HARMONIZATION OF PUBLIC COMPETITIVE TENDERING : EMPIRICAL EVIDENCE FROM THE MINISTRY OF HEALTH IN VIETNAM

1 ThAi nguyen University Southern luzon STATE University Socialist Republic of Vietnam Republic of Philippines ____________________________________________________________________________ DISSERTATION ABSTRACT HARMONIZATION OF PUBLIC COMPETITIVE TENDERING : EMPIRICAL EVIDENCE FROM THE MINISTRY OF HEALTH IN VIETNAM Advisor : Dr. Alice T. Valerio Name of Student : NGUYEN DUY PHUONG English Name : NOAH Date of Birth : 13-12-1974 Course : SLSU-DBA1 Hanoi May, 2013 2 PREFACE This study aimed to describe the common and the unique provisions in the International Law on Tendering (ILT) and Local Law on Tendering (LLT) in Vietnam to determine how procurement and bidding are being done in the Ministry of Health as measured in terms of openness and transparency; to analyze how can the ILL and the LLT be harmonized in the Ministry of Health using transparency and openness as factors of harmonization; and to formulate some recommendations to have a more effective public procurement system. After using statistic tool, the Author defined a efficient model which should be applied in Vietnam. Though title “Harmonization of public competitive tendering: Empirical evidence from the Ministry of Health in Vietnam”, preliminary results indicate there is one procuring method that meet both Vietnam Law on tendering and International procuring regulations. It is International Competitive Bidding (ICB) in which the sphere of openness as well as of transparency is the best. 3 CHAPTER I INTRODUCTION 1. Background of the Study Efficiency in procurement has long been recognized as a way to obtaining the desired goods or services at the lowest price or, more generally, at the best “value for capital”. The most common practices of procurement involve some forms of tenders and it is believed that, under these, efficient procurement outcomes can usually be achieved in situations where there are enough firms in the procurement market to sustain reasonable competition. In cases with a reduced number of firms, more sophisticated arrangements are necessary to prevent practices such as collusion, fraud and corruption, which hinder the achievement of efficient outcomes. 2. Statement of the Problem 1) What are the common and the unique provisions in the International Law on Tendering (ILT) and Local Law on Tendering (LLT) in Vietnam? 2) How are procurement and bidding being done in the Ministry of Health as measured in terms of openness and transparency? 3) How can the ILL and the LLT be harmonized in the Ministry of Health using transparency and openness as factors of harmonization? 4) What changes on LLT can be recommended to make the procurement system be effective? 3. Objectives 1. To describe the common and the unique provisions in the International 4 Law on Tendering (ILT) and Local Law on Tendering (LLT) in Vietnam; 2. To determine how procurement and bidding are being done in the Ministry of Health as measured in terms of openness and transparency; 3. To analyze how can the ILL and the LLT be harmonized in the Ministry of Health using transparency and openness as factors of harmonization; and 4. To formulate the best method to make the procurement system be more effective. 4. Hypotheses of the Study. - It was assumed that higher transparency and openness is the better preconditions for a good procurement, competition in tendering, and for a better proportion between the lower price and higher quality resulting in the effectiveness of tendering. - It was hypothesized that openness and transparency are significantly affecting harmonization in ILT and LLT in the Ministry of Health. 5. Significance of the Study This study will benefit the government, PMUs, bidders, and other researchers. The government can amend the law to remove the gaps of discrepancy between its legislative system and international donor’s regulation related to procurement procedure. As a result, there are more and more financial support for developing programs in Vietnam. On the other hand, these donors shall get confidence that their funds are using efficiently. Besides that, all available bidders will have equal opportunity to offer their best quality products at lowest price in a competitive market. 6. Scope and Limitations of the Study This study was not able to identify the source of changes in procurement 5 disciplines. It is also worth noticing that the analysis is not a comparison between regulated and non- regulated tenders. There may be other intangible benefits related to increases in quality, better tailored services, or innovative solutions which are not recorded in the data and hence are not quantifiable in this study. 