evaluation summary: participation and regulatory ......understanding of new regulations and will...

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Evaluation Summary: Participation and Regulatory Compliance in Vietnam

Edmund Malesky, Duke University Markus Taussig, National University of Singapore Business School

Table of Contents Page

I. Abstract 2 II. Policy Issues 2 III. Context 3 IV. Description of Intervention 3 V. Operationalization of Dependent Variable 4 VI. Hypotheses 7 VII. Power Calculation 15 VIII. Instruments 18 Appendix 1: Pre-Treatment Survey 19 Appendix 2: Placebo Presentation on VCCI 28 Appendix 3: Participation Presentation for T1 28 Appendix 4: Comment form for T2 29

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I. Abstract: Regulatory non-compliance by firms can have disastrous consequences, such as factory collapses or massive chemical spills, but many developing countries lack the capacity to strictly enforce regulations on firms. To address this issue, some countries are trying to encourage firms’ self-compliance through greater involvement of firms in law-making processes. However, little research has been done on the impact of this approach. Researchers are evaluating whether participating in the law-making process influences businesses’ regulatory compliance in Vietnam.

Researchers: Edmund Malesky, Markus Taussig

Partners: Vietnam Chamber of Commerce and Industry; Vietnam Ministry of Labor, Invalids, and Social Affairs

Location: Vietnam

Sample: 1,800 companies.

Phase 1: Placebo – 600; T1 Information – 400; T2- Participation – 600 Phase 2: Government Response – 300 (1/2 of Placebo); Indirect Democracy – 300 (1/2 of T2) Phase 3: Test of Regulatory Quality – 200.

Timeline: 2014 –

Theme(s): Governance

Policy Issue(s): Transparency & accountability Related Initiative: Governance Initiative

II. Policy Issues

Companies have a uniquely powerful influence over their workers and the environment, and unregulated or noncompliant firms can create disastrous consequences, such as factory collapses or massive chemical spills. But many developing countries lack the capacity to strictly enforce regulations on firms. To address this issue, some countries are trying to encourage firms’ self-compliance by adopting participatory law-making processes. Theory suggests that firms involved in regulation drafting will have a better understanding of new regulations and will view the legislative process as more legitimate; the resulting legislation is also likely to be of higher quality and better tailored to local preferences, reducing conflict between firms and the state. However, there is little existing evidence on the impact of such legislative participation. To address this knowledge gap,

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researchers are conducting a randomized evaluation to study the effect of legislative participation on businesses’ regulatory compliance in Vietnam.

III. Context

Since 2000, over 250,000 private enterprises have registered and begun operations in Vietnam. Vietnam’s Ministry of Labor and Social Affairs (MOLISA) estimates that less than 10 percent of these firms are in compliance with rules on worker safety, with more frequent violations among smaller businesses. Partly due to commitments under WTO acsession, the Government of Vietnam adopted a participatory law-making approach. In 2008, the Vietnamese National Assembly enacted a law requiring that an agency drafting a regulation must post the draft for 60 days for public comment, study the comments, and file an internal report on why the comments were accepted or not.

IV. Description of Intervention

In partnership with the Vietnamese Chamber of Commerce and Industry (VCCI), researchers are evaluating the effect of legislative participation on firms’ compliance to a new regulation on the storage of hazardous chemicals. The regulation will apply to a broad range of firms, including chemical producers as well as those that employ chemicals as intermediate products, and will necessitate non-trivial changes, such as the purchase of new equipment, among these firms. Vietnam’s Ministry of Labor and Social Affairs (MOLISA) released a draft of the regulation online for public comment in May 2014, along with a position paper laying out the need for the new regulation and the specific issues covered. Researchers will study 1,800 firms in Hanoi and surrounding provinces to whom the new regulation applies. These firms will be randomly assigned to one of the following groups:

1. Treatment 1 (Information): This group will receive an informational presentation on the new regulation, but will not be offered a chance to participate in the drafting process (n=400).

2. Treatment 2 (Participation): This group will receive the same informational presentation as the information group, and will also be provided the opportunity to comment on the law through an online portal (n=600).

