RIA_e-manual_final_ENG_July 25

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   Hanoi, August 2011

I. INTRODUCTION .....................................................................................................................3


   1.    Problem definition ...............................................................................................................4

   2.    Defining policy objectives ...................................................................................................7

   3.    Defining problem solving options .......................................................................................9

   4.    Assessing impacts of options ............................................................................................. 13

   5.    Public consultation ............................................................................................................. 19

   6.    Write the Regulatory Impact Assessment report ............................................................... 19

Annex 1 Some alternatives to regulation (indirect intervention measures) .................................. 23

Annex 2 Methods of assessment of negative and positive impacts ............................................. 24

Annex 3 Sample Pre-RIA Report ................................................................................................. 27

Annex 4 Sample Summary of RIA Report ................................................................................... 29

Annex 5 Sample Simple/Full RIA Report .................................................................................... 30
     Law on Promulgation of Legal Normative Documents and Government Decree No.
24/2009/N -CP stipulating the compliance details and methods of Law on Laws (“Decree 24”)
have formed a legal basis for the implementation of Regulatory Impact Assessment (RIA)
Vietnam. Accordingly, in drafting three types of legal normative documents (LNDs), including
laws, ordinances and decrees, LND drafting agencies should carry out RIA early, during their
drafting process, before making a decision to issue an LND.

    RIA helps authorities select policy solutions based on analyses of possible consequences of
government intervention. These evaluations aid the State in making the most economically
effective and socially acceptable decisions. RIA provides a foundation from which the
Government and National Assembly members can deliberate on appropriate and effective
problem-solving options and aid affected subjects in understanding why the LND is drafted.
RIAs guidelines are also supported by the requirements for mandatory public consultation with
businesses and citizens in policy-making.

    The RIA compliance manual includes theory applicable to each step with practical
examples. To illustrate, a typical assumption referred to within a RIA report is the need to
“regulate the population in inner Hanoi”. One particular example is the draft law. The drafting
team often selects from 5 to 7 important issues for evaluation. The evaluation process for a
specific issue will be reflected in the entire RIA report. Please note that this example is not a
source for citation and only serves illustrative purposes.
     This document is drafted by Dr. Nguyen Dinh Cung – Deputy Director and Mr. Phan Duc
Hieu – Chief of Regulatory Reform Department, Central Institute for Economic Management
(“CIEM”) in coordination with Mr. Faisal Naru – Chief Technical Advisor of Regulatory
Reform, Dr. Dang Quang Vinh – Economic and Regulatory Advisor of the Vietnam
Competitiveness Initiatives Project (“USAID/VNCI”) of the United State Agency for
International Development (“USAID”). This document only reflects the authors’ opinions and
does not necessarily intend to confirm and illustrate the opinions of CIEM or USAID.

    Every question related to the manual contents should be addressed to the Central Institute
for Economic Management, 68 Phan ình Phùng, Hanoi, Vietnam, or phone number (+84) 804
3670, or email:
 1. Problem definition

     Problem definition is the most important step in the RIA implementation process. An
incorrect diagnosis of the problem will obstruct the completion of the rest of the RIA and make
it impossible to propose effective solutions.
    Below are detailed instructions of three steps required for the problem definition process.

                                            -      The number of immigrants in Hanoi are
                                            continuing to increase significantly. Recent studies
                                            have estimated 170,000 immigrants arriving annually
  Step 1: Describing the
                                            in Hanoi, while only 40,800 are emigrating*.
                                            -        The high population growth is contributing to
  The description must include              unbearably dense living quarters in the city. As of
  the following:                            2009, the average population density of Hanoi was
  - Symptoms of the problem                 1.926 people/km2, while that of à N ng – a city also
                                            under central authority – was only 691 people/km2.
  - Context behind the problem              Although the average population density of Hanoi was
  - Scale (size) of the problem             lower than that of HCM City (3.399 people/km2), its
                                            population distribution is highly polar with a very
  - Progression of the problem
                                            large differences in density among neighboring
                                            districts.   ng a District in Hanoi has the highest
                                            population density (36.550 people/km2), followed by
                                            the Hai Bà Trưng District (29.368 people/km2).
                                            (*) Source: According to the data of the 2009 Demographic
Step 2: Describing negative impacts
of the problem

- Once the problem is sufficiently
defined, the consequences of the problem
on relevant subject—like citizens,          -       The high population density is
businesses, the Government and the          negatively affecting the economic, social,
environment—must be identified.             environmental, and security infrastructure
                                            of Hanoi. The public infrastructure for
- Without         clearly       defined     education, health, transportation, and
consequences, the need for regulatory       basic services has been significantly
action cannot be validated. The             downgraded, causing a sharp drop in
Government can only take action when        living standards. More specifically, the
society cannot self-adjust to solve the     average number of students in secondary
problem on its own or when the negative     schools has risen by more than 50%
effects of market failure are too           resulting in the huge demand for more
substantial.                                public learning facilities.
- Early consultation with relevant          -       Overpopulation in Hanoi has also
parties must be completed in order to       contributed to serious traffic congestion.
clearly understand negative impacts of      These bottlenecks do not occur only
the problem.                                during rush hour but during unpredictable
                                            periods throughout the day. The problem
- The scope of the negative effects
                                            is further compounded by the fact that the
should be quantified in order to clearly
                                            locations of traffic jams are not
define the actions necessary to solve the
                                            foreseeable. Gridlock can occur just about
                                            anywhere and at any time throughout the
- If impact quantification is impossible,   day.
the level of severity of the impacts must
be described.
- The frequency of the negative impacts
should be collected or forecasted to
ensure that the Government acts only
when necessary and at a reasonable risk
                                       Overpopulation in Hanoi results from the
Step 3: Defining causes to the         following:
problem                                 - The number of immigrants in Hanoi is
                                          increasing exponentially. According to the
- Identifying the cause of the            2009 Demographic Survey, the net
problem is the most important step        migration rate of Hanoi is 49.8‰. Hanoi has
in reaching an adequate solution.         such a heavy level of immigration because:

