An IFC-led project helped reduce time and costs for small businesses to start operations in Vietnam. © Nhon Hoa Company
When Pham Quoc Bao decided to start a rice-paper factory in his hometown in Vietnam’s Binh Dinh province in 2010, he expected to encounter a mountain of red tape. “I thought it would take three years to process the paperwork to even obtain the land,” recalls Bao.
He had good reason to worry. Renting or buying land, getting permission to build, addressing safety issues, and starting production had always been a bureaucratic headache for businesses in Vietnam. Moreover, information on land regulations was not readily available and processing times seemed interminable. That made it difficult, if not impossible, to start a business.
IFC launched the Business Access to Land project to address this problem. Our aim was to enable provincial governments to implement land-access reforms that would help businesses—especially small businesses—set up and start operations. We began by working with the governments of Bac Ninh and Thua Thien Hue provinces in 2008 and Binh Dinh province in 2009.
IFC conducted diagnostic surveys of businesses and the provincial governments to understand the problem. Based on our findings, we recommended streamlining of procedures, making the process more transparent, and eliminating repetitive documentation. When our recommendations were implemented, the results were impressive: across the three provinces, the time needed to acquire land was cut in half. So was the volume of documents required.
With less paperwork to submit and fewer required visits to government offices, Bao’s application was approved quickly. He started operations three years ahead of his expected schedule. “The officials were supportive of the project and helpful in giving instructions,” Bao says.
Local officials are happy too. “Coordination among relevant government authorities on land-access simplification is a key IFC recommendation and central to eliminating bureaucracy. It reduced time and costs for investors,” says Nguyen Phuong Bac, former Deputy Director of Bac Ninh province’s Department of Planning and Investment.
Having proved that it could be done in three provinces, IFC used the experience and lessons learned to develop a manual that could be used to streamline land-access procedures and enhance inter-agency coordination. The manual is helping replicate the simplified procedures in 55 other Vietnamese provinces.
Today, Bao’s company, Nhon Hoa Company Ltd., is dreaming big. From his initial 16 employees, Bao has expanded his business to employ over 50 employees, mostly women. He is also implementing enhanced production-line technologies to improve working conditions.
“The future is bright. I look down the road to 20 years from now and see an expanding business,” he says. Faster land acquisition has also encouraged Bao to set up a rattan-handicraft factory, which he hopes will create 1,000 jobs in the future.
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Published in February 2017