3. Treatment 3 (Legitimacy): This group will receive the same presentation and feedback opportunities as the participation group, and will also be told that their comments will be included in a briefing book to be submitted to the regulation drafting committee. Researchers will send participants a copy of the briefing book

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once it is assembled. This group will be randomly selected from the participation group, blocking on whether comments were used (Bloc 1) or unused (Bloc 2) (n=300)

4. Comparison: The comparison group will receive a placebo treatment—an informational presentation on the services the VCCI provides to the business community (n=600)

5. Treatment 4: (Indirect Democracy): This group will receive the placebo treatment, but then also be subsequently informed about the participation of firms from T2 and T3 (n=300)

Figure 1: Graphical Depiction of Research Design

Researchers will also randomly select 100 additional firms, separate from the treatment and comparison groups, to act as “judges” of legal quality. These firms will be given untitled and unmarked versions of both the draft and final regulation to judge which is superior. The opinion of this group will be used as a measure of the quality of the resulting regulation.

Placebo

Participation

Government Feedback

C T1 T2 T3 T4

ParticipationIndirect

Participation

PlaceboParticipation Participation Participation

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V: Operationalization of Dependent Variable - Compliance:

After the final regulation is circulated, researchers will monitor all firms in the treatment and comparison groups for compliance. Five dependent variables have been identified.

DV1: Firm called hotline number listed on USB to request help in implementing procedures listed on regulation (Yes=1/No=0).

DV2: Randomly selected subset of firms from each treatment group will be invited to attend pre-finalization conference on draft regulation (Attendance=1/Refusal=0).

DV3: Researchers have highlighted 11 criteria in the draft document (see Table X below), which can be constructed into an 11-point index and analyzed as a continuous variable. In the first pass, each measure will be treated as dichotomous (compliant=1/non-compliant=0) according to a strict application of the final regulation on hazardous chemicals. Note: It is critical to observe that these criteria are based on the draft regulation upon which the firms are commenting. It is possible that some criteria may be dropped between the draft and final regulation, forcing us to adjust our index of compliance, as well as adjust our individual measures.

DV4: For robustness purposes, a second 22-point index will be created that takes into account that some firms may be partially compliant, but still in violation of the draft regulation. This index will score compliance for each indicator using a two-point measure (fully compliant=2/partially compliant=1/0=non-compliant).

DV5-16: Each component of the index will be run separately as a dichotomous variable (compliant=1, non-compliant=0). This will be analyzed as a linear probability model with probit models used for robustness tests.

DV17-28: Each component of the index will be run using the two-point measure of partial compliance. The will be analyzed using OLS with ordered probit models using for robustness testing.

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Table 1: Components of Compliance Index

1 Organization by chemical types. Hazardous chemicals must be organized according to their chemical characteristics. In particular, this means chemicals that have the ability to react with each other should not be placed near each other. Similarly, chemicals that require different methods to extinguish fire – for instance those requiring water versus other solvents- must also be separated

2 Storage distance from wall and ground. All chemical storage containers must be placed at least half a meter from the wall, in order to avoid potential corrosion of warehouse structures. Hydrophobic chemicals have to placed on the stand that is at least one third of meter high

3 Warning signs. Equally important are the warning signs that correspond to each appropriate type of hazardous chemicals that is present on the business grounds.

4 Lightening protection. To avoid potential damage caused by weather, the warehouse must have lightning protection

5 Cleaning basin. There should be cleaning basin site directly outside the area of hazardous chemicals, so that employees can immediately cleanse off the chemicals from their bodies, eyes, and clothing when needed.

6 Vehicle sign & grounding wires. In order to transport flammable liquids, the vehicles must have a fire prohibition sign and grounding wires to avoid potential sparks that might ignite chemicals

7 Electrical system. The breaker, fuse, and socket outlet of the electrical system shall be installed outside areas containing easily flammable chemicals

8 Lighting system. The electrical system for lighting must be the type made for the prevention of explosions; it should also be carefully designed to avoid the penetration of gasses or dust into the lighting devices that might be flammable or combustible

9 Mixing & fire. When mixing the chemical liquid into the solvent in an exposed device, the regulation requires that it takes place at least 10 meters away from the areas with fire.