- It can be easy to identify            + The headquarters of many central agencies,
symptoms of a problem, but it can        organizations and enterprises are located
be difficult to understand the
causes or reasons of the actual         + 1/3 of the universities and colleges in
                                         Vietnam are located here. 40% (660,000) of
problem causing the symptoms.            the total number of enrolled students lives in
- One means of defining the causes       the inner districts.
of the problem is by answering the      - The city does not have sufficient resources
question of “why does the problem         in its budget to improve infrastructure and
exist?”                                   public service delivery capacity to meet
                                          existing demand. According to Hanoi
- Each reason must be described
                                          Department of Transport’s 2009 study,
with as much detail and accurate
                                          more than 300,000 cars and 3.6 million
reflection as possible.
                                          motorbikes, excluding Army vehicles, are
- Identified causes suggest possible      located in Hanoi. Hanoi now has
solutions for the problem. If the         approximately 4,000 km of road, accounting
reasons are accurate, it will be          for only 7% of the city’s area (the minimum
difficult to find an effective            requirement is 15%). The number of
solution.     The     Government’s        personal vehicles is growing at 10%
regulations must concentrate on           annually. This high rate requires each 1km
resolving the real causes, not the        of road accommodate 500 cars and 5,500
symptoms, of the problem.                 motorbikes. However, the road area of
                                          Hanoi only meets 40% of the demand of
- If this problem has been adjusted       registered drivers in the city, excluding
by some relevant LNDs, it is              vehicles from other provinces travelling on
necessary to explain why the              the roads of the inner city area everyday.
problem cannot be resolved via
existing regulatory actions.
               It is advised to implement all 3 steps in the given order mentioned above.
               Pay attention to analyzing the scale, trend, and level of severity of the problem.
               Always provide illustrative evidence for the problem. In case without sufficient
               data, try to provide at least one specific example.
               Explain why, without Government action, the society and market cannot solve
               the problem on their own.
               Early-on frequently consult with relevant parties to define the problem and
               accurately identify causes.
               Avoid citing “no LNDs” as a problem.
               Do not miss any causes in the problem definition step. Insufficient analysis will
               lead to the risk of defining inadequate solutions.

 2. Defining policy objectives
      The policy’s objective is to solve the problems of interest after the policy comes into effect.
It is thus necessary to specify the ultimate outcomes the proposal for LND development strives
to achieve based on exisiting resources.

Step 1: Listing harmful consequences
                                                                  The high population density has
                                                                  negatively impacted the city’s
- Review the above analysis of identifying                        economy, social life, environment and
harmful consequences a specific problem can                       security. Its infrastructure conditions
have on society.
                                                                  and capacity to deliver services like
- For each of these negative impacts, answer                      education,          health        care,
the question “does the Government want to
                                                                  transportation, and public services
resolve the harmful consequences of this
problem? Is this impact within the governing                      cannot satisfy the actual demands
scope of the LND?” In many cases,                                 and requirements.
Government action is not necessary because
                                                                     Does the State want to resolve this
society and market can solve the problems by
themselves, or the reasons of the harmful                         negative impact? YES
consequences are not under the LND’s scope.                             Is this impact within the
- If the answer is “yes”, consider the actual                     interference scope of the Capital Law?
resources before setting targets for harmful                      YES
consequence resolution.
         Step 2: Comparing with the
         SMART criteria
                                                                  The objective of the Capital Law with
         After defining the objective,
                                                                  respect to population regulation in inner
         compare it with the
                                                                  Hanoi states:
         SMART* criteria as follows:
                                                                   The population density of inner Hanoi
            1.   Specific (S)                                     districts should be no more than 10,000
            2.   Measurable (M)                                   people/km2 by 2020 in order to reduce the
                                                                  overload pressure on Hanoi’s
            3.   Attainable (A)                                   infrastructure.
            4.   Relevant (R)                                        Does this objective statisfy the SMART
            5.   Time-bound (T)                                   criteria?
                                                                       1. Specific (S)
         Step 3: Review the objective                                  2. Measurable (M)
                                                                       3. Attainable (A)
         If the objective does not satisfy the                         4. Relevant (R)
         SMART criteria, it should be
                                                                       5. Time-bound (T)
         revised accordingly so the above
         five objectives are met.

                 Stick attainable financial and human resources and a specific timeline to ensure
                 feasibility. Do not set too ambitious and unpractical objectives.
                 Check if the set objectives fit into the Government’s policy agenda.
                 Define the overall objective for the whole proposal and specific objectives for each
                 Never consider “State management” as an objective.
                 General, ambiguous and slang language should not be used.
                 Never state objectives like “to form a legal basis” or “to improve the legal system”,
                 because these are only tools from which the ultimate objectives are achieved.
                 Do not assume solutions exist while defining objectives because this will limit the
                 opportunities of locating the best solutions in the next step of RIA and may lead to the
                 risk of defining insufficient solutions for the problem.

  SMART is a play on words in English, which means “intelligent”. It is the acronym of the beginning letters of the
following words: S – Specific; M – Measurable; A – Attainable;R – Relevant and T - Time-bound
  3. Defining problem-solving options
      This step aims to describe all the possible solutions for the problem with the set objectives.
 In the pre-RIA implementation phase, the drafting agency should consider the following three
     Option 1: Maintaining status quo
     Option 2: Using direct non-regulatory methods
     Option 3: Using direct intervention regulatory method
     The implementation steps are as follows:

