultant selection Emphasize Poverty Alleviation Impacts of Reform Disadvantaged groups generally have the most to gain from a transparent and supportive regulatory environment, because they have less access to the power structures that make administrative decisions and enforce contracts in the absence of transparent institutions Smaller enterprises and enterprises belonging to disadvantaged segments of society are more likely to be located and invest in isolated areas, further distancing them from power structures Thus, such Projects have a potentially important role to play in ensuring more balanced economic growth 36 Support for Task Force on Implementation of Investment Law and Enterprise Law The fact that the core goal of a Project was to reduce poverty and to promote more equitable development made it easier to build support for reform Clear enunciation of the equity and poverty alleviation impacts of proposed reforms in submissions for change can provide powerful arguments for change Document Pre-reform Inconsistencies Clear enunciation of the inconsistencies of existing regulatory and/or institutional arrangements or practices is effective in mobilizing publicity and support for change This approach has been used effectively in submissions on changes to the Company Law (examples of measures to get around existing provisions) and business licensing (examples given of the number and frequency of licensing applications required for what would be generally considered to be relatively harmless activities) Planning Training Activities Well-structured workshops to discuss legislative changes and the dissemination of issues papers can generate substantial returns from modest investments, in terms of raising awareness of provincial and business level concerns about the practical realities of implementing business laws Recruit a Strong Mix of Domestic and International Experts Identification and recruitment of the highest quality international expertise is essential in supporting a high-level reform program Experts need to be familiar with the latest practical and theoretical developments in both transition and market economies, if they are to be of maximum effectiveness The recruitment of such expertise requires specialised assistance from relevant agencies Careful planning needs to be given to co-implementing arrangements, to ensure that the best expertise is available to the Project NIAs should keep options open to work with a range of international agencies, in order to identify the most appropriate expertise and resource material The internet can also be expected to be an increasingly useful tool in this regard The use of domestic consultants and sub-contractors to undertake initial studies and data collection can be both cost-effective and ensure more effective development of domestic institutional capacity through regular interaction (and sometimes competition) with external consultants In some cases, resources will be able to be saved by using external consultants to comment by e-mail on draft reports and documents prepared by domestic consultants and/or counterpart staff With all consultant inputs, it is important to provide terms of reference that are as detailed and specific as possible, and to include clearly defined reporting requirements This is particularly important when recruiting consultants with limited experience in consulting for projects funded by international organizations 37 Support for Task Force on Implementation of Investment Law and Enterprise Law ANNEX 2: TASKS OF THE TASK FORCE The Prime Minister has assigned the following tasks to the Task Force 14: To supervise, monitor and provide guidance on implementation of these two Laws, to Ministries, Government agencies, People’s Committees and the business community; collect and summarise best practices; discover activities which violate or run counter to the spirit of the Investment Law and Enterprise Law; and report to the Prime Minister Update and review implementation of the Investment Law and Enterprise Law; identify difficulties which constrain the effectiveness of the laws; and provide recommendations to the Prime Minister to settle these cases Review and assess regulations guiding the implementation of the Investment Law and Enterprise Law Report and provide recommendations to the Prime Minister to revise or amend inconvenient regulations Coordinate with related Government agencies, VCCI and other business associations to review business licenses and other business conditions, in order to: a) Remove unnecessary regulations or regulations that are contrary to the spirit of the Investment Law and the Enterprise Law; b) Revise or amend unclear, unreasonable or unpredictable regulations; c) Transfer the State management method of business licences into other suitable and more effective management methods; d) Issue new regulations on business conditions, if necessary, which comply