10 Welding. Welding and other activities that can create fire must not be done within 20 meters of flammable chemicals

11 Operator protection wall. The wall of the device and storage tanks, used for corrosive chemicals, must be higher than the operator position by at least 0.9 meters

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VII: Hypotheses:

H1 (Core Hypotheses): In a comparison of firm producing, using, or transporting hazardous chemicals, those firms which had the opportunity to provide feedback on the draft regulation governing their activities, will be more likely to:

H1a: seek feedback on implementing the regulation by calling the designated hotline at VCCI. H1b: inform themselves about the regulation by attending a Hanoi-based conference on the regulation held by the Ministry of Labor, Invalids, and Social Affairs. H1c: comply with the regulation according to an unannounced audit conducted by the research team. This means that participating firms will have higher scores on the 11-point measure of legal compliance, 22-point measure of partial compliance, each of the eleven indicators of legal and partial compliance.

Table 1: Direct Effects of Participation on Compliance

Hotline Conference Index Index 2 Hotline Conference Index Index 2(1) (2) (3) (4) (5) (6) (7) (8)

Participation Treatment

Constant

Female No No No No Yes Yes Yes YesSector No No No No Yes Yes Yes YesSize No No No No Yes Yes Yes YesProvince No No No No Yes Yes Yes YesMean of DV in Control GroupObservationsR-squaredRMSERobust standard errors, clustered at province level in parentheses, *** p<0.01, ** p<0.05, * p<0.1.

ModelUnadjusted Block Fized Effects

(+) (+) (+) (+) (+) (+) (+) (+)

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Table 3: Direct Effects of Participation on Compliance (Individual Indicators)

Organization by chemical

types

Storage distance

from wall and ground

Warning signs

Lightening protection

Cleaning basin.

Vehicle sign & grounding

wires

Electrical system

Lighting system

Mixing & fire WeldingOperator

protection wall

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)Participation Treatment

Constant

Female Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSector Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSize Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesProvince Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesMean of DV in Control GroupObservationsR-squaredRMSE

Organization by chemical

types

Storage distance

from wall and ground

Warning signs

Lightening protection

Cleaning basin.

Vehicle sign & grounding

wires

Electrical system

Lighting system

Mixing & fire WeldingOperator

protection wall

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)Participation Treatment

Constant

Female Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSector Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSize Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesProvince Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesMean of DV in Control GroupObservationsR-squaredRMSERobust standard errors, clustered at province level in parentheses, *** p<0.01, ** p<0.05, * p<0.1. Will run with both OLS (linear probability) and probit for robustness. Indexes will be run with OLS.

Dichotomous Dependent Variable (Compliance=1/Non-Compliance-0)

Ordinal Dependent Variable (Full Compliance=2/Partial Compliance=1/Non-Compliance-0)

(+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+)

(+) (+) (+) (+) (+) (+) (+) (+) (+) (+) (+)

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Mechanisms:

M1: In a comparison of firm producing, using, or transporting hazardous chemicals, those firms which received the information treatment (T1) about the requirements of the draft regulation, will be more likely to comply with the regulation (according to our five measures) than those receiving the placebo treatment (C).

M2: In a comparison of firm producing, using, or transporting hazardous chemicals, those firms which received participation treatment (T2), allowing them to provide comments on the draft regulation, will be more likely to comply with the regulation (according to our five measures) than those receiving the placebo treatment (C).

M3: In a comparison of firm producing, using, or transporting hazardous chemicals, those firms which received participation treatment (T2), allowing them to provide comments on the draft regulation, will be more likely to comply with the regulation (according to our five measures) than those receiving the information treatment (T3).

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Table 4: Tests of Mechanisms

Hotline Conference Index Index 2 Hotline Conference Index Index 2 Hotline Conference Index Index 2(1) (2) (3) (4) (5) (6) (7) (8) (5) (6) (7) (8)

Information Treatment (T1)

Participation Treatment (T2)

Constant

Female Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSector Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesSize Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes YesProvince Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

ObservationsR-squaredRMSE

M3: Participation v. Information

Mean of DV in Control Group

(Dropping T2 Group) (Dropping T1 Group) (Dropping C Group)Model

M1: Information v. Placebo M2: Participation v. Placebo

Robust standard errors, clustered at province level in parentheses, *** p<0.01, ** p<0.05, * p<0.1. Will run hotline and conference with both OLS (linear probability) and probit for robustness. Indexes will be run with OLS. Indivdidual indicators will also be studied.