Option 1: Maintaining status quo

- Before considering different options that address
the problem, the first and compulsory option to be                Maintaining the status quo option does
considered is “status quo” or “do nothing”.                       not require creating a separate policy
- Evaluating the impacts of these two options will                that controls the flow of immigrants
help the drafting team to define what would happen
                                                                  into inner Hanoi districts as stated in
without the Government action.
                                                                  the existing measure, provision in Item
- Not every problem can and should be resolved
                                                                  1, Article 20, Residence Law on the
with the Government action. In many cases, the
market and society can self-adjust.                               Conditions for permanent residence
- The “status quo” option serves as a basis to                    registration in cities under central
compare the consequences of all proposed options                  authority. Under this provision, those
for change.
                                                                  who have a legitimate place of
- This option should be considered if other                       residence and have registered constant
proposed options or the “do nothing” option cannot
help improve the status quo and are not as effective.             temporary residence for 1 year or more
All options will be compared against each other to                can apply for permanent residence at a
assess benefits or costs.                                         city under central authority.
- The “do nothing more” option should be
defined. The status quo should also be described
briefly and accurately.
Option 2: Using non-direct
intervention methods
                                                            Option 2: Use of non-administrative
In this option, the two non-direct                          regulations for immigration control

intervention methods to be considered                       Applying a package of incentives to (i) limit
                                                            population concentration in the inner city areas,
are: (1) Improving enforcement of current
                                                            and (ii) move residents to suburbs. Specifically,
regulations; and (2) Using non-direct                       the Hanoi Government will:
intervention alternative.

Option 2A: Improving enforcement of
current regulations

- If the regulation to address the problem of interest is            Option 2A:
available, first consider whether the problem can be
resolved by improving the effectiveness of that current              Implementing the current regulation
regulation, before introducing a new regulation.                     (Q 16/2008/N -CP)             for   moving
- If the current regulations are contradictory,
duplicative, ineffective, infeasible or no longer                    universities,   central      hospitals   and
necessary, the solution should be to simplify current                administrative institutions away from
regulations and remove unnecessary regulations. This
solution is more viable as it avoids additional burdens              the   inner     Hanoi.    Implementation
and costs that are associated with the promulgation of               requires relevant sectoral departments
new LND.
                                                                     and bodies to coordinate and develop a
- The steps for defining this option include:
                                                                     specific    action   plan,     provide    an
  • Review all relevant regulations;
  • Identify why the current regulations cannot solve                appropriate budget, and monitor the
    problem;                                                         progress.
  • Consult with the law enforcement agencies and
    affected subjects in order to (1) understand reasons
    for failures of the regulations; and (2) find
    measures to improve the effectiveness of
  • Propose measures to improve effect of the current
    regulations, which may include:
       Simplifying procedures and implementation
       Revising, complementing, and removing
        cumbersome and infeasible procedures.
       Reinforcing financial and human resources of
        the enforcement agencies.
       Improving coordination in enforcement among
        relevant agencies.
Option 2B: Using indirect intervention
alternatives                                                     Option 2B:
                                                                 (2) Encourage citizens to move to
                                                                 suburbs by providing direct subsidies
- The “indirect intervention” alternatives are not
typically used methods; however, they motivate the               to those who are really in need of
regulated subjects to change their behavior thus acting          housing.
as a viable venue to achieving policy targets effectively
                                                                 (3) Provide direct subsidies to certain
and efficiently.
                                                                 construction projects such as housing,
- These methods do help solve the problem more
                                                                 high-rise office buildings, and
effectively than do regulatory options.
                                                                 accompanied infrastructure in the
- The steps for defining this option include:
  • Consider the reasons described in the problem
     definition section and answer the question “can the         (4) Invest in developing transport
     problem be solved by indirect intervention                  infrastructures in the suburbs and
     measures?”;                                                 provide direct subsidized public
  • If the answer is “yes”, study the indirect                   transportation on the routes to these
     intervention measures to achieve the set policy             areas.
     targets (refer to Appendix 1 of the non-regulatory
     solutions);                                                 (5) Provide preferential treatment to
                                                                 high quality hospital construction
  • If the answer is “no”, specify possible
     alternative(s) to resolve the problem;                      projects in the suburbs.

Option 3: Using regulatory option)

                                                                           Option        3:      Using
                                                                           administrative methods for
                                                                           immigration control
-       Only when the above options 1 and 2 cannot resolve the
problem is the regulatory option considered the best indirect              Control of immingration into
intervention measure.                                                      Hanoi       via     administrative
-       The development of regulation should ensure that this              regulations: those who register
option will be implemented in the most effective and efficient             for permanent residence in the
manner.                                                                    Capital for the first time must
-       There are many different designs of regulations. The               satisfy the following conditions:
recommended solutions must pertain to the objectives of the policy.
-       The steps for defining this option include:                        (1) Register for      temporary
                                                                           residence in the Capital in 5
(i)     Presenting key policy issues of the LND proposal to be
conducted RIA (for preliminary RIA);                                       consecutive years or more; and
(ii)    List all possible solutions; and                                   (2) Have a proven stable and
(iii)   Describe measures clearly. For example, when developing            legitimate job with a salary at
the options for an administrative procedure, specific requirements         least   double the general
should be specified.                                                       minimum wage level.
     The traditional (or direct intervention regulation) is not the only and best way to
     resolve the problem.
     A good design of regulation should set the outcome standards for complying subjects
     to find their own way to satisfy the set norms/criteria. The regulation should not
     constrain detailed implementation methods. For example: when stipulating the
     quality of a foreign language centre, it is advisable not to prescribe specifically the
     organizational structure, number of teachers or textbooks but to prescribe the
     indicators related to learners’ outputs.
     The recommended policy solutions should be describe fully and correctly.
                Do not skip the “status quo” option.
                Do not use “LND not yet in place” as a reason for promulgation of
                Do not miss out relevant LNDs and review the regulation cursorily.
     To find all possible direct intervention measures, it is advisable to base on the
     reasons mentioned in the problem definition section. Measures can be found by:
                   • Developing new ideas
                   • Field studies and surveys
                   • Consultation of RIA reports of other countries
                   • Consultation with related parties and experts
                   • Consultation of domestic and international experience in resolving
                       similar problems
     Ineffective measures in the past should be identified for elimination.
     Never select options before carrying out analysis because RIA is a tool to find the
     best solutions.
     Avoid proposing proposals that are infeasible in terms of financial and human
     If the option has a major negative impact on SMEs, you should consider adding more
     SME-friendly options. The SME-supporting options include:
      (i)    Partial or full exemption of regulation;
      (ii)   Providing a grace period for compliance;
      (iii) Simplifying obligations;
      (iv)   Facilitating compliance (one-stop shops, information provision, v.v.); and
      (v)    Reducing fees, charges and duration of administrative services.
Generally, the most effective solutions require applying a package of solutions in
combination of both direct and indirect intervention options.
 4. Assessing impacts of options