7. Definition of Terms To provide a clear understanding of some of the terms that were used in this study, the following important terms were theoretically and operationally defined: - Legislation Harmonization refers to the process of creating common standards across the competitive market aimed to create consistency of laws, regulations, standards and practices, so that the same rules will apply to businesses. - Public procurement is including all Investment and development projects which are projects financed by the State as to 30 per cent or more. CHAPTER II REVIEW OF RELATED LITERATURE 1. Systems Theory This section includes studies on the management system of many famous authors directly related to the subject of this dissertation. 2. Administrative Theory This section includes studies on the administrative management of some authors directly related to the administrators of projects. There are some administrative theories that have been applied seriously. Otherwise, the project could not be performed smoothly. 6 3. Procurement Legislation Studies A substantially larger quantity of research has been devoted to the structure of procurement processes in order to achieve efficient outcomes under different situations. The procurement literature records several tools for its effective procuring implementation 4. Procurement Administrative Studies The papers offer solutions primarily administrative reforms to public procurement management from the central to local levels. Theare are some specific opinions for public procurement administration reforms emphasized on quality and results over cost, and decentralization of procuring. 5. Legislation of Vietnam and International Community for Procurement Vietnam's regulations including legislative documents issued by the National Assembly and the Government. The procurement rules of international law is subject to procurement guidelines from donors or international financial organizations. 6. Conceptual and Theoretical framework 7 Figure 1. Conceptual framework of the study Figure 1 shows how harmonization of two legislative systems that will measure relationship between indicators of transparency and openness. Evaluation was based on comparing two legislative systems and practice of applying procuring methods for public project in the Ministry of Health. This study also reviewed and updated the new findings and new regulations to see clearly the nature of current procurement. Eventually, Harmonized Laws and Regulations 18 Factors: Group 1. Openness - International tender - Local tender - Direct purchase Group2.Transparency - Public invitation - Public award National Law (LLT) Effective Procurement System International Regulations (ILT) Ministry of Health (MOH) Procurement Practices 8 specific solutions to harmonize regulations on bidding between the laws of Vietnam and relevant international law are offered. 9 CHAPTER III RESEARCH METHODOLOGY 1. Research Design This study employed three research designs as descriptive, causal/explanatory and comparative types. Descriptive was used to describe the respondents in terms of age, department, position, and working experiences of project administrators. Next, comparative research design was used to determine if there was significant difference in two law and regulation systems by referring to procuring articles of local and international laws. Finally, causal/explanatory design was used when the Author identified the relationship and effect of legislative harmonization, transparency and openness in public procurement. 2. Time and Place of the Study This study is on procurement administration which is based on latest data of two legislation systems. Research is designed to get primary data from all provinces of health care service Departments of Vietnam for the last five. 3. Sampling Procedures Secondary data were obtained from 02 legal regulation system (Vietnam Law and 03 International organization’ regulation) which are up to date. Primary data were collected using questionnaire method covering all 63 provincial Project Management Unit (PPMU) of Vietnam. 4. Data Collection Collecting information from researched subjects by Questionnaires is developed and applied according to Figure 2. Research questionnaire was made through different 10 stages. First, survey research was studied or conducted through articles, scientific reports, essays; second, the Author gets officers experts who are experienced in tender by submitting a preliminary questionnaire to amend the questionare set. After this pilot stage, the Author sent a formal questionnaire to individuals who are working in the field of public procurement 5. Research Instrument A five-point Likert scale was used for the scoring of indicators of legislative harmonizing, transparency tender, and openness tender. It includes five scales: always; frequent; sometimes; seldom; and never. Each of indicators was identified score based on mean of 4 to 5 variables. 6. Statistical Treatment The secondary data is compared to find out discrepancy from Vietnamese procurement law and procurement regulation of WB, ADB, JIBIC in term of transparency, openness, harmonizing. Primary data were processed by Statistical Analysis for Social Sciences (SPSS) software. The harmonizing variable is dependent and it is indicated by using the following formula: Legislative harmonization = Transparency Procurement + Openness Procurement 7. Methods of Analysis The results of the survey were analyzed in two parts. The first part was the profiling of the respondents in terms of individual and profile. The second part was the assessment of the procuring procedure applied of the respondents. [...]