CURRENCY MANIPULATION PROBLEM - LEARNINGS FOR VIETNAM
5. SOLUTION
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the audit recommendations made in the year and send them to the superior management units, the audited units. The upper management shall summarize and report on the implementation of the audit proposal (detailed to each document, implementation content) and send it to SAV and the Ministry of Finance.
- The use of 5% of the budget on 02 items which are Expenses for settlement of complaints and denunciations and Expenses for encouraging collectives and individuals who have actively coordinated in the implementation of conclusions and recommendations still account for a low proportion. Therefore, timely encouragement to promote the role of employees in the implementation of recommendations, complaints and denunciations in the process of participating in the performance of tasks has not been given.
contents of audit recommendations which has not been performed. It is necessary to strengthen inspection, supervision and handling according to the provisions of law for collectives and individuals who deliberately delay or fail to comply with audit conclusions and recommendations;
strengthen coordination relationships with localities and units in exchanging and responding to audit recommendations.
Fifthly, when the audited unit has paid money into the State Budget but the document does not clearly show the content “remit to the State Budget according to the proposal of SAV” as the basis for the finalization of the 5% budget. SAV needs to propose to the Ministry of Finance to consider a separate mechanism for these documents when there are sufficient documents to prove the payment to the State Budget in accordance with SAV’s recommendations to ensure SAV’s interests. This mechanism can be implemented as follows: every year, when SAV conducts audits on the implementation of recommendations (usually one year after the issuance of the Audit Report), If these unsecured documents are discovered, the inspection teams will review, compare and sign for certification of the number of documents and the amount paid between 03 agencies including: SAV and the Finance Agency ( Department of Finance, Division of Finance) and State Treasury (where the audited entity makes payment) as the basis for annual implementation. Thus, when the responsible parties have confirmed, this amount is guaranteed to be the amount proposed by SAV to increase State Budget revenue and ensure SAV’s legitimate interests.
Finally, reasonable funding needs to be balanced to increase the amount of money to serve the tasks of settlement of complaints and denunciations and expenditure of encouragement, encouraging collectives and individuals to actively cooperate in the implementation of conclusions and recommendations to encourage timely to promote the role of employees in the implementation of recommendations, complaints and denunciations in the process of participating in the performance of tasks. At the same time, the petitions and complaints lasting from previous years are completely resolved.
REFERENCES
1. Government (2018), Decree No. 66/2018/ND-CP dated May 12, 2018 stipulating the Priority for cadres, civil servants and public employees of the State Audit
2. Ministry of Finance (2019), Circular No. 16/2019/TT-BTC dated March 18, 2019 Guiding management and use of funds deducted to implement the Priority Priority for officials, civil servants, public employees of the State Audit
3. National Assembly (2005), Law on State Audit No. 39/2005/QH11 dated June 14, 2006, Article 13
4. National Assembly (2013), Constitution of the Socialist Republic of Viet Nam, Article 118 5. National Assembly Standing Committee (2016), Resolution No. 325/2016/UBTVQH14 dated
December 29, 2016 stipulating regimes for cadres and civil servants of the State Audit
6. State Auditor General (2017),, 2017 Decision No. 1006/QD-KTNN dated June 26 on promulgating the Regulation on Internal Expenditure of advisory units under the executive apparatus and specialized State Auditors branches.
