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Cablegate: Administrative Reform - Pm Agrees to "Guillotine" to Cut

VZCZCXYZ0014
OO RUEHWEB

DE RUEHHI #0055/01 0160954
ZNR UUUUU ZZH
O 160954Z JAN 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7007
INFO RUEHBK/AMEMBASSY BANGKOK 6144
RUEHGP/AMEMBASSY SINGAPORE 2477
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS HANOI 000055

SIPDIS

STATE FOR EAP/MLS
STATE PASS USTR FOR DBISBEE
TREASURY FOR SCHUN
SINGAPORE FOR SBAKER
AMEMBASSY BANGKOK FOR RDM/A CARDUNIER

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EAID BEXP ETRD VM
SUBJECT: ADMINISTRATIVE REFORM - PM AGREES TO "GUILLOTINE" TO CUT
RED TAPE


1. (SBU) Summary: Prime Minister Nguyen Tan Dung has approved an
unprecedented three-year action plan known as "Project 30" to
implement sweeping administrative and regulatory reforms in Vietnam
that will affect all 22 national ministries and 64 provinces. This
plan, developed by USAID with the Office of Government, is a radical
and progressive governance change for Vietnam that will require
active collaboration between the government, the private sector and
civil society. Project 30 has the potential to transform and
streamline Vietnam's regulatory process to increase transparency,
reduce corruption, sustain economic growth, and benefit both
citizens and business with improved services at lower cost and lower
risk. Billions of dollars previously lost in "red tape" will be
released to spur economic productivity, as corruption via
"rent-seeking" behaviors by functionaries is greatly reduced. The
PM's action is the culmination of Mission efforts to convince
Vietnamese leaders of the merits and urgency of advancing good
governance and adopting WTO principles of transparency and
democratic processes. The action plan designates AmCham as one of
the leading private sector partners, and the Ambassador has strongly
encouraged AmCham to engage actively in the new Advisory Council
that the Prime Minister will establish to support project
implementation. End Summary.

2. (U) On January 4, Prime Minister Nguyen Tan Dzung signed
Decision 7, approving the action plan to implement sweeping
administrative reforms, including the use of a "regulatory
guillotine approach." USAID's flagship programs -- Support for
Trade Acceleration (STAR) and the Vietnam Competitiveness Initiative
(VNCI) - were key in formulating decision language and will provide
substantial technical assistance in developing the plan, known as
"Project 30". Project 30, or the Master Plan to Simplify
Administrative Procedures, will engage 22 ministries and 64
provinces to inventory, review and recommend simplification of all
administrative procedures during the period 2008 - 2010. The
regulatory "guillotine" involves placing each administrative
regulation on the chopping block and eliminating any regulation that
cannot be justified. If the process finds that a regulation is
necessary, procedures under that regulations will be whittled it
down to necessary components to minimize cost and burden and to
achieve an intended purpose of public policy. The goal of the
action plan is to simplify administrative procedures and reduce the
burden of unnecessary government regulation for both businesses and
citizens.

3. (U) Project 30 includes two new institutional mechanisms, which
are radical changes from previous public administrative reform
efforts over the past 10 years that have achieved only modest
results. The first is the "Special Task Force" reporting to the
Prime Minister. Minister Nguyen Xuan Phuc of the Office of
Government (OOG) will lead this body with the assistance of about 20
full-time qualified experts to coordinate and manage the reform
efforts. The Prime Minister will chair the second mechanism, known
as the "Advisory Council for Administrative Procedures Reform," with
15 appointed members, including representatives from the American
Chamber of Commerce (AmCham), European Chamber of Commerce
(Eurocham), a Korean business association, and a Japanese business
association. The action plan will set up working groups to address
sectoral and specific issue areas. The Prime Minister will
establish these mechanisms with forthcoming separate Decisions.

4. (U) VNCI will begin initial consultations with AmCham and other
prospective Advisory Council members this week. STAR and VNCI will
host a workshop in February after the February Tet holidays on the
sixth draft of the Administrative Procedures Law (APL), with
representatives from the APL drafting committee and from the Law on
Laws drafting committee to integrate main ideas from OOG Minister
Phuc's recent administrative reform study mission to the United
States and South Korea which was sponsored by USAID. STAR and VNCI
will provide strategic advice and technical assistance to the OOG to
set up the task force office, recruit personnel, establish computer
systems, and design "e-guillotine" project management software.
USAID will also assist with project branding and coordination of
additional donor assistance. The APL is part of the government's
legal and political strategy to develop a policy coordination
function at the center of government (similar to our OMB/OIRA, which
the OOG study mission visited in Washington) to manage effectively
the regulatory system to achieve a lower cost, lower risk business
environment in the post-WTO accession period and to create more
effective democratic processes of consultation, transparency, and
accountability in governance.

5. (SBU) Comment: The PM's action can be seen as another feather in
the cap of VNCI, which has already received wide acclaim for its

Provincial Competitiveness Index. The Index, a joint effort between
VNCI and the Vietnam Chamber of Commerce and Industry, rates each of
Vietnam's 64 provinces on "doing business" issues, and yields a
numerical score for each jurisdiction. Leaders do not wish to be
number 64, and this mechanism has proven extremely effective in
improving business conditions throughout the nation. This latest
initiative promises to be even more significant in enhancing
governance. Project 30, if carried out effectively, will improve
the business climate, create more transparency in policy making and
policy implementation, and facilitate private sector investment. In
his meetings this past week with AmCham, the Ambassador has
encouraged them to make their active participation in the Advisory
Council a priority. While implementing Project 30 may inevitably
encounter resistance from certain entrenched interests, the Prime
Minister's willingness to take such a risk is an encouraging sign of
his commitment to governance reform. Underscoring the PM's
commitment, Vietnam Television will be airing a 30 minute program
about the Index on January 18, publicity that is clearly designed to
make organizing efforts to undermine the project much more
difficult. End Comment.

MICHALAK

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