with the new requirements for State management over enterprises Advocate the Investment Law and the Enterprise Law, and their guiding Decrees, to both entrepreneurs and Government staff; disseminate good and bad practices in implementation of these laws; and mobilize public initiatives in enforcing the law 14 See Article 2, Decision No 1267/2006/QD-TTg (25th September, 2006) of the Prime Minister on Establishment of the Task Force on Implementation of the Enterprise Law and Investment Law 38 Support for Task Force on Implementation of Investment Law and Enterprise Law ANNEX 3: MEMBERS OF THE TASK FORCE Mr Vo Hong Phuc, Minister, MPI: Head of the Task Force Mr Dinh Van An, President, CIEM: Standing Deputy Head of the Task Force Mr Pham Viet Muon, Vice Minister, OOG: Deputy Head of the Task Force Mr Hoang The Lien, Vice Minister, MoJ: Deputy Head of the Task Force Mr Pham Manh Dung, Director General of Legislation Department, MPI Mr Nguyen Van Trung, Director of ASMED, MPI Mr Nguyen Manh Tuan, Deputy Director of Foreign Investment Agency, MPI Ms Nguyen Thi Bich Van, Deputy Director of Foreign Investment Agency, MPI Mr Tran Tien Cuong, Head of Corporate Development Policy Division, CIEM, MPI 10.Mr Nguyen Dinh Cung, Head of Macroeconomic Policy Research Division, CIEM, MPI: Secretary of the Task Force 11.Mr Duong Van Hue, Director General of Economic and Civil Legislation Department, MoJ 12.Mr Le Hong Son, Director of Legal Document Monitoring Agency, MoJ 13.Ms Nguyen Kim Toan, Director General of Corporate Reform and Development Department, OOG 14.Mr Dinh Dung Sy, Deputy Director General of Law Development Department, OOG 15.Mr Nguyen Van Tai, Deputy Director General of Industry Department, OOG 16.Mr Nguyen Thai Son, Principle expert of Law Development Department, OOG 17.Mr Nguyen Sy Hiep, Expert of General Economic Affairs Department, OOG 18.Mr Le Tuan Anh, Expert of Corporate Reform and Development Department, OOG 19.Mr Tran Huu Huynh, General Director of Legal Department, VCCI 39 Support for Task Force on Implementation of Investment Law and Enterprise Law ANNEX 4: MATRIX OF DONORS’ SUPPORT FOR PRIVATE SECTOR DEVELOPMENT Project Title Technical Focus Area/Sector Main Activities DANIDA Business Sector Program Support (BSPS) BEElegal/regulatory govt capacity, BSS-business services, business linkages Supports the development of the business sector in five areas:i) removal of barriers for establishing and development business in the provinces; ii) improving of labour conditions, including occupational health hazards; iii) support to business development services through a SME Competitiveness Fund; iv) assistance to proper resolution of commercial disputes; v) policy advice to the GOVT of VN through a business research programme EU Private Sector Support Program(PSSP) BEElegal/regulatory Development of the private sector by creating an enabling business environment in nine provinces BSS-business linkages Establish pilot business-technology incubators to support the creation of enterprises in selected sectors with the aim of replicating them thereafter in other locations Planning two incubators in Hanoi (food processing and packaging) and one in HCMC (information technology) Budget $ 33 million Counterpart Organization MPI, ASMED, MOLISA, CIEM, VCCI, VN General Confederation of Labour, Supreme Court, provincial authorities & organizations in provinces Economic Institute at University of Copenhagen Donor Beneficiaries DANIDA SMEs, provincial authorities provinces: Hatay, Nghe An, Lam Dong and Khanh Hoa EU SMEs pilot provinces Hanoi, Dang and Can Tho EU SMEs Hanoi and HCMC ASMED/MPI Euro 9,050,000 40 ASMED/MPI Location Start Date End Date 2005 2009 2005 2008 Support for Task Force on Implementation of Investment Law and Enterprise Law Small and Medium Enterprise Development Funds (SMEDFs) Access to capital short/long credit Provision of improved financial services medium and long term credit) to SMEs to enhance social and economic development in Vietnam through a refinancing facility Provision of training to participating banks and DAF Providing of training to SME managers GTZ SME Development Program BEElegal/regulatory BEElegal/regulatory govt capacity Euro 20m Revolving Fund and about Euro million for Technical Assistance (50% earmarked for training alone) DAF and selected JSB banks EU SMEs and JSBs Nationwide Support the sector in terms of formulation and implementation of SME-relate policy, laws and regulations ASMED, CIEM, PMRC, MOJ and Provincial People's Committee BMZ SMEs Nationwide, provincial focus on An Giang, Quang Nam, Dak Lak and Hung Yen Support to public and private stakeholders in selected provinces in their implementation of essential promotional policies and activities Provincial People's Committee, VCCI, business associations, public and private stakeholders BMZ SMEs Initial focus on An Giang, Quang Nam Dak Lak, Hung Yen with possible extension