(+)

(+) (+) (+) (+)

(+) (+) (+) (+) (+) (+) (+)

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Hypotheses in the Second Treatment Arm:

Responsive Government Hypothesis: In a comparison of firms randomly selected to provide comments in (T2), those firms randomly selected to learn about how the government used their comments (T3) will be more likely to comply with the regulation (according to our five measures) than those participating but not selected for (T2, ~T3).

Responsive Government Hypothesis II: In a comparison of firms randomly selected to provide comments in (T2), those firms randomly selected to learn about how the government used their comments (T3), and who learned their comments were utilized (T3, bloc 1) will be more likely to comply with the regulation (according to our five measures) than those who received feedback, but who learned their comments were not used (T3, bloc 2).

Disenchantment Backlash Hypothesis: In a comparison of firms using hazardous chemicals, those randomly selected to provide comments, but who did not receive government feedback on their recommendation (T2, ~T3), will be less likely to comply (according to our five measures) than those firms that had no opportunity to participate at all (C + T1).

Disenchantment Backlash Hypothesis II: In a comparison of firms using hazardous chemicals, those randomly selected to provide comments, but who received feedback that their comments were not used (T3, bloc 2), will be less likely to comply (according to our five measures) than those firms that had no opportunity to participate at all (C & T1).

Disenchantment Backlash Hypothesis III: In a comparison of firms using hazardous chemicals, those randomly selected to provide comments, but who did not receive feedback or who received feedback that their comments were not used (T2, ~T3 + T3 (bloc 2)), will be less likely to comply (according to our five measures) than those firms that had no opportunity to participate at all (C + T1). Indirect Democracy Hypothesis: In a comparison of firms randomly assigned to the placebo group, those randomly selected to learn about the participation of their peers in the first round (C, T4), will be more to comply (according to our five measures) than those firms that were not contacted again (C, ~T4).

Indirect Democracy Hypothesis II: In a comparison of firms using hazardous chemicals, those randomly selected to learn about the participation of their peers in the first round (C, T4), will be more to comply (according to our five measures) than those firms that were not contacted again in both the placebo and information group (T1 + C, ~T4).

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Table 5: Second Treatment Arm - Government Response

Responsive Government I

Responsive Government II

Disenchantment Backlash I

Disenchantment Backlash II

Indirect Democracy I

Indirect Democracy 2

(Studying only T2 ) (Studying only T3 ) (All Firms) (All Firms) (Only Placebo) (Placebo +T2)Index Index Index Index Index Index

(1) (2) (3) (3) (5) (6)Participation Treatment (T2) (-) (-)

Received Gov't Response (T3)

Response was Positive (T3, Bloc 1)

Learned about others' Participation (T4)

Constant

Female Yes Yes Yes Yes Yes YesSector Yes Yes Yes Yes Yes YesSize Yes Yes Yes Yes Yes YesProvince Yes Yes Yes Yes Yes Yes

ObservationsR-squaredRMSE

Model

Mean of DV in Control Group

Robust standard errors, clustered at province level in parentheses, *** p<0.01, ** p<0.05, * p<0.1. For illustrative purposes we only study the main index DV, but will repeat for all other operationalizations of the DV. Will run hotline and conference with both OLS (linear probability) and probit for robustness.

(+)

(+)

(+)

(+)

(+) (+)

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Non-Experimental Hypotheses:

Better Law: In a blinded test removing identifying information, firms outside the experiment group will vote that the final law on hazardous chemicals surpasses the draft law in terms of its:

a) clarity;

b) ease of implementation;

c) reasonable provision;

d) expense posed on firms.

Weaker Law: I n a blinded test removing identifying information, workers in chemical using companies outside the experiment group will vote that the draft law on hazardous chemicals surpasses the final law in terms of its protection of workers.