     This is an evaluation of positive and negative impacts of each option using qualitative
and/or quantitative analyses. Negative impacts are also considered costs, while positive impacts
are often benefits (see examples of types of impacts of policies in Annex 2). The policy options
should evaluate impacts in areas of:
                •      Economy
                •      Society
                •      Environment
                •      Legal system
                •      Citizen’s basic rights and obligations
                •      Compliance ability of bodies, organizations, and individuals
                •      Other major impacts

     Evaluation of the options’ impacts should follow the two steps: Defining major impacts
of each option; and Qualitative and quantitative analysis of the impacts:

                                                  Option 3: Applicants for permanent residence must (1)
Step 1: Defining major impacts                    have registered for temporary residence for 5 years in a
                                                  row or more; and (2) have a proven stable and
                                                  legitimate job with a salary at least double the common
                                                  minimum wage level.
-       For each option, define                   Costs:
negative impacts first, then positive             * For the Government:
impacts. Every option should have                 -- Cost of verifying the applicants’ statements of
negative impacts but not always have              employment, salary and period of temparary residence
positive impacts.                                 -- Cost of inspection and violation handling
-       List the affected subjects. For           -- For the 5-year temporary residence condition, the
example: businesses, the Government,              Government has to bear additional costs for resolving
citizens and other sizable factors                the contradiction with the existing regulations
(environment, society, legal system,              (Constitution, Residence Law, relevant legal
international commitments, etc.)                  documents).
-       For each affected stakeholder,            * For businesses:
answer the question of how this option            -- Cost of confirming their employee’s salary
impacts him/her. Be specific. Describe            -- Increasing marginal costs from decreasing
when/where such stakeholders are                  productivity. These result from difficulties in recruiting
                                                  staff appropriate for specific sectors due to stricter
                                                  immigration requirements
-       For each affected stakeholder,
                                                  * For citizens:
list the direct impacts. Note that in
                                                  -- Increasing costs for medical and educational
RIA, only direct impacts, not                     services. Immigrants specifically have to pay for
secondary and indirect impacts, are               private services at higher prices while they wait for
taken into account.                               permanent residence status
-       Conduct formal and informal               -- Costs for loan services at higher interest rates
consultation with stakeholders of                 Benefits:
potential impacts.                                * For the Government: None
                                                  * For businesses: None
                                                  * For citizens: None
Step 2: Qualitative and quantitative analysis of impacts

Step 2A: Quantitative analysis of impacts
                                                                       Option 3: Applicants for permanent
                                                                       residence must (1) hold temporary
Step 1: Define cost/benefit components for each option in one          residence for 5 consecutive years or
year. For example: cost for implementing administrative                more; and (2) demonstrate a stable and
procedures, opportunity cost of waiting time for permit, cost of       legal job with a salary at least doubling
purchasing new equipment or hiring more staff.                         the common minimum wage level.
Step 2: Estimate market price for each cost/benefit unit in            Costs:
VND. For example, if the business has to purchase equipment            * For the Government:
according to the new regulation, the cost will then be the price       -- Cost of verifying the applicants’
of that equipment in the market. Cost of each travelling hour is       statements of employment, salary and
the average income by hour of each citizen = total GDP/year            period of temparary residence
(VND) ÷ total citizens above 15 years old (people) ÷ 12                = Time for verification (hours) X
(months) ÷ 160 (working hours).                                        Wage/hour (VND) X Number of first-
Step 3: Estimate the frequency with which the problem occurs           time application forms for permanent
within a year.                                                         resident/year (forms)
Step 4: Calculate value of cost/benefit by multiplying the             Cost of verifying the applicants’
market price of each cost/benefit component with its                   statements/year is 10,742,205,069 dong
frequency. Then multiply the result by the number of affected          This cost is calculated basing on the
stakeholders. For example, the formula to calculate the value of       following assumption and data:
each cost/benefit component by VND/year:                               + Time for officials to complete
Cost/benefit/year (VN ) = market price of a cost/benefit               verification/form = 4 (gi )
component (VND) X Action frequency in one year X number of             + Average wage of one official/hour =
affected stakeholders (bodies/people).                                 15,625 (VND)
- Repeat this procedure for each cost/benefit component. Add           + Number of application forms/year =
each result together to find the total annual costs/benefits.          171,875 (forms). Number of application
Direct compliance cost of businesses                                   forms/year is calculated basing on the
Direct compliance costs include the following two categories:          following data: (1) immigration rate into
-        Investment cost: cost to buy new equipment to satisfy         Hanoi = 65.3‰ (according to General
the requirements of the new regulation. For example: Cost of           Population and Housing Investigation in
installing sewage filter of the factory to satisfy the new             2009); and (2) Number of urbanites =
environmental requirements.                                            2,632,087 people (according to
-        Operating       costs:    expenses      arising      during   Preliminary report on General
implementation of recurrent activities to abide by the new             Population and Housing Investigation in
regulation. For example: Annual cost for maintaining the               2009, Hanoi City)
installed equipment under the requirements of the new                  * For businesses:
regulation.                                                            -- Cost of confirming employee’s salary.
-        The direct abidance costs of busisnesses are defined by       = Time for salary confirmation (hours)
considering in full the option abidance process. Put the               X Wage of business leader/hour (VND)
questions “Does the option…”:                                          X Number of first-time application forms
    cause further costs for adjusting business, abidance and           for permanent resident/year (forms)
    transaction activities to the business?                            Cost of confirming their employee’s
    affect the supply of necessary input raw materials?                salary that the employer has to bear =
    affect the access to capital sources?                              10,742,205,069 VND
    affect the investment cycle?                                       This cost is calculated basing on the
    lead to recall of a certain product from the market?               following assumption and data:
    limit or prohibit product marketing or business?                   + Time for employer to fill out
    have stricter regulations on business activity of a specific       confirmation form = 0.5 (hour)
    sector/industry?                                                   + Average wage of an employer/hour =
                                                                       125,000 (VND)
                                                                       + Number of application forms/year =
                                                                       171,875 (forms)
Step 2B: Qualitative analysis of impacts

