Luận văn thạc sĩ Quản lý công: The State's role in provision of testing service for food safety in Vietnam: From socialization perspective

Topic: The State’s role in provision of food safety testing service in Vietnam — From socialization perspective Level of thesis: Master of Public Management Authors: Lé Ba Anh, Pham Thi

UPPSALA UNIVERSITET UNIVERSITY OF ECONOMICS & BUSINESSVNUH ““

Le Ba Anh & Pham Thi Ngoc Dung & Le Yen Oanh

MPPM -Uppsala -Intake 1

The State’s role in provision

of testing service for food safety in Vietnam:

From socialization perspective

Supervisor: Prof PhD Sven-Erik Svard

PhD Nguyen Manh Hung

H

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ACKNOWLEDGEMENT

The thesis is completed in the scope of the Master Program of Public Management —

Uppsala University by Lé Ba Anh, Pham Thi Ngoc Dung, and Lé Yén Oanh Certainly, the

thesis will impossibly be well completed without the valuable support of the Swedish and

Vietnamese instructors as well as the leaders and employees of the agencies selected for

the two case studies of the research.

We would like to express the gratitude to Prof Dr Sven-Erik Svard - Head of Political

Sciences, University of Uppsala Sweden, for his orienting instruction in the process of

topic selection, especially in limiting the scope of the research: to Dr Nguyen Manh Hung

- Director of Center for International Security and Strategic Studies, Institute of WorldEconomics and Politics, Vietnam Academy of Social Sciences, who has accompanied andguided the research process and provided the group with valuable knowledge and research

materials.

We sincerely thank the lecturers who enthusiastically imparted useful knowledge on public

management during the master program to all class attendants We also thank the support

of the University of Economics and Business, the coordinators and program managers for

their support and assistance

We would like to thank the National Agro Forestry Fisheries Quality Assurance

Department (NAFIQAD) — Ministry of Agriculture and Rural Development, Committee on

Science Technology and Environment of the National Assembly, Department of FoodHygiene and Safety - Ministry of Health, Sub-branch of NAFIQAD Region 6 — Can Tho,

Intertek Vietnam Co., Ltd for providing the group with references, interviews and creating

favorable conditions for our group to access data sources; and informants involved in this

research

Thanks for the support of our classmates, friends, and colleagues who have contributed

ideas and information to the thesis.

Respectfully,

Lé Ba Anh Pham Thi Ngoc Dung Lé Yén Oanh

Ay > A ',de- » + > «* ».

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Topic:

The State’s role in provision of food safety testing service in Vietnam — From socialization

perspective

Level of thesis: Master of Public Management

Authors: Lé Ba Anh, Pham Thi Ngoc Dung, Lé Yén Oanh

Instructors: Prof Dr Sven-Erik Svard and Dr Nguyén Manh Hing

Master defense day: 17/5/2011

Objective:

In Vietnam, food contamination has led to thousands people suffering from food

poisoning and an average of 60 deaths per year Consumption of unsafe food has anadverse impact on health and life quality of people Production of unsafe food also

prevents the producers from entering the food market This creates an urgent need for

strengthening the management of food safety, in which food safety testing plays an

important role.

In the current context of Vietnam’s increased economic integration, the provision of

public services in general, and food safety testing service in particular has been liberalized in line with the market mechanism and reform requirements As a result,

there are two viewpoints on liberalization of Vietnam’s food safety testing service:

1) The traditional viewpoint argues that because food safety testing service has a

direct impact on life and health of the people, it must be directly provided by the

State agencies.

2) The second viewpoint states that food safety testing service should be provided by

the private sector, as long as the latter can meet the State`s standard, and this has

been done in many countries The State will focus only on some types of testing

service such as verification, not-for-profit services, and services In the

disadvantageous areas

Vietnamese term of "public service socialization" has recently appeared in this context

of liberalization The meaning of "socialization" should not be similarly interpreted in English Rather, it means the State retreat from providing public services in areas

where the non-public sector can undertake Vietnam’s Law on Food Safety affirms

socialization of food safety testing service as a long-term measure to mobilize more resources for food safety management activities Nevertheless, up to now, there is not adequate research on socialization of food safety testing sery ice, particularly the role of

the State in this process.

iv

Our research is to study State’s role on the provision of food safety testing service and change of this role in the socialization process Our research question is: “How does

the State’s role change in the socialization of FS testing service?” Findings of our

research will supplement available researches on reform of public management model

and provide the evidence-based reference for relevant policy makers ; Methodology:

Methods used in the research include: Literature review, case study, comparison andin-depth interview Data used in the research include the system of current policies,regulations of Vietnam, primary and secondary data from relevant survey, fieldworkdata collection and in-depth interviews

We have developed a model of public services socialization in Vietnam with 3 majorstages based on existing theories of public management public services and the reality

of socialization in health and education sectors This model was tested against the case

of food safety testing service provision by analyzing the changes of State’s role in thesocialization process

We then analyzed the secondary data from the survey conducted by National Forestry-Fisheries Quality Assurance Department The data covers 4 groups of testingservice providers, corresponding to different degree of socialization, to compare the

Agro-efficiency, performance and capacity among different groups of providers From theresults, we examine the room for further socialization in each group of providers

Next we examined two case studies: 1) a State-owned agency and 2) a privateestablishment (in the same geographic area) to compare the efficiency in the use of

investment capital, and human resources, speed of investment for capacity building andservice quality

Findings and Conclusions:

1. Findings of the research allow us to conclude that food safety testing service falls in the

category of extended public services (as defined by the World Bank) of which State is

not the only provider This conclusion is in line with the 2” viewpoint mentioned

above Even though in principle, food safety testing service should be socialized in linewith the market mechanism, some special kinds of testing service may not be provided

by the private sector, either because the latter is not ready to assume this role orbecause the provision of those services are too risky for them

The State’s role in providing food safety testing service has undergone in 3 stages: 1) the stage of direct State delivery; 2) the transitional stage; and 3) the socialization

State-owned establishments, but to improve their service quality and the scope of

autonomy.

4 Findings in the research allowed us to strengthen the original model of public services

socialization with regard to the role of State in terms of : supply-demand assessment: planning of service provision and establishment of output-based monitoring system of

services quality

5 In our new model, the State is identified in the process of socialization of food safety

testing service as having the following roles :

(1) To identify core and extended public services, and from this, identifying its

responsibility and role towards each group of public services, the management andprovision mechanism of public services:

(2) To assess supply-demand and plan the provision of public services, to identify

targets, itinerary and solutions for socialization of food safety testing service in

each specific stage

(3) To promulgate management tools for food safety testing service, including policies

and conditions to deliver services — the necessary condition to assure servicequality

(4) To extend the scope and enhances the autonomy of public service providers and

designs the itinerary to transform these establishments into the model of service

delivery enterprises

(5) To promulgate preferential policies on investment taxes, land and loans to

facilitate the development of non-public models:

(6) To generate a fair competition environment based on the four pillars of governance:

accountability, transparency, participation and predictability together with thereforms of administrative procedures and improvement in the responsiveness of

responsible individuals and organizations.

(7) To develop a system of criteria, output-based monitoring and evaluation about

quality of the services

(8) To facilitate service users to give feedback on quality, and balance — services

delivery so that the State can refine policies appropriately.

Limitations and recommendations for further studies

Our research has a limited scope Because of time and resource constraint, we were

not able to conduct the survey and evaluation of service quality from the user perspective Our two case studies have not dealt with wide-ranged comparative criteria

(e.g price, quality ).

The further studies should increase the number of case studies and broaden the scope of

study to not-for-profit and public-private-partnership models in service provision They

should also develop evaluation indicators on quality of services by clients’ perspectives

to have overall assessment of efficiency of different models of public services

provision.

vì

7 and identified the State role in provision of food safety testing

also provides policy implications for the two models of public and

non-> providers.

evi results have helped the public sector managers see the current situation

and the impact of State policies on food safety testing service provision and quality

assurance Our research findings also figure out the State’s role in socialization of

public services, and identify some aspects that need State intervention but not yet addressed in the existing researches.