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7. Hoang Thi Thu Huong (2019), Management of recurrent expenditures of the State Budget at the General Department of Taxation - Ministry of Finance, Master’s Thesis in Banking and Finance, National Academy of Public Administration
8. State Audit, General Financial Statement 2016-2020, Finance Department, State Audit Office 9. Dinh Trong Hanh (2020), Improving the decentralization of management of audit activities of
the State Audit, Ministry of Science Research Project, State Audit
10. Duc Tuan (2020) ), Financial management regime for agencies of Insurance Management and Supervision Department - Ministry of Finance, website http://baochinhphu.vn/Chi-dao- quyet-dinh-cua-Chinh-phu-Thu-tuong-Chinh-phu/Che-do-quan-ly-tai-chinh-doi-voi-co-quan- Cuc-Quan-ly-giam-sat-bao-hiem-Bo-Tai-chinh/391513.vgp
11. Le Quoc Minh (2016) , Salary adjustment for people working at Hoa Lac Hi-Tech Park Management Board, website https://nhandan.vn/tin-tuc-xa-hoi/dieu-chinh-luong-cho-nguoi-lam-viec-tai-ban-quan-ly-khu-cong-nghe-cao-hoa-lac- 255277
12. Chi Kien (2019), Some specific spending regimes of the Viet Nam Maritime Administration, website http://baochinhphu.vn/Chi-dao-quyet-dinh-cua-Chinh-phu-Thu-tuong-Chinh-phu/
Mot-so-che-do-chi-dac-thu-cua-Cuc-Hang- hai-Viet-Nam/378643.vgp
AND POLICY IMPLICATIONS FOR VIETNAM
Assoc. Prof. PhD.Vu Duy Nguyen1, MSc. Nguyen Quynh Anh2 PhD.Nguyen Thi Thuy Hong3
Abstract: Analyzing the impact of ASEAN Single Window (ASW) on improvement of Logistics performance index is a significant concern of the Government, businesses and researchers. This paper focuses on analyzing the impact of ASEAN Single Window (ASW) on improvement of the Logistics performance index (LPI) across 10 ASEAN countries. The research has found a positive relationship between the two criteria of customs clearance and logistics service quality and the LPI. Through the implementation of ASEAN Single Window (ASW), customs administration has a positive impact on two criteria of customs clearance and the quality of logistics services to improve the LPI. In addition, the study also proposes a number of ASW solutions to improve the LPI for ASEAN member countries and Vietnam.
Key words: logistics performance index; ASEAN single window; electronic customs.
1. INTRODUCTION
The Association of Southeast Asian Nations (ASEAN) is a regional association established on the basis of the Bangkok Declaration of August 8, 1967 with the participation of five founding members (Indonesia, Malaysia, the Philippines, Singapore and Thailand). After 43 years of development, ASEAN has 10 member countries (5 more countries are Brunei Darussalam, Laos, Myanmar, Cambodia and Vietnam). ASEAN has become an intergovernmental regional cooperation organization, having important political and economic influence in the Asia-Pacific, partnering with major countries as well as important economic and political organizations around the world.
ASEAN aims to develop the Association to be a deeper and more binding intergovernmental cooperation organization on the legal basis of the ASEAN Charter. The ASEAN Community is formed based on three pillars: (i) Political-Security Community, (ii) Economic Community, (iii) Socio-Cultural Community. In particular, the ASEAN Economic Community (AEC) has been formed since 2015 to create a single common market and unified production base to promote the free movement of goods, services, capital and skilled labor; enhance competitiveness and promote
1 Email: Vuduynguyen@hvtc.edu.vn Academy of Finance
2 VNU University of Economics and Business 3 National Economics University
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common prosperity for the whole region; create attractiveness for international investment and business (ASEAN Information and Propaganda Steering Committee, 2017).
ASEAN’s significant mark was achieved in 2018, representing an important consumer market with the population of 649.1 million; the average income per capita reached 4,601.3 USD/person/
year; is the fifth largest economy in the world with a gross domestic product (GDP) of USD 3,000.0 billion, the real GDP growth rate of 5.2% (2018) and the average of 5.3% over 2000-2018;
import and export turnover reached USD 2,816.0 billion, trade balance surplus reached USD 48.0 billion; total foreign direct investment (FDI) reached USD 154.7 billion, of which intra-regional FDI investment reached USD 24.5 billion, foreign FDI investment in the region was USD 130.2 billion (some top partners in terms of total FDI value such as: EU (USD 14.2 billion), Japan (USD 13.7 billion), China (USD 6.6 billion), Hong Kong - China (USD 6.6 billion)
In particular, the economic structure of ASEAN has had a positive change towards the development of industry and services. The economic structure is grouped into three main sectors:
the share of agriculture is 12%; the proportion of production and manufacturing is 37.7%; the proportion of services is 48.7% in 2010. The structure has shifted in the direction of reducing the proportion of the agricultural sector to 10.3%; while the proportion of manufacturing industry was about 36.6% and the service industry increased to 50.1% in 2018. ASEAN countries have agreed to adopt Logistics sector as one of 12 priority areas to accelerate intra-regional linkages (including agricultural products; automobiles; electronics; fisheries; rubber products; textiles; wood products;
air transport; ASEAN e-commerce; healthcare; tourism; Logistics) (ASEAN Secretariat, 2008).