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Heterogeneous Effects based on Blocking Variables and Clusters:

Size: The marginal effect of the participation treatment (T2) on compliance will be greater for smaller firms, because they have less access to alternative, pre-existing modes of participation. Narrow Industry: The marginal effect of the participation treatment (T2) on compliance will be greater for firms producing hazardous chemicals than those using or transporting them because of the greater salience of the regulation.

Female: The marginal effect of the participation treatment (T2) on compliance will be greater for firms managed by female CEOs, because they have less access to alternative, pre-existing modes of participation. Urban/Rural: The marginal effect of the participation treatment (T2) on compliance will be greater for firms in provinces outside of Hanoi, because they have less access to alternative, pre-existing modes of participation (at the national level) Heterogeneous: Effects using variable to be collected during research design:

Relationship: The marginal effect of the participation treatment (T2) on compliance will be less for firms that have previous relations with government officials (Relationship will be operationalized by whether CEO is a previous government official, party member, military officer, or manager of an SOE).

History of Firm: The marginal effect of the participation treatment (T2) on compliance will be less for firms that are former State Owned Enterprises. Experience of CEOs: The marginal effect of the participation treatment (T2) on compliance will be greater for CEOs that have experience of either working on studying in the West. History of Participation: The marginal effect of the participation treatment (T2) on compliance will be reduced for businesses that have previously commented on draft regulations.

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VII: Power Calculations

Background: In our preliminary research for this project in September 2013, we worked with the MOLISA Labor Safety officials to estimate the number of firms that would be affected by the new hazardous chemical storage regulation and the share of firms complying with the current version of the regulation, which is considered to be outdated. MOLISA has yet to complete its pre-regulation study, so the numbers they gave us our ballpark estimates. According to their current inspection records, only 8% of affected firms are complying with the existing regulations. MOLISA did not have a population size of affected firms, but did provide us with a list of the industrial sectors that would be covered by the new chemical storage regulation, including a wide range of industries from chemical producers to paint manufacturers to garment companies. Using this list, we matched these sectors to the list of registered firms in the Hanoi metropolitan area from the National Tax Authority database. In addition, to the city of Hanoi, we also included the border provinces of Bac Ninh, Hai Duong, Hung Yen, Vinh Phuc, Phu Tho, and Tay Nguyen. This matching exercise produced 5,200 operations that would be affected by new chemical storage guidelines. The Tax Authority list also includes information on size (annual revenue), four digit ISIC code, and gender of the business owner/manager. This sample frame is preliminary, because the sectors of affected firms may shift after the final pre-regulation study is completed.

Key Assumptions:

1. Current compliance rates are extremely low (8%), implying that variation in compliance is also quite low and the expected effect size of each additional treatment will be reasonably large (after all, we are measuring growth from a near zero level).

2. To keep the power calculations tractable, we conceptualize the empirical analysis as three separate tests: H1 (Information) = T1>C; H2 (Participation)= T2>T1; H3 (Legitimacy)= T3>T2.

3. We calculate our estimated treatment effects based on two sources: 1) theoretical literature on the participation-compliance relationship; and 2) observational data from the Vietnam Provincial Competitiveness Index survey on current levels of compliance with labor laws.1 From these, we expect the effect size for T1 to be about .22 standard deviations (or a 6 percentage point change in the level of compliance). Conservatively, we estimate the effect size of participation (T2) to be about the same (6 points). Based on the theoretical literature, we estimate the effect size of legitimacy to be twice that of information alone (.44 standard deviations or 12 percentage points).

1 See www.pcivietnam.org for survey details.

http://www.pcivietnam.org/

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4. Further, using observational data from we estimate that explained variation from our three blocking variables (size, narrow sector, and gender) to be about 10%.

Calculation: Using the Optimal Design software to measure effects with 5% statistical significance and with 80% power, we calculate that we would need about 522 observations in the sample. To account for potential non-response and to provide some cushion, we conservatively estimate 600 observations for both the control group and T1 (See Figure 1). Repeating this exercise for the T2, we employ the same estimated treatment effect, requiring 300 additional observations (we used 400). For H3, the legitimacy treatment, the larger effect size means that we require only 133 observations to reach 80% power (See Figure 2). To be conservative, maintain simplicity, and to allow room for a study of heterogeneous effects with the blocking variables, we maintained the same 600 observations for both placebo and participation.