Key words: Food safety, food testing, socialization, State, public services, service

Vii

MANAGEMENT AND PROVISION OF FS TESTING SERVICE IN VIETNAM 13

rp THE STAGE OF STATE DIRECT PROVISION OF TESTING SERVICE FOR FS 2 SE S525 52525 c2 13 4.2 TRANSITIONAL PERIOD IN MANAGEMENT OF FS TESTING SERVICE ccccceccececcecesescescececeeeeecereseeeee 14 43 THE PERIOD OF ENHANCING SOCIALIZATION OF FS TESTING PROVISION ccccccccceoceececeesceseeececees 16 4.4 CHANGE OF THE STATE’S ROLE IN PROVIDING FS TESTING SERVICE 2 S5 S2525 25255522 18 À(TỦỎ0 ïẰ 1 N/CASFESTUDEE s.eessằẽSe-.ee s e VeeễVesễ 20

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6.2 THE ROLE OF THE STATE TOWARDS SOCIALIZATION OF TESTING SERVICE FOR FS 29

6.3 WITH REGARDS TO POTENTIALS OF SOCIALIZATION OF TESTING SERVICE FOR FS 31

6.4 LIMITATIONS AND PROPOSED FUTURE RESEARCHES + 2 C22132 S22 122322328 E23 3£ cv zz sẻ 3] — x6 6.6 co GsoanpantccsanchebebubtnsnousiocvsesusassansiosbvcssassesdFedshsnexbvessvonssasobee 32 Tike " ẽ 32

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8.1 APPENDIX I: GUIDELINE FOR IN-DEPTH INTERVIEWS .cssccsscoscesscersencecsessecesssecsasenceseensessees 33 8.2 ¬" Aã 5n ởẺ - 34

8.3 APPENDIX III: LIST OF SOME POLICIES ON SOCIALIZATION OF PUBLIC SERVICES - 35

8.4 APPENDIX IV: LIST OF SOME DOCUMENTS ABOUT FOOD SAFETY MANAGEMENT - 35

8.5 APPENDIX V: DATA ABOUT TESTING CAPACITY OF THE TWO CASE STUDIES - - 36

—— vi

of regional center No 6 — Can Tho 36

FIGURES Figure 2.1: Model of public services provision 22 se e+S2s+EES222E22E222E23222222252 7 Figure 3.1: Socialization process of public service proviSiONn c.ccccccccecsecsssseseseeeeseeeees 11 Figure 4.1: Organization chart of NAFIQACEN :csssssseseeseeseseeesesesesesesesececerseseeeeeeees 13 Figure 4.2: Organization chart of NAFIQAVED 0 :cccccsesssesseseseseseeesesesescecseseseseecacerseee 15 Figure 4.3: Total volume of export goods tested through NAFIQAVED 1996 - 2006 16

Figure 5.1: Distribution of testing labs of different areas throughout the country 20

Figure 5.2: Comparison of investment efficiency based on the testable targets 26

Figure 5.3: Comparison of efficiency of human resources use per testing targeUyear 26

Figure 5.4: Comparison of development speed of testing capacity - 5-5555: 27 Figure 5.5: Comparison of improvement speed of testing service quality 28

Figure 6.1: The State’s role in socialization of testing service of food safety 30

ix

Ministry of Agriculture and Rural Development _

Ministry of Health

13 | NAF IQACEN National Fisheries Quality Assurance Center

-Ese NAFIQAVED _| National Fisheries Quality Assurance and Veterinary Directorate

Hà AD J1 National Agro-Forestry-Fisheries Quality Assurance Department

-Sanitary and Phytosanitary —sss—“—ssSSSSSCsS

_ | Technical barriers to Trade _

World Trade Organization

1 INTRODUCTION

In Vietnam, food contamination has made thousands of people suffered from acute food

poisoning On average, more than 60 people die each year Each person experiences

gastrointestinal tract infection about 1.5 times per year Abuse of plant protection chemicals isone of the causes of cancer, brain damage, leukemia, kidney failure and even death

Consumption of unsafe food has negative effects on health, work capacity and quality of life of

people Absence of FS assurance also limits market access of high value agricultural products of

Vietnam This poses a pressing demand to strengthen the FS testing service in Vietnam If

public services are regarded as "activities to serve the basic needs of the society, the commoninterests of the community, the society" (Le Chi Mai, 2003), then like health and education FStesting is considered a form of public service, not only because of its broad social impact, butalso because it originally was provided and strictly managed by the State during the period of

the commanded economy

The traditional viewpoint, which is strongly influenced by the centralized subsidy mechanisms,

argues that provision of FS services, including testing service, is the responsibility of the Stateand it must be directly supplied through State agencies, using State budget and is not-for-profit

This view also suggests that the nature of the private service provision is to earn profit, so it isdifficult to control the quality of service and therefore fairness for users is not guaranteed (since

users have to bear costs for profits of the business) Moreover, FS is an important aspect, closely

linked with the social security and directly related to people's health This is a core service, and

accordingly must be directly provided by the State

However, in today context of increased international economic integration, the public servicessuch as FS testing service must be provided in a more competitive and efficient way, in linewith the market mechanism In this regard, the second viewpoint, which is more popular in

many countries such as USA, Japan, EU, considers that this kind of service should be provided

by the private sector (e.g the Association for Protection of Consumers, the Food Standards

Association ), or the Public Private Partnership model (PPP) on the basis of meeting thestandards set by the State The State still provides FS testing service, but focuses on verification,non-profit, free of charge services or in disadvantageous areas Furthermore, while the State isresponsible for ensuring FS, it uses food testing as a management tool Testing service is viewed

as not having the characteristics of a core public service, such as market failures, demand to be fairly supplied, political control, being uncompetitive, outputs are unidentified

In view of new public management school, the Government’s role changes from "rowing" to

"sailing" The State does not need and should not deliver all kinds of services In many countries

in the world, public services provision role has been transferred to the private sector Range of

transferred public services is expanded in the principle that what the other economic sectors may deliver, the State shall not participate For the services that other economic sectors do not want or not yet participate, the State shall take the full responsibility to provide.

In Vietnam, along with the transition to the market mechanism, the State has socialized the

provision of certain public services This is considered a typical process of Vietnam.

Socialization of public services does not only mean that the public services provision is transferred to the non-public sector, but also refers to the proactive participation of non-public

sector into the development, and diversification of the service provision Eventually, quality of service through competition will be enhanced and people can benefit from better quality

services.

to

In that trend, the Law on Food Safety No 55/2010/QH12 of Vietnam does not only regulate FS

management in the entire process of food production and consumption, but also states the policy

of socialization of FS testing service as a solution to increase investment resources to overcome

various existing weaknesses However, until now, there is not any research about the socialization of FS testing services in general and FS testing service in particular, especially theState’s role in that process

This research explores change of the State’s role in providing FS testing service during thesocialization process

It aims to answer the question:

“How has the State’s role changed in the socialization of FS testing service?”

To answer this question, the research has verified the specific characteristics of socialization asthe process of gradually releasing the monopoly of the State but not totally eliminating theState 's involvement in the provision of public services

The research develops a socialization model of public services based on the theoretical

framework and practices in health and education services This model is then tested against the

FS testing service by examining the change of State’s role in different stages of socialization

The above process leads to the appearance of different kinds of public services providers

However, the important issue is not the number of service providers, but the quality and

efficiency of service provision Therefore, comparing the performance of different kinds ofservice providers is important to help finding out the strengths and overcoming the weaknesses

To compare the performance of FS testing service providers, this research used the survey

results of NAFIQAD about four FS testing service groups, corresponding to four different levels

of socialization, from low to high, including:

Group A: Testing labs of the State agencies under Ministries with managerial functions for FS.Group B: Testing Labs of Research Institutes, Universities

Group C; Testing Labs being State service delivery agencies in charge of FS

Group D: Testing Labs being non-public sector facilities (private companies, joint-stock

companies, foreign invested companies, association).

