Vietnam Releases the Administrative Procedure Compliance Costs Index
Vietnamese government recently released the Administrative Procedures Compliance Costs Index (APCI) 2018, that quantifies the cost that individuals and firms must bear to comply with administrative procedures as per current regulations. Cost includes both financial as well time spent to complete the procedures.
To quantify the cost, 3,000 firms were surveyed which were involved in administrative procedures in the second half of 2017 in 63 provinces and cities. The survey included eight groups, business registration, taxes, investment, business license and work permits, customs, land, environment, and construction.
According to the report, on an average, enterprises have to spend an average of VND 12.7 million (US$ 550) on the procedures in the eight groups. Spending on tax procedures was the lowest, while construction emerged as the mostly group.
According to the survey results, taxes were the least costly group, at VND 73,750 (US$ 3.16). Time taken to complete one tax procedure took an average of 2.9 hours.
Starting a business/ business registration
Business registration costs were the second lowest at VND 720,700 (US$ 31). Time taken to complete a procedure was much higher than taxes at 10.4 hours.
The deployment of National and ASEAN Single Window, Vietnam Automated Cargo and Port Consolidated/ Vietnam Customs Intelligence Information (VNACCS/VCIS) system, as well the use of technology in customs operations have significantly reduced the administrative procedures cost for companies. Now, customs procedures cost VND 3.5 million (US$ 150), while the time taken has reduced to 12.1 working hours.
Land, business license, and investment
According to the survey, the cost to comply with procedures in areas such as land, investment, business license, and work permits were in the middle compared to other groups.
Cost for land or property procedures was VND 4.9 million (US$ 210) while licensing and investment cost were higher at VND 5.2 million (US$ 223) and VND 7.9 million (US$ 338.6) respectively.
Time spent on completing land, licensing, and investment procedures were 84.9 hours, 80.8 hours, and 125.4 hours respectively.
The environment group was the second most costly group for firms. They have to spend an average of VND 46.8 million (US$ 2,005.8) for environmental procedures, while the time taken was the highest amongst all the eight groups, at 218.4 hours.
Construction sector emerged as the mostly group in the survey, at VND 64.1 million (US$ 2747.3), while the average time taken to complete the procedures was 108.9 hours. The cost in the construction sector was much higher in the north compared to the south due to the difference in the procedures at local levels. In the north, the cost was around VND 146.7 million (US$ 6,287.5), while in the south it was only VND 12.6 million (US$ 540).
Time spent on procedures
There are five key tasks that need to be performed by firms in Vietnam.
- Searching for information
- Preparing documents
- Submitting documents
- Amending documents
- Conclusion/waiting for results
Among all the five tasks, preparation of documents takes almost 55 percent, while amending documents takes around 18 percent of the total time to complete all the procedures.
Time taken for the initial research and the submission of documents is the highest for tax, customs, and business registration procedures, while for document preparation, it is highest for the business license, investment and construction procedures.
Amending documents takes the longest for the environment, land, and construction groups, while firms involved in business registration, customs, and land procedures have to wait for the longest for the final results.
On an average, the procedural cost in the north and central Vietnam are higher compared to the south. However, in terms of processing times, the northern provinces and cities are faster compared to the rest of Vietnam.
The survey highlights the positive effects of government reforms, especially in the areas of taxes and customs, but more needs to be done. Environment and construction procedures cost in terms of direct/indirect costs, as well as time, continue to remain high, and comprehensive measures are required not only at the central level but also at the provincial level.
Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and maintains offices in China, Hong Kong, Indonesia, Singapore, Vietnam, India, and Russia.