... if there is multicollinearity The best model is selected with Rsquare at 0.79 It is reflecting 79% of the variables in the model are explained In order test the coefficient of the Models, using ANOVA statistic showing the Sig value of Models are 0.000 < 0.05 by the F-test reflects a consistent Model On other hand, T-test of the appropriateness of the independent variables in the models show VIF is the. .. measure the phenomenon of multicollinearity If the VIF> 12 10 reflects the phenomenon of multicollinearity between the independent variables in the model In this case, the result shows the VIF values of the independent variables are less than 10 showed that is not multicollinearity phenomenon in the Models The coefficient of model ( R-square is at 0.624) indicated that the variables in mode is interpreted... DISCUSSION 1 Provisions in ILT and LLT in Vietnam It is the summary of discrepancies raised by the World Bank, ADB and JBIC/JICA against the contents of the current Vietnamese Laws on tendering referring to transparency and opening of tendering Basing on practice of managing projects and principles of applying Laws and regulations, some significant methods are used to harmonize these legislative differences... is hard to find out the most effective bidding method Because, in fact that the procurement of international competition which uses the above funds are implemented from planning step to organizing tender for signing sale contract and implementing contracts are placed in the territory of Vietnam, but the funds are from foreign donors through the loan agreements or financing assistance In principle, this... difference by proposing the best method of tender for public procurement 2 Conclusions The research's results show the positive and significant effects of procurement disciplines related to increasing openness and transparency from comparing the provisions of the "discrepancy" between local law and international law The research finds that the Law and regulation on public tendering have resulted in greater... management, including: (a) planning the execution of procurement; (b) directing the activities required in procurement execution; (c) monitoring the progress of the procurement well as controlling and solving problems that may occur in bidding; and (d) gathering lessons from experience that will assist better planning and management of future procurement projects It has been stressed that the projects... officially to ensure that the public procurement is transparency and competitive in market mechanism Finally, during the stage of reforming, changing tender laws, the project management units should apply the best procuring method as International competitive Bidding for all public procurement It shall be avoid of the legislative conflILL phenomenon On other hand it is the best way that could buy the. .. procedural steps taken by Vietnam Government and international organizations/ governments Following points are important in public procurement but have found to be relatively weak in the prevailing procurement regulations: (i) StrILL ly utilization of “two stages bidding” method including with use as many as possible the kind of International Competitive Bidding (ICB) (ii) Requiring that bidding plans be available... development, aid, grants of individuals and foreign organizations belong to the management of the State budget, etc which Vietnam government guarantees, always is difference between the provisions of the sponsors and procurement -tendering Laws of Vietnam Therefore, in the implementation process, the application a certain system of law or regulation is extremely difficult for investors as well as the contractors... Owner/Investor and Controlling Agencies It means these PMUs shall choose LCB procuring method instead of ICB because LCB method is very simple and easy in submitting procedure of bidding documents 3 Procurement and Bidding Practices in Terms Transparency and Openness Measures Almost PMUs apply publishing tender document and use the most competitive bidding method of ICB- International competitive Bidding . ABSTRACT HARMONIZATION OF PUBLIC COMPETITIVE TENDERING : EMPIRICAL EVIDENCE FROM THE MINISTRY OF HEALTH IN VIETNAM Advisor : Dr. Alice T. Valerio Name of Student : NGUYEN DUY PHUONG English Name : NOAH Date of. tool, the Author defined a efficient model which should be applied in Vietnam. Though title Harmonization of public competitive tendering: Empirical evidence from the Ministry of Health in Vietnam ,. Analysis The results of the survey were analyzed in two parts. The first part was the profiling of the respondents in terms of individual and profile. The second part was the assessment of the procuring