The research also conducted in-depth analysis of two case studies of the laboratories of Group C and D, including:

1) NAFIQAD Branch 6 - Can Tho, State service delivery unit in the transitional process

towards autonomy;

2) Can Tho INTERTEK Company, an establishment invested and managed by a private

investor in line with the socialization policy.

These two case studies are selected on the basis of the following criteria:

we

- The State-owned provider of testing service: to explore the stages of transition towards

autonomy and the State’s role during the time of FS crisis

- The private provider: to analyze the impact of socialization policy on provision of FS

testing service

- One belongs to the public sector and one belongs to the private sector: to compare and

evaluate the benefits of socialization, (i.e in term of efficiency of investment, and service

quality )

- Same location (both in Can Tho city) to rule out the effects of geographical difference Can

Tho City is chosen because of its activeness in food production and trading with great

testing demand, allowing justifying the balance in service demand-supply

- Two providers are in Group C and D, being the potential and capable labs to facilitate the

socialization process.

In-depth interview in the study field is used for these two case studies.

The next sections of the thesis are structured as followings:

Part 2 — Literature review: This section reviews the works on public management, publicservice, and public service provision in Vietnam

Part 3 - Socialization of public services: This section provides a theoretical and practical basis

of socialization of public service in Vietnam The authors’ views on classification of FS testingservice are also presented in this section

Part 4 - Management and provision of FS testing service in Vietnam: [his section presents

the changing role of the State towards the provision of testing service for FS through three

phases: From State direct provision (1) to State’s management of the supply through State

services delivery establishments (2) to socialization of service provision together with

management (3) in Vietnam

Part 5 - Results of data analysis: Results of a survey conducted by NAFIQAD in 2010 on the

existing system of FS testing service in Vietnam; and findings of the two case studies.

Part 6 - Conclusion: Research findings on the changing role of the State to provide FS testing

service in particular and public services management in general; Contribution, limitations and

further research.

2 LITERATURE REVIEW

2.1 Public services

The public services have a close connection with the category of public goods They are always associated with the role of government in providing them.

From the economics perspective, based on the main characteristics there are different

approaches to classify pure and impure public services From State management approach, one

can emphasize the role and responsibility of the State in delivering the public goods and

services From the beneficiaries approach, one can emphasize the essence of public services to

meet the needs of society and communities, therefore public services can be provided by boththe State and the private sector.

According to the World Development Report — World Bank (1997)':

- The core public sector includes the services (mainly pure public goods and services) that

the government is the sole provider and all citizens are asked to receive when they are inneed of such services Government provides this service based on a legal basis and

principles of basic state management Such services can include law, security, national

defense and social welfare, environment, epidemic prevention services, property

certification (property, real estate), identification ( passports, visas, identity cards),

certificates (birth, death, marriage), establishment registration (enterprises, associations and

organizations)’.

- The extended public sector includes public services (mainly impure goods and services) of

which providers may be the State and non State establishments (private, civil society,communities) The provision of these services is flexible, depending on the needs ofconsumers, non-monopoly, and this process can be free or not These services include

health, education, urban transportation, information, infrastructure

The concept and scope of public services, even approached in different ways, are of a commonnature, which is to serve the needs and common interests of society and the State is responsiblefor ensuring the provision of this service to society Even if the State transfers partly theprovision of public services to the private sector, it still plays a regulatory role to ensurefairness in the distribution and overcome the inadequacies of the market

From the above characteristics, public services can be understood as the necessary activities to serve the needs and common interests of the community and society, directly delivered by the

State or by authorized non-public partners.

2.2 — The State’s role in provision of public services

Depending on the nature and type, public service can be delivered directly by the State agencies

or by non-State sector Over time, the role of the State and other actors in the provision of public services has been significantly changed with the existence of different service providing

models:

- The State agencies directly provide the public services: The State takes direct responsibility

to provide the public services relating to national security and common interests of the

' Source: World Bank, World Development Report 1997

country that only public authorities have adequate legal status to do State also provides

direct services in the sectors that are not favorable for market investment because of high costs or low profit.

- The State partly transfers the provision of services to non-State sector, including:

+ Delegating to private companies or non-governmental organizations to provide

some services and the State is responsible for ensuring the quality and often use funds allocated from the State budget for support.

+ Forming joint-venture between the State and its partners to provide public services

on the basis of resources contribution, risks and profits sharing This form allows the State to reduce the investment budget and still participate in the direct management

to ensure common interests.

+ Transferring responsibility of public services provision to non-state organizations

for the services that these organizations are capable of delivering effectively These

organizations are encouraged to operate with not-for -profit mechanism.

+ Privatizing public services, where State sells facilities to the private sector but still

supervises and ensures the equality under the laws among the private providers, or the State outsources services to private sector that can perform well and eventually

reduce number of staff in the public’

The State must determine types of services it should take the leading role in delivery: types of services can be provided by the private sector and services can be jointly provided by State and private sector If State is overloaded in the provision of public services, the efficiency of public services provision will decline, creating negative impacts on the lives of people and social

development

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eform o public services in Vietnam (Le Chi Mai, NAPA, 2003) Public services, management reform and

provision in Vietnam today (an Thanh Chu, NAPA, 2007)

6

Source: Lé Chi Mai, Lecture in the Senior Administration management course, NAPA, 2010

Before the 1980s, the role of the State and the public sector (e.g law enforcement and provision

of public services to society) focused on “ruling", with limited attention to performance.

Since the 1990s, there were quite a few researches on public management and Government

reform (ADB, 2003; Boyle, 1995; Hood, 1995; Humphreys, 1998, Osborne and Gaebler, 1993; World Bank, 1997) including the issues of new public management, improving public service

provision, management and public services There are also other practical works on public

services provision in Europe, Australia and New Zealand (Anttonen, 1996; Boston, Jonathan et

al, 1996; Pollit, and Bouchaert, 1995) These studies discussed the mode of the new public management, including the changing role of government from "rowing" to "sailing" or the State

does not need and should not do everything but should decentralize to enhance the quality and

efficiency of its services’

In Vietnam, there are some researches on public management from the views of State reform, for example, “Public setvices and socialization in public administration reform im Vietnam” by

the Institute of State Science and Organization (Ministry of Home Affairs) in 2004, “Public

? tm addition to thosé viewpoiltits, some critical viewpoints about the exaggerated optimism on mummzing the

rote there are researches of Joseph F Stiglitz (Nobel economic prize 200!)

in the works Lan and its Discontents, Foonomies of The Public Sector Jim Kessler in a Of basic services with a note about the risk of moving fom

role to its role

sector management and the role of State” by Vu Huy Tu (1999) and “Transferring the public

services to non-state institutions - Problems and Solutions” by Le Chi Mai (2001) |

Additionally, there are quite a lot of works relating to the public services, public finance reform, administration modernization, transferring public services to non-state institutions (Le Chi Mai,

2002; Dinh Van An, Hoang Thu Hoa, 2006; Dinh Van Mau, 2002; Vu Huy Tu, Le Chi Mai, Vo

Kim Son, 1998; Chu Van Thanh, 2004, Nguyen Ngoc Hien, 2002 Vo Kim Son 2002).

Besides, there are some papers of new public management in socialization of services in health.

education, cultural and sports, services of common good (water supply and drainage, wastes and garbage collection ) Ministry of Finance of Vietnam is currently conducting a master project

about socialization of some public services and continuity of reformed operation mechanism of

public service delivery units’ However, we have not been able to access this project document.