The development of trade in logistics services has strategic significance, not only as an optimal connection from supply, production, and distribution to consumption, but also to promote the connection of intra-ASEAN goods trade as well as foreign trade. In addition, the logistics industry has gradually become an important component for GDP growth of member countries and the ASEAN region. William Gibson (2017) estimates that logistics costs account for about 8% of GDP in the developed countries with the most efficient Logistics industry such as the United States, Netherlands, 13% of GDP in the countries of Organisation for Economic Co-operation and Development (OECD), between 16-18% in China, 18-22% in ASEAN countries) and about 25%
of GDP in the countries with inefficient logistics systems.
In 2015, logistics services were included in the priority development strategy of the region by member countries. ASEAN countries have signed the Protocol to implement the AFAS 9 service commitment package in the ASEAN Framework Agreement on Services signed in Malaysia on November 6, 2015, which emphasizes the priority of 5 sectors including: healthcare, tourism, logistics, e-ASEAN and aviation. This is a key criterion in ASEAN’s trade policy aimed to establish a unified and connected logistics environment and turn ASEAN into a logistics center in the Asia-Pacific region (ASEAN Secretariat, 2015).
For Vietnam, the Government has signed and approved the ASEAN Framework Decree, clearly planning the roadmap for ASEAN integration in logistics services. The Government has affirmed the important role of logistics services in Decision No. 200/2017/QD-TTg, dated February 14, 2017 and revised Decision No. 201/2021/QD-TTg, dated February 22, 2021 on approving action plans to improve competitiveness and develop Vietnam logistics services to 2025:
(1) Logistics is an important service industry in the overall structure of the national economy, supporting, connecting and promoting socio-economic development of the whole country as well as each locality, contributing to improving the competitiveness of the economy; (2) Developing logistics services into a service industry that brings high added value, linking logistics services with the development of goods production, import and export and domestic trade, development of transportation infrastructure and information technology.
The governments of ASEAN members have had a number of positive policies and movements in improving the Logistics Performance index (LPI) to comprehensively and sustainably develop the logistics service industry in each country as well as connect and develop the logistics industry in ASEAN. National LPI scores and rankings have improved between 2007 and 2018. In the coming period, the goal of improving the LPI index is set and is the focus of enhancing the quality of ASEAN’s trade in services in general and of each member country in particular. For Vietnam, the Government has set a goal: “By 2025, ranking of the national LPI will have reached 50th or higher; the contribution of the logistics service industry to GDP will have been about 8%-10%, the service growth rate will have reached 15%-20%, the proportion of outsourcing logistics services will have reached 50%-60%, logistics costs will have decreased equivalent to 16%-20% of GDP”
(Prime Minister, 2017).
LPI is researched and introduced by the World Bank (WB) to rank the national efficiency and capacity of logistics activities. This index is determined every two years and has had 6 LPI ratings in 2007, 2010, 2012, 2014, 2016, 2018. The international LPI index is built on 6 criteria, including 3 input criteria: (1) customs, (2) infrastructure, (3) Services and 3 output criteria: (4) international shipments, (5) timeliness, (6) Tracking and tracing (World Bank, 2007, 2010, 2012, 2014, 2016, 2018).