                                                               Option 3:
-       If impacts of the policy solution cannot be defined
                                                               * For citizens:
by quantitative analysis, qualitative analysis will then be
                                                               -- Increased costs arise for medical and
                                                               educational services as immigrants have
-       Use a standard measurement system to evaluate
                                                               to pay for private services at higher
potential social and environmental impacts of each option.     prices.
These measures will help to compare the costs and              -- The lengthy requirements to register
benefits of the options.                                       for permanent residence negatively
-       Try to describe in numbers the major impacts, such     impact immigrants’ lives. Immigrants
as “reduce 200 injured” or “10,000 people getting out of       experience limited employment and
poverty”.                                                      access to public services such as health
-       If it is impossible to evaluate by a measurement       care and education according to the 2004
system, the impacts need to be described as accurately as      Migration Investigation.
                                                               -- Migrants use public services less than
possible. For example: how many people will be affected,
                                                               non-migrants. Migrants thus spend extra
which groups of people will be affected, the nature and
                                                               to pay for private services; with
outcomes of the impacts.
                                                               permanent resident status, they would
-       The impacts may also classified as “small”,            have received these services for free.
“medium”, “big" in order to compare and evaluate the           -- Therefore, if the above regulation is
different levels of impacts.                                   applied, the Government will
-       RIA reports should not make evaluations like an        unintentionally create further costs to
option will “ensure food safety and sanitation”. Instead, it   immigrants. Yet, these regulations still
should estimate the number of cases of food poisoning          cannot make people from rural areas
preventable in each option. For example, the parameters        change their intention to migrate to the
that can be used include:                                      city. The set objective is thus not
                                                               achieved in the process.
• Number of cases of asthma prevented
• Numer of cases of commercial fraud decreased in one
• Number of tons of CO2 discharged into the

(See further example of quantitative analysis of the costs
for abiding by a regulation and below)
    Example of calculation of compliance cost of one regulation
     Cost estimation of the new requirement that each enterprise mandatorily test its products for
safety and label products with a safety certification at the government’s testing agencies as
               Costs for the Government:
        o       Cost for establishment of testing facility (VN ) = Number of testing facilities
   (facilities) X Investment expenses for each facility (VN )
       o    Cost for time to issue certificate (VN ) = Time to issue safety certificates (hour)
   X Number of certificates granted in a year (certificate) X Average salary per hour of
   government officials (VN )
        o      Cost for market surveillance (VN ) = Time of a visit to inspect certified products
   in the market (hour) X Number of visits a year) X Average salary per hour of government
   officials (VN )
               Costs for Manufacturers:
       o      Cost for upgrading production line to meet new safety requirements (VN ) =
   Expenses to upgrade one production line (VN ) X Number of production lines not
   currently meeting new safety standards
        o       Compliance cost (VN ) = Expenses for compliance of each product
   (implementation of AP, sample, testing) (VN ) X Number of products needed to obtain
       o      Cost for safety labeling and re-designing of products (VN ) = Expenses for
   using new label and re-designing products (VN ) X Number of products
               Cost for workers :
       o     Cost for losing jobs (VN ) = Number of workers lose their job because of
   closure of some factories that cannot meet the new requirement X Average
   income/person/year (VN )
               Cost for Consumers:
       o       Cost for paying higher price of certified products (VN ) = Difference between
   price of product and safe&certified product (VN ) X Number of consumed products
    Example of qualitative impact assessment
     Below is an example of qualitative assessement method used in a RIA Report by the European
Union (EU) for the proposal on roaming mobile network. The report compared impacts of different
policy options based on five criteria: effectiveness, competitiveness, efficiency, consistency and
synchrony. Each option is assessed to different degrees, from very negative impact (---), no changes
(=), to very positive impact (+++).

         Criteria Efficiency Competitiveness Effectiveness Synchrony Consistency

 (1) No                   --               --                =              --             --

 (2) Better               +                +                 +              +              +
 (3) Regulation          ++               ++                 +              +             ++
 on wholesales
 (4) Regulation          ++                --                +              +              +
 on Retail
 (5) Combine             +++              ++                 +              ++            ++
 option (2), (3)
 and (4)

    The drafting agency should be cautious in determing exact criteria when applying this analysis
method. In the above example, five criteria are defined by the EU:
            • Effectiveness: The degree to which the main objective to reduce mobile roaming cost
       is achieved
            • Competitiveness: Increased level of competitive pressure on mobile phone market
            • Efficiency: Measure of costs for achieving the objectives. Costs of a proposed option
       include administrative costs, investment cost of faciltities for mobile network and estimated
       loss of benefits (in case of stipulating ceiling price).
           • Synchrony: The degree to which balance is achieved between social benefits and
       reduced market segmentation
            •   Consistency: The extent to which this regulation is consistent with general principles
       of the legal framework of electronic communications and European law.
                   Negative impacts/costs should always be assessed first. Options must
                   always produce negative impacts/costs. They may not have positive
                   Focus on sizeable impacts on those affected. No need to analyze small,
                   negligible impacts.
                   Consult financial experts on proposal for increased/decreased tax, subsidies,
                   preferential interests in order to estimate the responses to and impacts of this
                   Costs may be incurred once in the first year or several times in subsequent
                   years, while benefits can be produced many times in subsequent years.