The above researches have initially examined the new public management model and its application in the State administration and public service provision in Vietnam For example, the book "Reforming public services in Vietnam," Le Chi Mai (2003) addressed that, in the

process of globalization, along with the developed market economy, the public sector has faced

major challenges in using efficiently the State resources to meet the demand of citizens State management model reveals the traditional disadvantages:

- The Government apparatus is cumbersome The maintenance cost increased while

operational efficiency reduced Therefore, it is necessary to review the scope and role of the

Government

- Public services are of low quality, types are less diversified and prices are higher than those

delivered by the private sector The strong development of science and technology requires

adjustment and development of the administration.

- The democratization trend forced the State on one hand to accept the participation of the

public into State management task, and on the other hand to intervene more deeply into the

process of socio-economic, public sector reform and improvement of services quality”.

In other words, the internal and external social context requires the coordination and regulation

of personal aspirations to be in line with the interests of the community The State and the

public sector cannot act alone and solves all the social problems, but it must promote

democratization associated with decentralization, to focus on performing well the role of

"sailing".

4 Source: http://(www.xaluan.cony modules.php?name~News& tile - artic le&sid=76522

` Reform Of public services in Vietnam (Lẻ Chi Mai, NAPA, 2003)

3 SOCIALIZATION OF PUBLIC SERVICES

3.1 Socialization of public services in Vietnam

Even though the terms “public management” and “new public management” were not directly

mentioned in the State official documents, the reform targets, specific policies in the master

program of Administrative reform 2001-2010° were towards the public management model

through narrowing the State apparatus, replacing direct management by indirect management through regulation, “transfer some work and services not necessarily to be delivered by the

State to the hand of enterprises, social organizations, non-governmental organizations." Decree

No 73/1999/ND-CP dated 08/19/1999 also stressed "the State and social respect and treat

equally towards products and services delivered by both public and non-public facilities":

Term “Socialization” appeared in Vietnam recently in the context of reform initiated in

1986 “Socialization” is used in Vietnamese with the following meanings’:

- The State retreats relatively its role in providing public services in areas where the

non-public sector can undertake; the society or the private sector takes the responsibility toprovide the services In general, people have the opportunity to use public services delivered

by both the public and non-public sectors

- Public service provision is affected by the supply - demand principle Since costs are shared

between public and private sector, it leads to the trend that users (people) may use or deny aservice

- The state monopoly in service provision is reduced:

Socialization of public services is a common trend in service areas such as health and education

in Vietnam today

In the education — training sector: The State continues to fund universal education, and invest in

manpower training for targeted disciplines and careers that are difficult to mobilize socialresources, or in disadvantageous and ethnic minority areas The State encourages establishing

non-public educational and training institutions to convert public establishments into non-public

ones It also encourages cooperation and joint training programs with high quality foreign

training institutions and opening of the training institution with 100% foreign capital Theoverall target is that, the majority of vocational training institutions and a part of traininginstitutions that are not in charge of ensuring universal education will operate under the servicedelivery mechanism

In the health sector: The State continues to invest in health, ensuring the budget for the public

health facilities, basic health care policy for the poor and children under 6 years old Investment

is prioritizéd for preventive health system, and health facilities, especially in remote and

disadvantaged areas The State aims to strengthen and expand health insurance system Health insurance payers select the appropriate clinics by themselves: Private hospitals and clinics are

encouraged to develop The State aims to eliminate monopoly in the export and import.

manufacturing and supply of medicines Universal health insurance will be implemented,

® Decision No 136/2001/QD-TTg dated 17 September 2001 of Prime Minister

” Reference from the Article: Socialization in education and the State`s role (Dr Hoang Ngoc Vinh, Director of

Department, Ministry of Education and Training), source: http: pda.vietbao.vn Trane-ban-doc Na-how!

duc-va-vai-tro-cua-Nha-nuoc/20727765 478.

transferring most of the public hospitals to operate under the form of service deli Province:

will have non-public hospitals MIS hl

Thus, socialization is essentially a process of mobilizing resources in society to develop public services and make more people benefit from those services as well as be more responsible

when using services Socialization carries the signs of a market economy in terms of demand —

supply relationship Regarding the social meaning socialization improves the quality, fairness

and equality in society Socialization can be considered as a form of privatization, which means

the participation of non-public partners.

Mechanism and solutions of socialization include the followings:

- State creates and facilitates a healthy competitive environment in light of the law (to

promulgate rules and standards about service quality to supervise, evaluate the quality ofservices) to promote both public and non-public institutions to develop The beneficiariesare able to choose the appropriate service providers

- To shift the operation paradigm of public establishments toward public services provision,

to improve efficiency and quality of services and products:

- To transform a number of public establishments into public forms: and to develop

non-public facilities with two basic types: non-public-private partnership and private-owned The

State encourages the development of not-for-profit establishments

3.2 Stages of public service socialization in Vietnam

From the theoretical basis for public management, public services, socialization policies andsocial practices of a number of fields, it is possible to generalize the process of socialization ofpublic service in Vietnam as follows:

The first stage (prior to socialization period, before the 1980s), the State undertook direct

responsibility for providing all public services to society Public services, regardless of beingcore or expanded, were delivered by state agencies

The second phase (transition phase of socialization, in the 1990s), Vietnam started the

administrative reform program and began separating the bodies of state administration (providing core public services - public administration) and public service units (providing essential services of the extended public service group — public business — to the society).

Third phase (implementation of socialization of public services, during and after the 1990s).

Vietnam continues to boost the administrative reform program and extensively integrate into the world economy The separation between state administrative agencies and public service units

was clearer The State diminished control over the public service delivery agencies through

self-financing management mechanismŸ and then the autonomy about organization, personnel and

fiance”: The policies om encouragement of the non-public seetor`s involvement were enacted

For testing labs, in addition to testing labs of Group A, B, C, the testing labs of Group D startea

to appear andvapidly developed `

-t ‘ewe-t grin “e-tc omer in

* Decree 10/2002/NĐ-CP in 2002 about the self-financing mechanism for public service delivery agencies

* Decree dated 25/04/2006 of the Government regulating autonomy accountability mission

completi ormgipation personnel and finance for the public service delivery agencies.

!© Master plan of administration reform 2001-2010 and Decree No 73/1999/ND-CP dated I9 § 1999

10

Based on the theoretical framework and practices about socialization in two common areas

services of health and education, we develop the te sa di ng of gah ry lop the theory on the socialization of public service

nơ —r4 gael standard procedures for standard services supply an of services to be socialized Accordingly, it issue

`" - a- s‹ nts of each period _ In ee, the theoretical frame about socialization of public services, the next part of the thesis will focus on analysis of management and provision of FS testing service in Vietnam

4 MANAGEMENT AND PROVISION OF FS TESTING SERVICE IN VIETNAM

export and import of food original of agriculture, forestry, fishery products) According to F§

management practices "from farm to fork", the responsibility of MARD accounts for 90% o

total volume and have a decisive role in effective FS management The next part of this thesi:

will focus on analyzing the operation of the National Fishery Quality Assurance Departmen

(NAFIQAD) as an agency to manage the provision of testing service for FS in order to secure :

comprehensive perspective on the management of FS testing in Vietnam, through which t‹

clarify the role of the State in this practice.

4.1 The stage of direct State provision of FS testing service

After the initiation of international integration, seafood exports increased rapidly However

until the 1990s, export market for Vietnam's seafood products was mainly Asian countries

accounted for more than 80%, while the new EU market reached approximately 1% During thi:

period, Vietnam's fisheries have not directly penetrated the U.S market and Canada due to the

sanctions Throughout the world, this was the period of strong reform methods to control FSMany technical barriers (TBT) and the sanitary and phytosanitary measures and FS (SPS) werebuilt

In 1991, the European Committee (EC) issued Directive 91/493/EEC pioneering ways to contro

FS in the process "from farm to fork" From May 7/ 1994, only the countries with FS contro

principles and Hazard Analysis and Critical Control Points (HACCP) and a designated state

agency with full authorized responsibility for safety control of aquatic food are permitted tc

export to EU

In 1994Choosing EU markets as an obstacle to overcome and to penetrate into other markets

the Ministry of Fisheries set up the National Fisheries Inspection and Quality Assurance Cente!