Jose Tongzon and Inkyo Cheong (2013) systematize previous studies (such as: Fink, Mattoo, and Neagu, 2000; Frankel and Romer, 1999; Hummels, 2000; Anderson and Banomyong, 2010) and give the comment that: (i) Improved efficiency in transport and logistics will directly improve export turnover and economic growth; (ii) Greater efficiency in logistics will create higher market demand, companies will increase economies of scale, reduce costs, promote growth; (iii) The effective organization of the logistics industry will be an important factor to facilitate international trade and domestic transportation. Meanwhile, Sanchita Basu Das (2017) indicate that a 1%
improvement in customs and logistics facilitation among ASEAN members will boost growth of intra-regional trade by 1.5%.
Customs administration is a government agency with the function of state management in import and export activities, performing such functions as: customs inspection and supervision for imported and exported goods, means of transport on exit, entry or in transit; anti-smuggling and illegal transportation of goods across borders; collecting revenue of customs duty related to import and export goods, professional management of customs brokers. In fact, the Customs has made a direct and important contribution to the improvement of the LPI index by affecting two groups of criteria: customs clearance and quality of logistics services. However, in order to increase LPI’s scores and rankings in the near future, the customs authorities of member countries need to have specific and effective solutions to improve the national competency index, thereby improving the business environment (DB: Doing Business) and national competitiveness index (GCI: Global competitiveness index).
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This study combines quantitative and qualitative methods to analyze, evaluate and solve the problem of improving the LPI of ASEAN member states. It adopts SPSS 20 software to test Cronbach’s alpha coefficient, exploratory factor analysis (EFA) and carry out linear regression to determine the relationship between customs clearance criteria, logistics service quality and LPI index. The data is sourced from LPI index database of 10 ASEAN member countries surveyed by the World Bank in 2007, 2010, 2012, 2014, 2016, 2018. Number of observations of 10 member countries in 6 years 56 observations (because Brulei only has 2 observations, 2016 and 2018, missing 4 observations). In addition, this article also analyses cross-border trade transaction criteria in the ease of doing business index surveyed by the World Bank (from 2007-2019); data reported by the General Department of Vietnam Customs and ASEAN countries.
2. LITERATURE REVIEW
The World Bank (2007) researched and published the LPI index for the first time in 2007.
The LPI index is translated into Vietnamese with a number of different names but the same essence:
logistics efficiency index (Ministry of Industry and Trade’ 2019b), or logistics performance index (Nguyen Tuong, 2018), or national logistics capacity index (Prime Minister, 2017). However, whatever the name, the essence of the LPI is to provide simple comparative indicators of the efficiency of the supply chain connected to logistics activities. The World Bank (2018) comment that: “Although it is only an index issued by one organization, so far the World Bank’s LPI has been recognized by a large number of countries as an indicator of competitiveness and performance of the logistics service industry in each country. LPI has been used by policymakers, trade experts, and researchers in assessing and comparing logistics developments. Thereby, LPI allows governments, businesses and stakeholders to assess the competitive advantage created by logistics activities and take measures to improve logistics - the lifeblood of the global economy” (WB, 2018).