to neighboring provinces 41 2005 2008 5Apr 9-Mar Support for Task Force on Implementation of Investment Law and Enterprise Law ESS-consulting business linkages Value Chain development, strengthen business and cooperative relationships between the stakeholders (production, processing, trade and services) of selected sub-sectors Initial focus on agro-industry BSS-production tech Strengthen the capacity of the institute of Material Testing and relevant agencies in the field of material testing and advanced technical service for industry Poverty Reduction through integrated Small Enterprise Development (PRISED) BEE-business culture & govt capacity BSS-training, business linkages i) improving local economies & business environment at provincial level; (ii) introducing new and innovative training materials and services for providers and enterprises to improve BDS markets; (iii) stimulating use of mass media by MSEs for improved access to knowledge, information and services; (iv) developing national capacity to provide training and support in the areas of local econ dev policy reform, public private partnerships and management of small business associations Assistance to establish the national and provincial SME support infrastructure Training and advocacy Assist ASMED and the SME Promotion Development Council to build up policy formulation and institutional capacities, initiate linkages with central level agencies and with a network of provincial focal points in selected provinces Development of organizational procedures, training of staff, setting up of knowledge and information basis bases, and assistance in launching of promotional activities to improve perceptions of entrepreneurship and enterprises Euro 8.3 million Provincial People's Committee, VCCI, business associations, public and private stakeholders BMZ SMEs Initial focus on An Giang, Quang Nam Dak Lak, Hung Yen with possible extension to neighboring provinces Institute of Material Testing (IMS), SITE 2, Quatest BMZ SMEs Nationwide $ 4- million VCCI SIDA SMEs, local authorities provinces: Binh Phuoc, Quang Nga, Thanh Hoa, Tra Vinh, Yen Bai and on other province 2005 2009 $1,804,000 ASMED, MPI UNIDO ASMED, SME Promotion Development Council, SMEs, local authorities Hanoi, Danang, HCMC and two rural provinces 2004 2008 42 Support for Task Force on Implementation of Investment Law and Enterprise Law Vietnam Japan Cooperation Center (VCCI) BSS training Development of business training courses for managers & directors of SMEs placement of long tern resident expert at Foreign Trade University TBD Foreign Trade University Finance for Development (FMO) Access to capital short/long credit Investment in two VN financial institutions to promote financing for micro and small entrepreneurs Euro 2-3 million Netherlands/FMO Market Access for the Poor (MAP) BSS-training & business services Access to capital Provides advice in the following areas: i) Finance; Improve access to banks for credit and other financial services; ii) training: obtain suitable business, technical and marketing skills; iii) business: services market access, product development, business information, IT, marketing and exporting; iv) management services: strengthen organizations mission and strategy development by participating in organizational development, operational planning and service development; v) communication and promotion: raise awareness of the private sector, facilitate public-private partnerships, offer support in private sector coordination's, policy-making and trade promotion; vi) research and planning: provide market and sub-sectors and, roll out provincial economic planning SNV; Euro Provincial & District Women's & Union Provincial People's Committee, VCA, Dept of Industry, Dept of Trade, Vpbank, BSP, business associations 50,000/year plus Euro and personal costs Cordaid: Euro 70,000 ICCO/EU: Euro 500,000 McKnigh Fdn: 40,00 Oxfam HKG: 20,000 43 JICA SNV, Cordaid, ICCO/EU, McKnight Fdn, Oxfam Hong Kong SMEs Hanoi and HCMC 2005 2010 Sacombank, Vietnam International Leasing Corporation HCMC 2004 2009 Micro, household, and small enterprises provinces: Ninh Binh, Thai Nguyen, Son La, Lai Chau, Dien Bien, Quang Binh, Quang Tri and Thu Thien Hue 2004 ongoing Support for Task Force on Implementation of Investment Law and Enterprise Law World Bank Rural Finance Program Access to capital short/long credit Project goals are to: i) increase resources available for short, medium and long term credit to rural areas; 2) increase savings mobilization among the poor; 3) increase competition in supply of rural financial services; 4) support the strengthening of rural financial institutions to formal credit and savings services The Rural Development Fund (RDF), a revolving credit fund, would be established to make short, medium and long term credit available through competing Participating Financial institutions (PFIs) to finance household