(NAFIQACEN) The functions of the Center include state management and provision of public

services on quality inspection and certification of aquatic goods for export, import and domestic consumption, and testing service for food and goods safety and quality.

Figure 4.1: Organization chart of NAFIQACEN

P= 1 h—-

[-13

NAFIQACEN based in Hanoi and 6 branches located at key fishing areas

Those branches included laboratories (LAB) which provided FS testing upon the State orders:

and FS testing for quality certification for other clients.

In 1999, the EU recognized NAFIQACEN as the only authorized state agency in Vietnam's FS

control in the manufacture and export of seafood products to the EU (Decision 1999/813/EC or

16/11/1999) Overcoming these barriers, the market share and turnover of seafood expor

rapidly increased For EU only, the total seafood export value increased to 40% in 2000 Ir

1996, only 36,046 tons of fisheries were tested, accounting for 26.5% of seafood exports, ir

1999, this figure was 170,148 tons, equivalent to 85-86% of total exports.

The so-called “food safety crisis" led to basic change of the system during this period Ir 9/2001, Vietnam's fishery products were repeatedly warned to be detected with residues oi banned antibiotics On 09/19/2001, the EU issued Decision 2001/699/EC enhanced inspectior

Chloramphenicol (CAP) 100% of all seafood products originating from Vietnam CAP is the

EU banned substances If it is detected, products will be banned to reach consumers The cascquickly causes a chained reaction from other markets

In parallel with measures to prevent the use of CAP in production, the imperative requirement!set forth was the capacity of CAP testing corresponding to the EU standard (0.1 parts pebillion, ppb) To have this capacity, equipment and trained personnel were needed Facing the

urgent crisis, State was required to act promptly A State budget amount was approved to inves

for six labs under NAFAQACEN branches in 2002 After the investment, laboratories basically

met the requirements The situation of CAP infections in fisheries was controlled Or

02/10/2002, the EC issued Decision No 2002/770/EC lifting control for residues of Vietnam'sfisheries Competent bodies in other countries also abolished Vietnam’s seafood check-up

During the crisis period, for the common interests of the country, consumers and the food business, the role of the State is very important At those moments, it is impossible to rely on private

investors because they normally invest only when profit is visible The State shall provide timely

testing service when privatization is not ready and in the context of a crisis.

(Mr Nguyen Tu Cuong, Forner Director of NAFIQAVED)

The State's role in providing FS testing service in this period is typically characterized by direct

State investment, management and provision This problem can be displayed on two aspects:

1) Provision of FS testing service is the responsibility of the State, in the context where the

private sector is not yet willing to invest; the testing service for FS is tended to meet the

requirements more than meeting the society's demand - ‹

ie —<

The State myst take the wesponsibility for investment on the testing service because it is not

yet read polidies to involve players’ (néti-public seếtor) to ‘participate inte

2

-“pe r0 Of food g Whith ‘are basié public services.

ite fishery Hsin 7 =5 deydloped the export turnover

no

In the 2003 = 2007 peri T

exceeded US$ 1 billion, and productio fisheries faced many new challenges of integration

14

management The organizational structure of NAFIQAVED includes a newly set up Department

of testing service management Branches of NAFIQACEN were converted to Department for

fishery safety and quality assurance.

Quality Testing Dept of Assurance services Fishery

Dept management and

Dept veterinary

Admin Dept

External relations

public service delivery agency that is also in charge of the function of state management.

Actually, the role of the department was moved from direct provision to management of the

testing service provision.

community, the damage to national interests”.

(Mr Nguyen Huu Dung, Vice Chairman of VASEP)

During this period, science and technology for FS continued to thrive Management method

to fork” has widely around the world The technical barnérs continue

ay “` tc <a

15

Graph 4.3: Total volume of export goods tested through NAFIQAVED 1996 - 2006

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: NAFIQACEN-NAFIQA VED

In 2003, the State continues to invest in laboratories to meet the market requirements Ever

year, these the labs participated in the joint testing programs with the international labs In 2003

the laboratories of 6 Centers were accredited ISO / IEC 17025.

Not only management requirements increased (90% of the sample to be tested), but testin;

demand of production and trading facilities also grew However, system capacity could mee only 50-60% of the service samples Testing system becomes overloaded, the service qualit

reduced More State budget investment was not approved because of limited resources.

Characteristics of the FS testing service provision at this stage indicate the followings:

Assurance Department (NAFIQAD) Apart from fisheries, the managed objects inclu

The establishment of NAFIQAVED is an appropriate step in the administrative reforr

process, initially separating the State management and service delivery In terms 0

organization, opening a Testing Management Dept represented the viewpoint of changin:

from direct delivery to management of the testing service provision.

Organizational model of service providers in the transitional process: The branch mode which was totally dependent on the parent organization was shifted to the model of regionz

Department (state management agencies), an independent management unit with th

expectation to be more proactive in meeting the social demand However, Sub regioné

model was quickly replaced by the regional center acting as a business unit with mal function to provide services This is crucial inevitability of a reform process, showing ' ' ' | th

; in an attempt to narrow the government apparatus Ministry of Fisheries was merge MARD NAFIQAVED was changed to National Agro-Forestry Fishenes =

16

|

As the demand grows, the scale of fishery production and processing establishments increasec

in quantity By the end of 2007, there were 230 enterprises in the list of aquatic produc’ exporters to the EU (from 18 companies in 1999) Number of enterprises meeting the standard: and being permitted to export to other markets also increased Testing and certification capacity needed to be developed to meet the demand of export market and businesses |

Increasing controlled quotas in accordance to the market demand was really the challenge fo testing capacity for FS Compared with 2000, targets for testing had to add 13 targets Tota

export goods volume tested by NAFIQAD in 2006 increased by 266% compared to 2000 anc

increased by 144% compared to 2003.

In order to meet the management requirements and society needs, the socialization aiming t

boost the capacity to provide testing service for FS became urgent The new methods in service

supply have been established through the promulgation of policies and technical tools to replacethe direct management and administration MARD promulgated Regulation on evaluationdesignated the laboratory and issued provisional regulation on requirements for testing

laboratories, equivalent to international standards.

The standards issued by MARD on management of testing service provision for FS was

necessary and timely This is a milestone in the socialization process of this service Socialization is

successful only in the presence of the State's role through concrete and transparent policies, and

(Mr Luong Le Phuong, Vice Minister of MARD)

The role of the State in this period indicates the followings:

- NAFIQAVED continued restructuring to clarify state management functions and service:

provision activities through the transfer of all functions of state management from the

regional centers in region Sub-Department at the Central and the Southern regions This

time, the regional centers have become an independent regional unit directly providing

services

- Organizational model of the Department continued to maintain the Division of food safety

testing management, carrying out the management functions for both public and private

testing services providers.

- For the first time, the specific mechanism on testing service management was issued

providers of testing service from both public and non-public sectors were evaluated basec

on technical standards and services quality management for licensing |

- The transforming process and the organizational model of the Department and the regional

centers were associated with newly-issued policies of the State Decree 43/2006/ND-CF

.: : re ations.on autonomy, accountability about mission completion, organization4 - * R Ai] - heed ae * * = : La

& pers a inancing mechanism for public service delivery agencies (replacing Decree No

0/2002/ND-CP) It reduced the intervention of the Government towards public service

“beiver SPREE Ay + | Ae =< | `” à ` mast

17

en

- For FS testing service: From meeting the "requirements", it essentially moved to meet the

_ demand in the mechanism of fair competition between public and private establishments.

The stronger appearance of private service providers is to be noted The Government issued

Decree No 79/2008/ND-CP stipulating the system for testing service for FS It created a legal basis and opened a mechanism for the formation of the private FS testing system.

Box Mechanism of socialization of FS testing service

The testing labs under MARD, MoST carry out the tasks of state inspection and testing of food

hygiene and safety; provide testing service to organizations, and individuals within the scope of |

State management.