Figure 2: Power Calculation for H1: Information Treatment

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Figure 3: Power Calculation for H1: Information Treatment

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VIII: Instruments

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Appendix 1: Pre-Treatment Survey

Enterprises Survey – Round 1 Black script represents questions to be answered by respondents. Red script represents instructions for enumerators or questions to be filled out soley by enumerators. Navy blue script represents text to be read aloud by enumerators to respondents. Questions filled out by Research Team before Arrival at Company (through Phone Call) Randomly Generated Firm-ID……………………………………

1. Company Name: ……………………………………………………………………………………….

2. Company Address:

……………………………………………………………………………………

3. Company Main Industry (by revenues): 4 digit ISIC Code ……………………………………………………...

4. Company Legal Form:

Private enterprise Partnership Limited Liability Company Joint Stock Company Joint Stock Company with Minority State Ownership

Joint Stock Company with Majority (but not 100%) State Ownership

Other 4a. If “Other”, please specify ………………………

5. Does this company have any foreign Ownership? Yes No

6. Enterprise Leader’s Name: ……………………………………..

6a. Enterprise Leader’s Gender: Male Female

7. Enterprise Leader’s Formal Position Title: …………………………………………………………………

8. Interviewee:

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a. Enterprise Leader

b. Representative of Enterprise Leader

8a. If the answer is (b), please specify the formal title of interviewee: ………………………………………………………………… B. Questions to be asked at the enterprise I. Respondent Thank you so much for the meeting. We are conducting a survey as part of a joint research effort of the Vietnamese Chamber of Commerce and Industry (VCCI), Duke University, and National University of Singapore. The study is intended to improve the quality of services of VCCI and the business environment for private business in Vietnam. Today, we will ask you some questions about your business performance and your perspectives on economic governance and the regulatory environment in Vietnam. Let’s begin with some basic information about you and your business. 1. What year were you born? …………

2. In which province were you born? (Please refer to the provincial code in the following page) ………………………………………………………. Now, I would like to ask you about your educational and work experience: 3. What is the highest degree you currently hold?

Did not graduate high school High School Vocational college Bachelor’s Degree Masters of Business Administration (MBA) Other Masters Degree Doctoral Degree

4. Did you ever study or work abroad outside of Vietnam?

a. Yes, I have studied abroad b. Yes, I have worked abroad c. Yes, I have studied and worked abroad d. No, I have neither studied nor worked abroad

5a. Which foreign country did you study? …………………………………………

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1) USA; 2) United Kingdom; 3) Germany; 4) France; 5) Other European country; 6) Japan; 7) Singapore; 8) Korean; 9) Other Asian country; 10) Other country (please specify…………………)

5b. Which foreign country did you work? ………………………………………… 1) USA; 2) United Kingdom; 3) Germany; 4) France; 5) Other European country; 6)

Japan; 7) Singapore; 8) Korean; 9) Other Asian country; 10) Other country (please specify…………………)

6. Next, I would like to ask about your working experiences. I am reading a list of positions that you may have occupied. Please say “YES” if you have ever hold that position, “NO” if you haven’t.

POSITION YES NO Owner or CEO of a different private company Private company employee SOE Director SOE employee Informal economy owner or manager Military servant Civil servant

II. Enterprise

7. Are you the owner of this company?

Yes, I am the only owner of the enterprise Yes, I am one of the owners of the enterprise No, I am not the owner of the enterprise. I am employed by the enterprise’s owner

8. In what year did this enterprise legally registered? …………………..

9. Did your enterprise start its business in the same year? …………………..

Yes No 9a. In which year did your enterprise start its business

10. Please list your enterprise’s top leading three product and service lines (based on share of revenues)

First product line: …………………………………………………………………………………… Second product line: ………………………………………………………………………………... Third product line: ………………………………………………………………………………

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11. What is the total equity capital of this company? Under 0.5 Billion VND

Between 0.5 and 1 Billion VND

Between 1 and 5 Billion VND





Above 500 Billion VND

12a. How many employees do you currently have in your enterprise? (including full-time, part-time, short-term/ seasonal … employees).