and private enterprise investments in agricultural and other viable rural operations (both in fixed assets and incremental working capital) Technical assistance and training would be given to State Bank staff and Bank of the Poor staff $ 122 million SBV World Bank SBV, BSP Nationwide 2003 2009 Sponsorship of the Vietnam Business Forum (VBF) BEE- business culture &govt capacity Twice a year the PSF brings together high level government officials (form MPI) and representatives from local and foreign business to discuss the Vietnamese business environment $120,000 MPI, ASMED, MOLISA, CIEM, VCCI, VN General Confederation of Labour, Supreme Court, provincial authorities & organizations in provinces Economic Institute at University of Copenhagen IFC Govt and private sector Hanoi and HCMC 1999 ongoing 44 Support for Task Force on Implementation of Investment Law and Enterprise Law Mekong Private Sector Development Facility BSS-training, business linkages, consulting foreign & domestic market, prod tech Business Development Programme, Development of management training products and services designed to improve the performance of SME managers and would be managers ("Business Edge") Establishment of the Bank Training Center to promote a reliable supply of international standard training, tailored to local needs and at locally affordable prices Strengthen the capacity of industry associations to provide services that enhance members' satisfaction, create value and attract new members Export promotion activities in eCommerce, Market Access Support/Certification and Market Education Supporting legal framework for fisheries industry Capacity building for fisheries administration $29,5million (phase 2002-2007) JSBs, business associations, SMEs ADB, Australia, Canada, Finland, IFC, Japan, Norway, Sweden, Switzerland, UK IFC Nationwide 1997 2007 NORAD Supporting fisheries Industry BEE-legal, regulatory $ 3,3 million Ministry of Fisheries NORAD Ministry of Fisheries SMEs 2004 2009 BSS-Production Tech, business services Capacity building of Research institute for Agriculture, Extension activities like farm trails genetic improvement, caging $ 4,1 million Research Inst of Aquaculture NORAD Ministry of Fisheries SMEs 2002 2007 BSS-business service Capacity building of faculty of University of Fisheries in economics and aquaculture $ 2,4 million University of Fisheries NORAD Nha trang 2003 2007 Swiss Organization for Facilitating Investment (SOFI) BSS-Business services, Training Consulting & Business linkages To provide services incl info on investment climate and opportunities in VN, advice and assistance in preparing and implementing projects, searching business partners for Swiss entrepreneurs CHF 4,5 million per year KPMG SECO Swiss and Vietnamese enterprises 1996 2007 Swiss Import Promotion Programme (SIPPO) BSS-training, consulting, foreign market info, business linkages Support Vietnamese exporters to penetrate the EU and Swiss market by providing information, contacts and training CHF 450,000 per year Vietrade SECO VN exporting SMEs Switzerland 1999 2009 Vietnam Cleaner Production Center (VN CPC) BSS-Business training Business consulting, production technology Promotion and implementation of ecoefficient industrial production modes through Cleaner Production incl Cleaner Technology $ 2,3 million Hanoi University of Technology SECO UNIDO VN SMEs 2004 2007 45 Support for Task Force on Implementation of Investment Law and Enterprise Law Technical assistance to joint stocks commercial banks ASIA-INVEST Grant Program BEE-Legal/ Regulatory BSStraining & Consulting To support improvement of the owlring conditions in enterprise in compliance with ILO's core labour standards and VN labour legislation The objective is to increase productivity of the enterprises VCCI SECO ILO, UNIDO and VN CPC Nationwide 2004 2007 Access to capital Training To contribute to setting up sound, efficient banking and financing services by targeted trainings to managers and staff of joint stocks commercial banks Vietnamese JS banks SECO Banking training centre BTC Nationwide 1998 2007 BSS-production tech Technical assistance/setting up a welding training institute in Vietnam according to European standards with an testing laboratory for destructive and nondestructive material testing Vietnam-German Technology Transfer and Training center EU SMEs Hanoi 2003 2007 BSS business services Enhance the effectiveness of the VCCI to deliver professional services to assist local SMEs to develop and expand through int'l trade and enhance wider Chamber SME support activity VCCI EU SMEs, VCCI Hanoi 2003 2007 BSS-business services Strengthen capacities of Vietnamese business organizations in preparing enterprises for doing business with the EU Fdn for Econ Dev EU SMEs 2003 2007 EU Southern Foreign Investment Centre HCMC 2003 2007 EU VCCI HCMC 2003 2007 BSS-business services BSS-training, consulting CHF 900,000 Euro 