With more favorable policies for investors together with the increased demand of services (or average 20%/year), many domestic and overseas investors began to provide FS testing service

Particularly in 2007 - 2008, three private laboratories were set up In 2009 and 2010, there were

11 additional facilities providing testing service for FS applied for license and they mainly

concentrated in the Southern region where the production is dynamic and testing demand i:

huge

To date, there have been 14 labs accredited as testing labs for safety of agricultural, forestry anc

fisheries products.

Thus, in reality, 14/56 laboratories (accounting for 25%) meet the requirements of regulatec

standards on laboratory of FS for agriculture, forestry and fisheries Some survey report

showed that, approximately 60% of laboratories can mobilize capacity for FS of agriculture

forestry and fisheries products on the national scale.

lowever, the socialization speed of service was slow because the majority of policies laws anc nanagement guidelines for testing food safety rules are mainly "framework." Some document:

ire issued in the form of provisional regulation Ministry of Health is the agency responsible fo

yverall management of FS, but has not yet stipulated specific legal documents to provid

nstructions to manage the system of FS testing service.

1.4 Change of the State’s role in providing FS testing service

Nith regards to the classification of testing service: Starting from considering testing as un

letachable part of State management on FS, the functions of state management and FS testing

yelong to one organization Through administration reform, FS testing is detached as a tool tt

erve the State management and become an independent subject.

Vith regards to managerial organization: The organizational structure is designed to move fron

lirect delivery to management of the testing service The testing management apparatus n‹

onger covers dependent testing labs only, but is in charge of general management for all testini

ervice regardless who are the providers This is a necessary model when socialization occurs.

(#9 ae «= _

a

CS

18

The above aspects indicate that the State’s role on FS testing service gradually moves from

“rowing — direct service delivery” to “sailing” — stipulation of policies, management tool competition encouragement, orientation by targets, satisfaction of users but not of the State; problem solving by taking full advantages of the market position.

tái

kxx kì

5 FINDINGS FROM THE RESEARCH AND CASE STUDIES

5.1 The testing system of NAFIQAD

According to reports of the Minsitry of Health, at present, there are 72 testing labs delivering FS

testing service all over the country'’ Another source said that this figure is over 10012.

In accordance with Surveillane report of testing labs on the national scale (1st time in 2007 and

2nd time in 2010) carried out byNAFIQAD, verified it against the list of testing labs being

members of VINALAB” and the list of testing labs accredited ISO 17025 of BOA", the

existance of 56 testing labs is guaranteed.

5.1.1 Geographical distribution of testing labs

FS testing labs mainly concentrate in some big cities, transportation hubs, seaports, airports of goods transit This distribution is appropriate with the method of checking the final product

(before 1990).

Figure 5.1: Distribution of testing labs of different areas throughout the country

When the management mode of FS is

converted to control risks in the whole chain of production, trading anc consumption of food "from farm to fork " the distribution of test laboratories is

inappropriate:

- Testing service is not connected witl

ew food production areas, causing certair

barriers for service users.

Distribution structure and above mentione‹

limitations certainly need adjustments t

meet the demand of FS testing requirement.

Currently, there are four types of testin;

labs for FS in Vietnam (see Table).

`! Moglaoring report about foed safety No 225/BC-UBTVQH Ì 2 of the Standing Committee of the National

Assembly to the session 6 of the 12° National Assembly |

'? These is difference in statistics criteria (ex Testing with ful! legal entity) |

© Source website |

—— %.l.2 Competence of testing labs and potentials for socialization.

Table 5.1: Groups of testing labs for FS

Numbers of labsQuantity accredited ISO

17025'°

Group A: Laboratories of state agencies under the

Ministries managing food safety “ 21% | 5 41.7%

Group B: Laboratories of the research Institutes,

Universities sa 18% | 3 | 300%

Group C: Laboratories are the business-oriented ° |

service units under the state agencies on food safety : — | 86.3%

Group D: Laboratories in forms of Joint-stock [ |

companies, private companies, foreign companies |

anaes : ‘ , & a — | calle

Total 56 | 100% | 39 | 69.6%om | aI

(Source: Compiled from Preliminary survey report of the NAFIQAD and other sources).

The testing labs in Group A: Accounting for low proportion (21%), being invested wit

limited equipment, being incapable of analyzing multiple targets The rate of testing lab

accredited ISO/ EC 17025 standards is at average level (41.7%) Quantity of analyzed sample

is not large (mostly under 1000 samples per year) mostly to serve the purpose of inspection an checking Testing labs in this group face difficulties in the equipment and facilities investmer

because they depends on the state budget and do not have independent income These festin labs are totally and directly managed by the State, directly serving management decisions an there is almost under no pressure and have little motivation to improve the quality of service

Testing labs in Group B: Accounting for low proportion (18%) Many labs have adequat

equipment, but being incapable of analyzing many targets because they focus on research in

certain professional areas The rate of testing labs accredited ISO 17025 standards is low (30%

Quantity of analyzed samples in each unit varies from 1000 to 15,000 samples per year) Eve though these labs are not strictly managed by the State they do not guarantee independence an

objectiveness in service delivery.

Testing laboratories in Group C: Accounting for a proportion (39%) Most of testing lab

have been equipped with modern equipment, being capable of analysis of many targets an

diverse samples The rate of labs accredited ISO 17025 standard is high (86.3%) FS indicator

recognized are high (70% of the targets in group C are able to be analyzed) Facilities ar

appropriate with analytical capacity (150,000 samples per year) Apart from the state budg:

investment, this group is proactive to charge service fee so they have resources in investing 1

equipment, facilities, and quality guarantee systems They can accommodate large-scal

analysis, and become a major force in providing testing service for food safety stat

management and social needs Regarding organization form, testing laboratories are organize

as an independent entity, under the system of central administration agencies such as Mol

MoST, MARD Zhey have been managed by the State but recently, State enacted policies 0

‘th edits ve om {ong ei tell

"180 Peedi international standards: General requirements about labs for testing and calibration

|

21

autonomy, accountability for labs of this group’® In principle, these labs are providing service

independently but still are subjected to State management.

Testing labs in group D: Accounting for low proportion (21%) The labs in this group ai

equipped with more modern equipment, being capable of analyzing most of FS criteria on

variety of forms Rate of testing labs accredited ISO 17025 is high (100%), with high number «

FS indicators recognized (64%) Facilities are consistent with the high analytical capacity (ove

4500 samples per year) Basically, these labs are independent and not managed by the State

The assessment of the above labs which correspond to different stage of socialization in FS

testing service shows that:

- Testing labs of group A: Can only have minimal contribution to the provision of testir

service to society

- Testing labs of Group B: Having potential to add the capacity to provide testing service fi

society, but need support to develop and apply management systems (e.g achievir

ISO/IEC17025) and ensure the independence By then, the labs of this group will fall ineither group C or D

- Testing labs of Group C: These will be the dominant forces in providing testing service fi

society, but it requires a mechanism to enhance the autonomy and investment resources, ar

opportunities for accessing new technology.

- Testing labs of Group D: Although these labs are newly developed as results of th

socialization of laboratories from 2008, they have potential to be the dominant forces ¡

providing testing service for society thanks to the highly active in the investment resourc«and access to new technologies Especially important, these testing labs now are operating |

the effective and profitable, highly productive mechanism

5.2 Case study 1:

Because of rapid growth of farming of aquatic products in the Mekong Delta, the most dynam

area of fishery production, the demand for food safety testing increased fast In 1998, th

Ministry of Fisheries decided to establish Branch No 6 in Can Tho City under NAFIQACEN

meet the service requirements of the region.

Being a specific unit to provide exclusive service in the area, all the testing needs in the regio had to be conducted through the branch Operation budget was from the State budget an

revenue of low fee (state subsidies); staff salaries were paid by the State cost norms There we

no pressure for the Branch to improve service quality and development other than pressure fror

the superior agencies.