Compare and choose options
    -    Once negative/positive impacts of options are assessed, drafting agencies should
 compare these impacts and select the preferred option.
     -    When comparing proposed options, pros and cons of each option should be
 presented in a persuasive way to indicate that the preferred option obviously has more
 advantages over other alternatives. The preferred option must satisfy the following two
 fundamental criteria:
    •          The option is needed to achieve expected outcomes and objectives set out.
    •    The option helps achieve the objectives of highest socio-economic benefits.
    Three following instruments can be employed to conduct assessment:
        (i)           Cost Benefit Analysis (CBA): Choose the option with the lowest net cost
                (= costs - benefits) or the highest net benefit (= benefits – costs) to the
                government, business and citizens.
        (ii)           Cost-Effectiveness Analysis (CEA): Choose the option with lowest cost
                per a unit of benefit (e.g: reduction of one traffic accident fatality).
        (iii)           Least-Cost Analysis (LCA): Choose the least cost option with a fixed
                target (e.g. reduction of 50% exhaust fume).
      -   The “Conclusion on Preferred Option” part should summarize, synthesize
 previous analysis to explain why the option is preferred by the drafting agency in a simple,
 readable, understandable manner. For each option, qualitative and/or quantitative
 information should be presented in table format for the purpose of comparison.
 5. Public consultation
         -    Public consultation on the draft legal text and draft RIA report is a key element of
     conducting RIA.
          -    Consulting with affected stakeholders is critical to understand impacts of the draft
     legal document. RIA will only make sense when it absorbs comments by stakeholders,
     particularly those who are negatively affected.
         -    RIA is a useful communication tool that can help stakeholders identify
     unintended consequences and potential benefits brought by draft legal documents.
          -   Under the Law on Promulgation of Legal Normative Documents and Decree
     24/2009/ND-CP, draft Preliminary RIA report must be posted for public consultation on
     the information portal of the agency making a legal norm proposal for at least 20 days and
     when it is forwared to Ministry of Justice, much be posted for public consultation on the
     ministry’s website and the Government information portal for at least 20 days. Draft RIA
     Report must be posted for public consultation on the information portal of the
     Government and the website of the drafting agency for at least 30 days.

          -    Following questions should be asked before consultation is conducted:
              ⇒       Is the list of most affected key stakeholders identified?
              ⇒       Does the list include all stakeholders that need to be consulted?
              ⇒       What is the purpose of consultation?
              ⇒       Are consultation questions clearly identified?
              ⇒       What are resources for conducting consultation?
              ⇒       Which methods are suitable for consultation?
              ⇒       Is consultation information publicized as set forth in the law?
         -    The drafting agency shall synthesize key comments collected from stakeholders.
     The final report should clearly indicate who was consulted, when the consultation was
     done and summarize key comments collected and present which comments are absorbed
     and which comments are rejected and explain why

 6. Write the Regulatory Impact Assessment Report

     The RIA report is a document that takes down the mentioned-above 6 step process in a
systematic manner. Under the law, there are two types of RIA including the Preliminary RIA
and Simple/Full RIA. A detailed guideline for the Full RIA is not provided in this document
since this type of RIA is rarely conducted in reality and requires a deep quantitative cost-benefit
analysis. However, the methodology for preparing a RIA including Full RIA is basically similar.

    6.1. Preliminary RIA
     Preliminary RIA must be conducted on proposals for legal normative documents (LNDs) to
identify problems that need to be addressed by issuance of new legal normative documents and a
preliminary conclusion is made that indirect intervention options are not the optimal approach to
address the problem, based on comparison between negative/positive impact assessment of this
option with those of the direct intervention option of issuing a new document.

    What does a Preliminary RIA look like?

    A Preliminary RIA should be 5-10 pages long, subject to the number and nature of the
issues in question. On how to complete the Preliminary RIA, refer to Preliminary RIA template
in Annex 3.

    Steps for conducting Preliminary RIA:
         1. Identify the overall problem that needs to be addressed (Part I of Preliminary RIA
         2. Identify the objectives of addressing the overall problem (Part II of Preliminary
       RIA Report template);
          3. Determine options to address the problem (Part II of Preliminary RIA Report
       template), including:
                   a. Option 1: Maintain status quo (no intervention)
                   b. Option 2: Using indirect intervention measures/non-regulatory alternative
                   c. Option 3: Using direct intervention measure (regulatory) option
          4. Assess positive/negative impacts of each option and compare impacts of options
       (Part II of Preliminary RIA Report template);
          5. Agree on individual solutions or a package of combined solutions. Agree on how
       to interpret, present analysis results, and preliminarily preferred option (Part V of
       Preliminary RIA Report template);
          6.   Draft Preliminary RIA report for formal consulation;
          7. Conduct formal consultation (Note: Informal stakeholder consultation, through
       discussions with experts for example, should be conducted throughout the above-
       mentioned process, especially in step 1, 2 and 4);
          8. Improve, fianlize Preliminary RIA Report based on comments collected, and
       provide feedback to formal consultation (Part IV and V of Preliminary RIA Report

       6.2. Simple and Full RIA Report (“RIA Report”)

         -     In priniciple, Simple RIA and Full RIA are similar in terms of methodology and
     process, they just differ in a way that Full RIA requires much deeper qualitative analysis
     and often makes quantitative assessments. Simple RIA and Full RIA are generally
     regarded to as “RIA Report”
          -   RIA Report is required for every document whose proposals are approved to be
     included in the annual law, ordinance and decree making program. RIA Report is
     submitted to the Government and the National Assembly as an important document.
         -    RIA Report must demonstrate that the preferred option will achieve the objective
     of addressing the problem at the lowest costs and highest benefits despite whether this
     option uses regulatory measures or other indirect intervention measures.

    What does a RIA Report look like?