20 million and Vocational Training Assist business intermediaries to enhance their institutional capacity in terms of organizational development, creation of a database and development of research methodologies to provide better quality information to meet the local SMEs requirement in market settings and study workshops and staff twinning to enable them to provide better business practices Southern Foreign Technical assistance and training to strengthen Vietnam Garment sector competitiveness and export capabilities College of Business Administration to Managers Investment Centre 46 Support for Task Force on Implementation of Investment Law and Enterprise Law BSS-training Boosting Vietnamese expertise in international l Business Law through seminars, workshops and trainings Foreign Trade University EU Foreign Trade University Hanoi 2003 2007 BSS-business linkages information foreign market Vietnamese Creative Industries Expo: increase economic cooperation b/w Vietnam and the EU through business matchmaking events and meetings VCCI EU VCCI SMEs 2003 2007 ADB ASMED, SMEs 64 provinces, ASMED, etc 64 provinces 2003 2008 2001 2009 SME Development Programme Create an environment conducive to SME development through addressing the country's policy framework for SMEs, institutional coordination, conducting business registration and licensing reforms, and enhancing access to resources for both land use and finance US$51,200 (loan + TA) Viet Nam Competitiveness Index (VNCI) Improve the competitiveness of small and medium-sized enterprises (SMEs) in Vietnam through, among others, identifying, analyzing and addressing various policy and regulatory constraints undermining the development of small and medium sized enterprises (SMEs) in Vietnam USAID Support for Trade Acceleration Project (STAR) Support (i) the development of institutional and administrative systems needed to implement the massive legal and regulatory changes that have been promulgated over the last five years (2001-2006) in the areas of trade in goods and services, commercial dispute settlement, intellectual property rights protection, development of foreign direct investment, and transparency and the right to appeal; (ii) extensive educational programs that include training for officials, lawyers, judges, and business leaders; revision of university curricula and capacity development; and media-based public education campaigns USAID 47 Support for Task Force on Implementation of Investment Law and Enterprise Law 48 Support for Task Force on Implementation of Investment Law and Enterprise Law ANNEX 5: KEY LAWS GOVERNING BUSINESS LEGISLATION IN VIETNAM The following are additional laws and supporting the new Investment Law and Enterprise Law, approved 30 November 2006 Law Dates the law was approved, amended or repealed Enacted December 1990 Amended June 1994 Replaced January 2000 Categories of business entities or arrangements addressed under law Enacted December 1990 Amended June 1994 Replaced January 2000 Private unlimited liability enterprises Enterprise Law Approved April 1999 Enacted January 2000 All private enterprises Allows State enterprises to be incorporated State Enterprises Approved April 1995 All entities with State invested capital (State corporations, public utility enterprises, and business enterprises Approved March 1996 Co-operatives Financial Institutions Approved November 1997 Banks and other financial institutions Insurance Approved May 2000 Entities providing insurance services Bankruptcy Law Approved December 1993 All business entities Commercial Code Approved May 1997 All business entities December 1993 All business entities Applies differently to different entities Labour Code Approved December 1987 Amended November 1993 Approved June 1994 Mining Promotion of Domestic Investment March 1996 June 1994 Amended April 1998 All relevant business entities All domestically owned business entities Foreign Investment Approved December 1987 Amended June 1990 Amended December 1992 Amended April 1997 Amended May 2000 Joint-venture entities Foreign owned entities Business co-operation contracts Build-operate-transfer projects Companies Private Enterprises Co-operatives Environmental Protection Land Law 49 Joint-stock companies Private limited liability companies Applies (but not equally) to all entities ... inter-personal and team building skills Good spoken and writing skills in both Vietnamese and English Available to assist with Project implementation on a regular basis as required Familiarity with... EL and IL companies and other stakeholders implementation seeking information and guidance available to relating to the two laws people in need 3.4 Train trainers of EL and IL at local levels and. .. devoted EL and IL information and recourse mechanism, such as a hot-line and website (with email submission functionality), that allows companies and stakeholders to submit queries and grievances