At the time of FS crisis due to antibiotic residues, all markets intensified Chlorramphenicol te:

in 2001 and 2002, overcrowding often occurred

self-responsibilit

"© Decree No.43/2006/ND-CP dated 25/04/2006 of the Government regulating the autonomy,

about mandate, organization, staffing and finance of public business units |

22

W The main cause of overcrowding situation was due to equi inadequat.

n quipment shortage, 'e staff,

incomes from Sees were not enough to recover costs while State budget was limited <A

opportunities for improvement must rely on State budget investment Moreover, the branch itself

(the model totally dependent on superior organization) cannot decide th ; :

mechanism and staffing) lecide the reform of its operational

(Mr Nguyen Chinh, former Director of NAFIQACEN Branch 6)

NAFIQACEN was allowed to apply the new mechanism the branches are proactive of labc

use, and in the procurement of materials and chemicals and additional equipment Staff salarincreased 2.5 times more than the State salary norms Testing yield increased, time to return tesresults decreased These motivations facilitated the branch to improve quality of service

develop the management program for testing lab in accordance with ISO 17025

That was a very difficult period The performance of testing and certification for goods was delayed because the payment process for purchasing chemicals and supplies must be processed through the State Treasury which normally lasted for months This was accordingly unaccepted by the vendor Time for returning testing results was often very slow at 3-5 days due to the lack of

chemical and low labor productivity, work motivation of staff was weak due to delayed wage

payment If in the earlier time, on average, about 50 samples were tested per day for prohibitedantibiotics, and then during this time, only 20-30 samples were made per day

(Mr Nguyen Chinh, former Director of NAFIQACEN Branch 6)

Facing pressure from the business community, on 17/03/2005, Ministry of Fisheries issue:

Decision No 15/2005/QD-BTS to transform the NAFIQAVED Region 6 into the NAFIQACE}

Region 6 Performance model was transformed from State management agency to public servic

delivery with higher level of independence The new model was applied to the Center will revenues from the financial autonomy under Decree 10/2002/ND-CP during period 2004-200

very close to the mechanism of the business That opportunity created favorable conditions fo the regional center to develop comprehensively Quality of service (the targets internationa

standard ISO 17025) is significantly enhanced: timing to return the test results was mục]

shortened.

In 2007, Vietnam joined the WTO This circumstance put pressures on rapid changes o

subsidized model and services delivery monopoly The government continues to reform thị model of business activities, providing the public service units with high autonomy ir

recruitment, payroll, investment in capacity results and performance.

23

At the same time, Decree No 79/2008/ND-CP dated 18/7/2008 i ime, t provided legal basis for the

system of socialized testing labs by the non-public providers Out of 14 private servicproviders through the country, on the operational area of Branch 6 there are 4 newl:

› -Set

testing labs (INTERTEK, CASE center, SGS company and AGRIFISH stock Co.) eae

more testing service providers continue to apply for licenses This context pushed the regiona

center to improve its capacity in providing FS testing service to compete with the private testin;

laboratories.

The establishment and development of NAFIQAD Region 6 (as an agency providing FS testing

service) showed the changing role of the State and impact of State policies in the process o

socialization and transformation of state public service providers:

- The provision of testing service shifted away from the State monopoly closely attached witl

state management of food safety to provide the service in accordance with the needs of thịsociety Through the conversion, in line with the increasing degree of autonomy, publi

service units evolved stronger, and provide better service while the State does not need t

increase investment.

The State’s management role through stipulating the management mechanism creates direct ani

basic impact to the performance of the testing providers towards quality and efficiency bettethan the direct state delivery Moreover, this mechanism allows mobilizing additional resource

from the non-public sector for services delivery.

This conclusion creates basis for verifying the solutions proposed in the theoretical framewor! about the public services socialization in the research model which is to transform th

operational mechanism of the public agencies to autonomy in order to improve efficiency an¢

quality of services

5.3 Case study 2

INTERTEK Testing service (INTERTEK) is headquartered in the UK, with offices an laboratories located in 117 countries worldwide, providing services of assessment, checking testing, and system certification in different fields such as industrial products, oil, food an

consumer goods

INTERTEK Viet Nam established in 1998 is 100% foreign-invested Co belonging to Intertel

group Initially, it operated as an agent of companies in the areas of assessment, ey aluatio

services; and certification of management systems.

Right after the socialization of FS testing services is promoted; the company expanded its scop:

of business to this area and now has offices and laboratories in Hanoi, Hai Phong, Ho Chi Min! City and Can Tho, providing analytical testing service in the fields of food, petroleum, textiles

consumer goods, technology, production lines

Seizing business opportunities from Mekong Delta region, which is the biggest region o

agriculture and fishery commodities production in Vietnam, the company establishes

INTERTEK branch delivering testing service in Can Tho in 2008 That was only 6 months afte

the Government issued Decree 79/2008/ND-CP and 15 days after the MARD issued Decisior

No 3/12/2008 116/2008/QD-BNN promulgated the Regulation on assessment and designatior

of testing laboratory for quality, safety of agriculture, forestry and fisheries.

ta ay

24

The company chose ` ’ to locate in Can Tho, one of the central city of the Mekong Delta, th

biggest farming and fishing area of the country with huge demand for testing men > a

it had to compete with NAFIQAD Branch No 6 which is the monopoly unit in the :

of experience and stable customers in the same field 4 mite

With advantages of resources and international experience, the company immediately investe‹

in the most modern equipment for FS testing Analysis methods are originally correlated o

adjusted from international standards Quality management system of testing activities ar

implemented quickly, laboratory testing of food of INTERTEK Vietnam is now a member othe association AOAC chemical analysis of the U.S., while the Agency Vietnam VILAS als‹

recognized testing laboratory achieved accreditation under ISO / IEC 17025 With the flexibl:

approach of investment and competition, INTERTEK Can Tho established brand name for :

private laboratory, being independent, capable of providing testing service, food and consume

goods testing.

In May 2009, Can Tho INTERTEK registered for assessment of quality and safety of the testing

laboratory of agriculture, forestry and fisheries products according to Decision No

116/2008/QD-BNN dated 03/12/2008 After quickly fixing errors discovered during the

assessment process, INTERTEK Can Tho lab was accredited by MARD by Decision 2595/QD

BNN-QLCL on 15/9/2009 with 59 indicators.

INTERTEK Can Tho applied a flexible policy in services delivery: establishment of a receptior

and counseling team on all testing-related issues; Operation hours is until 10:00 PM, working or

Saturdays and Sundays to return results ASAP; returning results by fax, email mobile service

to collect samples: approaching clients including farmers, producers, traders and througt

associations to advertise the services capacity and quality

With private testing provider like INTERTEK, we can even send and receive samples on

Saturday to make timely decision on exports business or to register shipping schedule timely The

policies to support clients such as mobile sample collecting, rapid results return are favorable

(Service users, Can Tho)

The testing lab has about 400m2 area, with 22 personnel In 2008, the number of sample:

analyzed was about 47,000 After being accredited by MARD to be testing lab for FS anc quality, the sample size nearly doubled in 2009 with 74,000 samples and 70.000 samples ir

2010 In addition to maintaining the quality in line with ISO17025 in the areas of food anc

fisheries, this lab can meet high international standards.

The establishment and development of Can Tho INTERTEK branch provide better

understanding of the impact of state socialization policies in FS testing service:

- The private sector can afford providing FS testing services The emergence of private sector

has an important contribution to meeting the society's demand, and bringing better options

for service users.

- Investment policies, and competition on service quality are challenges but also a driving

— force for changes in FS testing service supplied by the State Fair and competitive

environment not only creates incentives for private sector to invest in service provision but

f service in both public and private sector.

"oe b sass P P

It is possible to conclude that the appropriate state policies on socialization facilitate

to what the State directly provides'’ This conclusion verifies one of the solutions in

the theories about public management for the case of expanded public services to be socialized

to involve the private sector The State manages by legislation, technical regulations to ensure

the provision of quality services and equality.