    This RIA Report contains two parts:

    Part 1 (RIA Summary Form): This Form is intended to provide key information required
during consultation and provide important information for competent agencies. It should be
simple, concise and less than 2-3 pages long (refer to a sample Form in Annex 4).

    Part 2 (RIA Report): This Report should detail all policy issues, objectives and options for
addressing such problems and qualitative and/or quantitative analysis of each option and
comparison of positive/negative impacts of options should also be included. The RIA report
should focus on assessing economic, social, environmental, legal system, civil rights and
freedom impacts, compliance by individuals, organizations and other impacts. Subject to level of
complication of the draft document, a RIA report will normally include from 5 to 7 priority
policy issues in the analysis. See Annex 5 for sample RIA report template.

    Steps for conducting a RIA report

     Based on the results of the Preliminary RIA process and Preliminary RIA report, the
drafting agency will follow steps below to complete a RIA Report:

    Identify the overall problem:

       1) Identify objective of issuing a LND;

       2) Identify priority policy issues that should included in RIA report;

     For each priority policy issue in RIA report, analysis should be conducted in a sequence of
following steps:

    2.1. Identify problems of the policy issue;

    2.2. Identify specific objectives of each policy issue;

    2.3. Choose options to address the issue;

    2.4. Conduct qualitative and quantitative negative/positive impact assessment;

   If quantitiative analysis is made, conduct following steps (if only qualitative analysis is
made, then switch directly to Step 3):

    2.4.1. Develop calculation formulars for each cost/benefit item;
    2.4.2. Identify data that should be included in the formular and determine methods of data

    2.4.3. Collect and synthesize data;

    2.4.4. Plug data into the formular as developed in Step 2.4.1 to get the results;

    Once Step 2.4 (or Step 2.4.4, if quantitative analysis is made) is completed for one policy
issue, repeat the process of Step 2.1 – 2.4 (or Step 2.4.4, if quantitative analysis is made) for the
remaining policy issues.

       3) Review analysis results of each issue, compare options and make conclusions;

       4) Write RIA report;

       5) Conduct formal consultation (Note: Informal stakeholder consultation, through
          discussions with experts for example, should be conducted throughout the above-
          mentioned process, especially in step 1, 2.1 and 2.4);

    Improve and finalize the RIA Report based on comments collected

    Basic differences between RIA Report and Preliminary RIA:

    The method of doing Preliminary RIA Report is similar to RIA Report, however, they differ
    in terms of objective, process and level of analyis details as follows:
      1.   The purpose of the Preliminary RIA Report is to justify (i) the need for government
           intervention to address the problem; and (ii) the regulatory measure is the best option
           to address the problem while the RIA Report is intended to analyze, compare and
           select the best policy option to address the problem by introducing a new regulation.
           The Preliminary RIA Report considers the “status quo” option as a solution before the
           Government takes intervention action, while the RIA only uses the “status quo”
           option as the base line to compare with other proposed options.
      2.   The RIA Report does not consider the “better enforcement of existing regulations” as
           does the Preliminary RIA report, since the ratification of the proposal indicates that
           the “better enforcement of existing legislation” cannot solve the problem and that the
           “regulatory” option is necessary. In other words, the RIA Report considers only
           “status quo” and “regulatory” options.
      3.   If the Preliminary RIA Report indicates the necessity of introducing a document to
           address the problem, once the list of policy issues of the proposal is identified, only
           preliminary qualitative impact assessment is required for proposed options while the
           RIA Report requires much deeper and more specific qualitative and quantitative (if
           possible) analysis with more sufficient data.
                                      ANNEX 1


        Self regulation – encouraging trades and professions to regulate their own
members’ activities to ensure certain standards are met. Organizations of Lawyers,
Architects or Accountants often play this role to regulate their own profession. Self
regulation requires supporting bodies and processes to make it work, and it is important
to guard against self regulation acting as a barrier to entry for new firms.
       Information and education campaigns – informing the public of actions to take
to minimize risk. These are often most useful when governments want to influence the
behavior of individuals in the social sphere. For example, education campaigns can
encourage people to wear safety equipment when driving motorbikes, improve food
hygiene in the home, or quit smoking.
        Financial incentives – such as tax increases/reductions, subsidies, concessionary
loans with reduced interest rates, etc. Used to encourage people to change certain
behaviors. For example, tobacco products are heavily taxed to discourage people from
smoking; education is sometimes subsidized in order to encourage people to increase
their qualifications and skills. Tax relief or reductions are often provided in certain areas
or localities to attact investors.
       Quality assurance marks – signal the quality of a product to consumers. For
example, the LGA laboratories in Vietnam test furniture for their safety, performance
and quality. Any product with the LGA quality assurance mark such as furniture will be
provided with a certificate so that the product and factory can place a LGA label on the
product. In this way, the quality mark gives consumers confidence in purchasing the
product and harnesses consumer purchasing power to influence markets to raise quality
         Service charters – a way of setting minimum service standards that the public
can expect to receive. Industries such as tourism often have service charters to set the
minimum standards of tourist facilities that should be in place to attract and grow the
tourist sector.
       Standards of performance – regulations need to avoid abusing rules but should
enhance the affected stakeholders to find their own ways to achieve better efficiency and
meet standards set out.
                                        ANNEX 2

      Type of impacts                                    Guidance
     Impacts on all types     Describe major compliance costs borne by businesses in
of enterprises of various each option. Cost savings for businesses shall be included in
sizes                     benefit analysis