For the overall assessment, LPI index consists of 2 components - the international LPI and the domestic LPI. In which, broadly speaking, logistics is a network of services that support the movement of goods, cross-border trade and domestic trade. In the framework of the research focusing on the international LPI index, the index is evaluated on a liker scale 5, which is assigned a score from 1 point (lowest) to 5 points (highest). The LPI index depends on 6 criteria that are assigned points by the surveyed subjects according to the evaluation criteria: 1 point (very low), 2 points (low), 3 points (medium), 4 points (high) and 5 points (very high). There are 6 criteria are proposed, including: (1) Criteria for effectiveness of Customs clearance (C: Customs):
Efficiency of border control agencies, such as the speed of customs clearance of export and import goods; simplification of customs procedures and predictability of customs clearance procedures (openness, transparency, stability of customs procedure regulations); (2) Infrastructure criterion (IN: Infrastructure): Quality of infrastructure related to commerce and transport (infrastructure for seaports, airports, railways, roads, seaways, cargoes, warehousing, information technology infrastructure and IT services); (3) Logistics service quality criteria (LS: Service quality): The capacity and quality of logistics service providers, such as enterprises providing road, rail, and air transport services; warehousing and distribution enterprises; forwarding agents; customs clearance agents; trade and transport-related associations; shipper and consignee; (4) Delivery criteria (Sh:
International shipment): The ease of arranging transportation of import and export goods with
competitive prices: agency fees, port fees, fees tolls and roads, storage fees…; (5) Tracking and tracing (TR): Ability to track and trace shipments; (6) Criteria for delivery Timeliness (Tm: Time):
The punctuality of shipments being shipped upon arrival against the specified deadline; Import and export shipments are cleared through customs clearance and delivered on time.
Thus, the study regresses the LPI index (dependent variable) against 6 component criteria (6 independent variables). The independent variables are assumed to have a linear relationship with the dependent variable LPI through the coefficient (αi). The regression model is as follows:
LPI = F(Xi) = α0+ α1X1+ α2X2+ α3X3+ α4X4+ α5X5+ α6X6+ ε0 (Model 1)
In addition, existing studies have shown the impact of customs authorities on the criteria of customs clearance (C) and quality criteria of logistics services (LS).
WTO (2017) proposes in chapter 7 recommendations to create favorable conditions for international trade, minimize time and financial costs for export and import activities. The customs authorities should apply modern measures such as: administrative reform, application of information technology and publicity of procedures online (articles 7.2, 7.9); apply the form of goods release when there is no decision on customs clearance (Article 7.7); National Single Window (NSW) (article 7.10); apply risk management (clause 7.12); Apply post-clearance audit (article 7.13); apply the Authorized Economic Operator (AEO) mechanism (Article 7.14) and develop customs clearance brokers (Article 7.20).
Within the framework of the ASEAN region, member states have agreed to a Protocol on Facilitation of International Trade such as: simplification, harmonization and standardization in trade, processes, customs clearance and related information flows, which raises expectations for lower transaction fees, thus enhancing export competition and ASEAN integration in a single market for goods, services and investment and a unified production platform. (ASEAN Secretariat, 2008; 2015).
Jose Tongzon and Inkyo Cheong (2013) point out that the delay in implementing the NSW plan, the ASEAN Single Window (ASW) in some member countries has caused a delay in the implementation of the plan for e-documents transaction on the NSW system such as:
electronic customs declarations, electronic certificates of origin on ASW, thereby affecting the effective implementation of the regional logistics industry. The study also indicates the important conclusion that inefficient customs clearance is one of the fundamental reasons for the continued uncompetitiveness of the logistics industry in most ASEAN member countries, leading to the decline of the logistics industry of regional integration. In addition, Thuy Nguyen et al., (2014) conclude that two important limitations affecting the efficiency of the ASEAN Logistics industry are high costs in transportation and time and financial costs for customs clearance of import and export shipments.
The Ministry of Industry and Trade (2019b) analyzes the need to improve Vietnam’s LPI as customs reform because this criterion has the lowest score in the consideration criteria. In addition, the study proposes solutions that need to be improved related to customs, such as controlling the actual inspection time for import and export goods, controlling the time for checking documents, the red channeling rate and the yellow flow of customs documentation,
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controlling customs clearance brokers, improving NSW efficiency and reforming specialized border management.
Thus, it is possible to identify the mechanisms of ASEAN Single Window on improving the LPI of the ASEAN region according to the following research framework: Customs authorities carry out functional activities that positively impact on two criteria of customs clearance and logistics service quality through the effective implementation of ASW, thereby improving the LPI index.
CUSTOMS - ASEAN Single Window
Customs clearance criteria
in LPI
Quality criteria of logistics services
in LPI
National Logistics performance index
(LPI)
Research theoretical framework