5.4 Some evaluations from the case studies

Comparing some criteria on investment and provision of testing service between the public and private models, we found that:

5.4.1 In terms of investment efficiency:

Figure 5.2: Comparison of investment efficiency based on the targets that can be

In spite of more advantageous position and investment opportunity for the public model.

the private investment shows to be more efficient In the private model, investment cost is VND

90-150 million/testing target vs VND 220 — 250 million/target of public model Thus

investment for provision of testing service by the private model is 15-180% more efficient thar

the public one In other words, public investment is usually wasteful of resources or higt

indirect costs to the service provision.

5.4.2 Efficiency of human resources use:

The velapment tự» | 7 ‘

mumobors of testable oti ate

-ph) made! i €o OR and Hem =

eed immedi’ 6a

liNh tú li sua ——S ˆ

'” See comparison of specific criteria at 6 4

Percent of samples/1 staff

Year

For public service providers, on average, | staff can handle 1200 to 1800 samples per year.

Meanwhile, for the private service providers, this figure ranges from 2000 to 2400 samples, or

about 150% higher The cost efficiency of the private service providers is better than that of the public service providers because of high productivity and positive impact of motivated personnel mechanism, more compact and efficient operational structure.

This result is contrary with survey findings of NAFIQAD which indicated that staffing capacity

of the public service providers is stronger than that of the private service providers In the stage

of direct state provision of services, the main cause to low productivity is the lack of motivation

due to strict wage mechanism, and promotion opportunities After the application of autonomy mechanism, those factors were improved so staffs are more motivated to work.

5.4.3 Development speed of testing capacity:

Figure 5.4: Comparison of development speed of testing capacity

SPEED OF TESTING CAPACITY ENHANCEMENT

# {Regional

center

No.6 Intertek

development speed of testi capacity is presented through investment for increased

public model is €ven and slow, about !0 targets per year on average This is because of low

anitual investment resources due to limited state budget While in the private service providers.

improved to meet the social feeds for testing service when socialization 's carried out

27

¬ "3 ã Xã

5.4.4 Speed of improvement of testing service quality:

Figure 5.5: Comparison of improvement speed of testing service quality

SPEED OF SERVICES QUALITY IMPROVEMENT

—e— Regiona

| center

No.6

—s—Intertek

This speed is manifested through the number of targets meeting international standards ISO

17025 divided by total number of testable targets over years.

As shown in the Graph 5, investment for improvement of service quality in the public service

providers only started when the autonomy mechanism is put into practice When the

competition with private sector appeared, the service quality went down and maintained at 50%

number of targets Meanwhile, in the private service providers, because of good investment

resources, the speed of investment on service quality increased in line with overall investment and then reduced to balance and slightly higher than the public service providers This shows

that competition has a positive impact on improving quality of services However, it also brings

negative results when the two kinds of service providers observe each other and do not invest

sufficiently on quality This problem requires the State role in managing service quality.

6.1 About socialization of FS testing service and the State’s role

Pressure of civil society, democratization and international integration is both cause and

motivation to push up the reform process of Government o i : Tác os peration model and reform j

service provision in general and testing service for FS in particular ral i

Results of research on management of testing service provision for FS in Vietnam, and survey

results of testing service provision on the national scale and case studies allow the authors to draw out some conclusions as followings:

6.1.1 The viewpoint for socialization of FS testing service

FS testing service is in the group of extended public services'* Therefore, this service belongs

to the groups of public services needed to be socialized (according to the 2" viewpoint'’) so that

non-state actors particularly the private sector can deliver the service together with the public sector in line with the market mechanism, and fair competition to improve the service quality.

However, for some sub-groups of the testing service group, such as verification testing,

arbitration, meeting the testing requirements in the case of crisis of FS, disadvantageous geographical areas (where the private sector is not willing to invest), the State needs to take the

responsibility to provide the services (according to the 1" viewpoint)’ , in line with the

principle “The State must take the highest and final responsibility to provide sufficiently public

services in quantity, quality and efficiency and also, the State is not the only provider of public

services.

6.1.2 The role of the State towards socialization of FS testing service

The change of State’s role through socialization of FS testing service is specified in 3 stages: the stage of direct provision by the State; the transitional stage with initial separation between state

management body and business-oriented unit providing services: and the stage of full or mature

socialization of public services provision in Vietnam”.

Compared with public management model, socialization of public services in Vietnam is

conducted more prudently, with slower speed due to the resistance by the centralized

management mechanism.

It is necessary to supplement the model of socialization of public services in the area of FS

testing in the current stage to overcome some shortages, concretely:

- Lack of strategic nature, consistent planning with the whole socialization plan Studies

showed that there is not any planning enacted to balance the supply - demand for testing

service of FS, no planning on levels of testing supply, on geographical area This shortage

will lead to spontaneous situation in socialization, and lack of specific supporting policies.

(h Same needs HF Ment com ad extended wh crvires @ | from O% nbenisfy cụ

* dit sole towers: cath grotiy of wil tic mrvwe+ anc fre manageme ý sổ

1897)-e+at+: oi of mm eo er ` he Ai tho

+ ^^ ogy: xa.

be socialized (see Introduction)

- The monitoring system on quality of public services is in place but with low efficiency j

input-based indicators and criteria There is a lack of output-based monitoring and

evaluation system in provision of testing service of FS.

Issuance of conditions, standards

for service provision (3)

Preferential policies ơn taxes,

land, loan (5)

Generation of fair competitive environment

Accordingly:

1) State needs to identify core and extended public services, and from this identifying its

VU thd sa towards each group of public services, and he management and

provision mechanism of public services.

develops and stipulates plann: socialization of public services, identifies targets.

_ (3) State promulgates management tools for FS testin ice, i ili

I

Ø service, includin

lici

conditions to deliver services — the necessary condition to assure quality of = al 9g Sẽ

(4) State extends the scope and enhances the autonomy of public service providers and designs

the itinerary to transform these units to the model of business-oriented service providers

(5) With regards to non-public models, it is necessary to promulgate preferential policies on

investment, taxes, land and loans to facilitate the conditions for growth.

(6) State generates a fair competitive environment on the following pillars of governance:

Accountability, transparency, participation and predictability together with reforms of administrative procedures and improved responses of responsible individuals and

organizations.

(7) State develops a system of criteria, output-based monitoring and evaluation about quality of

the services :

(8) Service users have rights and are facilitated to give feedback on quality, balance in

supplying services for the sake of State regulation refinement

6.1.3 Potentials of socialization of FS testing service

Testing labs of group D and group C are equally capable of ensuring the quantity and quality ofservices when being granted with greater autonomy However, if assessing the efficiency, theprivate sector shows better results

Considering the State’s role, and strengths and weakness of the groups of testing labs in the

process of socialization, there is a need to focus on development of testing labs of Group Dthrough preferential policies and a fair competition For testing labs of Group C, it is not

necessary to increase the quantity, but concentrating on enhancing the capacity and quality.

Legal basis and mechanism*~ is also needed to transform some labs of Group B to the model of

Group D

6.2 Limitations and proposed further researches

This study has limited scope (studies on few models were conducted) The evaluation of service

quality by services users was not done Some other comparison criteria of the case studies (e.g.

testing duration, hospitality, competition capacity and development potential) preliminarily

indicated that private service providers are performing better However, due to the limits of time and access to data our team has not been able to collect sufficiently data about these indicators.

The further researchers should increase the number of case studies and broaden the scope of

study to not-for-profit and PPP models in service provision They should also develop evaluation indicators on quality of services by clients’ perspectives to have overall assessment

about efficiency, of different models of public services provision.

“

"na 4

(A “ate ww f +

=M i n develo ent Of Decree No 115/2005/ND-CP about the autonom) mechanism, accountability of the

* Meth an nology establishments.

31