                                   Negative impacts                  Positive impacts
                             Introducing new costs for       Decrease in exisiting costs for
                               businesses                     businesses
                             Increase in existing costs      Simplification or removal of
                               for businesses                  AP,    time    saved   for
                             Increase in costs due to          businesses.
                               introduction    of    new     Removal of barriers for
                               administrative procedures      enterprises and investors to
                             Increasing    barriers    for    enter market or industry
                               enterprises and investors     Increase in security or
                               to enter market or industry     transparency for businesses
                              Decrease in revenue or           to operate in Vietnam
                               sales of businesses
                             Opportunity costs in terms
                              of    time     spent    on
                              regulation by businesses
     Impacts on small and     Small and medium enterprises (“SME”) bear a
medium sized enterprises disproportionate regulatory burden in comparison with larger
(if any).                 businesses: Most of Vietnam’s businesses are SMEs. Drafting
                          agencies should consider if the option has a major negative or
                          positive impact on SME, even more than on large firms. For
                          example, administrative costs are often more burdensome to
                          small enterprises.
                                   Negative impacts                  Positive impacts
                                Similar to impacts      on     Similar to impacts on
                            enterprises in general,    but enterprises in general, but more
                            more         focus          on focus     on    disproportionate
                            disproportionate impacts    on impacts on SMEs
   Impacts     on   state       Describe impacts on state budget revenue and expenditure
                                   Negative impacts                  Positive impacts
                                New costs or increase in        Abolishing or simplifying
                            costs for State agencies to:        the costs for State agencies to:
                             Recruit and train staff             Recruit and train staff
                              Introduce regulation               Enforce regulation
                              Enforce regulation                 Oversee the implementation of
                              Set up new authority                regulation

                              Invest in IT facilities
                              Exercise management          of
                              Other new costs
    Impacts      on    the Consider for each proposed option other possible major impacts:
society and citizens
                                • Social impacts: What are the effects on health and safety,
                            social cohesion and other issues in Vietnam?
                                • Legal system impacts: Does the option increase the
                            security, transparency and quality of the legal system? Does it
                            guarantee the consistency and coherence of the legal system?
                                • Impacts on Citizen’s Rights specified in the Constitution.
                                     Negative impacts                     Positive impacts
                             Increase in unemployment            Increase in employement
                             Decrease in family incomes          Increase in family incomes
                             Decrease in opportunities           Increase in opportunities and
                              and social mobility                  social mobility
                             Deterioration of or risk to         Improvement       in      people’s
                              health of people                     health
                             Increase or introduction of         Decrease in discrimination
                               discriminatory                      (based on gender, ethnic
                               environment for a section           group, age)
                               of society (based on
                                                                 Compliance time saved for
                               gender, ethnic group, age)          citizens
    Impacts     on     the Changes in environmental quality includes: changes of the
environment                environment itself, and impacts of the environment on human
                           beings, e.g. its impacts on people’s health.
                                     Negative impacts                     Positive impacts
                             Increase     in    pollution        Decrease    in     pollution
                               including air, water, land,        including air, water, land,
                               wildlife                           wildlife
                             Destruction or waste          of    Contribution to sustainability
                              natural resources                   of natural resources
                             Increase in incidence of            Decrease in environmental
                               diseases and fatalities due        pollution and thus related
                               to environmental pollution         diseases and fatalities
                             Cost of cleaning up the             Savings in terms of tackling
environment   when   any potential   or   actual
polluted             pollution
                                       ANNEX 3

    I. Overall problems that need to be addressed
    II. Overall objectives of the proposed legal normative document
    III. Proposed options
     3.1. Option 1: Status quo
     3.2. Option 2: Indirect intervention (non-regulatory) measures
     3.3. Option 3: Direct intervention (regulatory) measures
    IV. Impact assessment of options
     4.1. Option 1: Status quo
          4.1.1. Negative impacts/costs
                 To the State
                 To businesses
                 To citizens
                 To other subjects (environment, society, legislative system, international
        experience, v.v.)
          4.1.2. Positive impacts/benefits
                 To the State
                 To businesses
                 To citizens
     To other subjects (environment, society, legislative system, international experience,
     4.2. Option 2: Indirect intervention (non-regulatory) measures
    4.2.1. Negative impacts/costs
    4.2.2. Positive impacts/benefits
     4.3. Option 3: Direct intervention (regulatory) measures
    Major policy Policy Issues expected to be analyzed in simple/full impact assessement
report of draft LNDs, if the proposed LND is approved and put in the annual legislative
program, include:
           -     Policy Issue 1
           -     Policy Issue 2
           -       Policy Issue 3 …
Policy Issues are preliminarily analyzed as follows:
                4.3.1. Policy issue 1:
              Objectives of addressing problems
               Preliminary impact assessment
4.3.2. Policy Issue 2: [Similar to 3.3.1]
4.3.3. Policy Issue 3: [Similar to 3.3.1]
   V. Public consultation in the preliminary RIA implementation process

   VI. Conclusion
Explain why direct intervention (regulatory) measures are selected (Option 3)
                                 ANNEX 4

                      Of the draft [name of document]

1.    Problems that need to be addressed

2.    Overall objective of the draft document

3.    Preferred options in the draft document:
3.1. Policy Issue 1: [Preferred option]
3.2. Policy Issue 2: [Preferred option]
3.n. Policy Issue n: [Preferred option]

4.    Overall positive and/or negative impacts of preferred options

5.     Consultation in the RIA implementation process
                                         ANNEX 5
                       SAMPLE SIMPLE/FULL RIA REPORT

                                   Of [name of document]

List of abbreviations
List of tables
Consultation question
I. Identify overall problems that needs to be addressed
  1.1. Background for promulgation [of proposal]
             1.1.1. Problems that needs to be addressed
             1.1.2. Related legal documents
  1.2. Objectives of promulgation [of proposal]
II. Impact assessment of the options
        2.1. Policy Issue 1 :
        2.1.1. Identify problem for Policy Issue 1:
        2.1.2. Set objectives of addressing Policy Issue 1:
        2.1.3. Propose options to address Policy Issue 1:
        2.1.4. Analyze options of the options of Policy Issue1:
        2.1.5. Select option for Policy Issue 1:
        2.2. Policy Issue 2 : [Similar to 2.1]
        2.n. Policy Issue n : [Similar to 2.1]

III. Compliance
IV. Consultation during the RIA implementation process
 V. Monitoring and post-implementation evaluation
VI. Conclusion and Recommendation


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