Less than 5 people

Between 5 and 9 people






Above 1000 people

12b. Could you please estimate, of the total number of employees as stated above, approximately how many percent are full-time employees (who work for 40 hours or more per week)? ………% 12c. Could you please estimate, of the total number of full time employees as stated above, approximately how many percent are formally contracted employees? ……..% 13. Which statement best describes your enterprise’s overall performance in 2014?

Large Losses Small Losses Break Even Small Profits Profits as expected

14. Which statement best describes your enterprise’s investment plans in 2015 and 2016?

a. Plan to considerably increase size of operations b. Plan to increase the size of operations c. Will continue operating at present size d. Plan to considerably reduce size of operations e. Plan to close this business

15a. Does your enterprise have a Land Use Rights Certificate (LURC) for the land on which it operates?

Yes No

15b. Your enterprise is currently operating in how many land areas? ….. 15c. Of all the land areas, how many areas your enterprise has Land Use Rights Certificate?......

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III. Perspectives on the Government 16. Next, I would like to ask you about some government agencies who manage and monitor your enterprise. Firstly, I will list agencies that you frequently work with. For each agency, please let me know if you satisfy with business regulations applied by the agency on your enterprise over the last year? Please rate your satisfaction from 1 to 5, of which 1) Very unsatisfied; 2) Fairly unsatisfied; 3) Neutral; 4) Fairly satisfied; 5) Very satisfied.

Administrative Unit Very

unsatisfied Fairly

unsatisfied Neutral Fairly

satisfied Very

satisfied Ward/Commune Administration

District Administration Province Administration

- Hanoi Department of Labor, Invalids, and Social Affairs

National Administration - Ministry of Labor,

Invalids, and Social Affairs

17. Next, I am reading a list of specific regulatory agencies. For each agency mentioned, please provide your best guess of how many times was your company formally inspected by the agency over the last year: (Enumerators please write 0 for zero inspections and -999 if the respondent cannot recall).

18. How would you evaluate the attitude of government officials toward the private sector?

Negative Somewhat Negative

Neutral Somewhat Positive

Positive

Regulatory Agency # Regulatory Agency # 1 Fire and Labor Safety 7 DONRE (Natural Resources and

Environment) Regulators

2 Economic Police 3 Customs Authorities 8 Tax Authority 4 DOLISA (Labor) Regulators 9 Construction 5 Market Regulators 10 Other (please specify):

……………………………………..

6 Food Safety and Sanitation

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IV. Perspectives on Business Regulations Some people argue that government’s business regulations are intended to protect citizens and workers against the negative side effects of business, and create a framework for business to make contributions to the society, balance interests among target populations. Other people argue that these regulations create additional costs and burdens for enterprises. With this in mind, we would like to better understand your views about how regulations affect enterprises like yours. What is your opinion of the following three statements? Please say “Strongly Agree”, “Agree”, “Disagree”, or “Strongly Disagree”: 19. “I believe government’s business regulations are designed with the intention of protecting citizens, workers, and the natural environment.”

Strongly Agree

Agree Disagree Strongly Disagree

Don’t want to answer

Don’t know

20. “Government officials have sufficient understanding of enterprises’ situation to effectively carry out their regulatory duties.”

Strongly Agree



Don’t know

21. “It is common for government officials to use regulations to extract rents from businesses in my industry.”

Strongly Agree



Don’t know

Moving on to a slightly different subject: In order to better understand how well the government has communicated legal regulations to your company, I would like to ask a set of questions about your understanding of the rules, including the Law on Laws, that govern the ability of companies like this one to influence important laws and regulations. 22. Does government have a legal obligation to make drafts of business regulations available to companies like this one before they are finalized and implemented?

(Interviewers, please tick yes, even if the respondent notes that the obligation has not been met in practice).

Yes No

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23. Does government have a legal obligation to allow enterprise to make comments on drafts of business regulations before they are finalized and implemented?

Yes No 24. Does government have a legal obligation to provide formal feedback on comments provided by enterprises?

Yes No

Now I would like to ask you some questions on the actual activities of this company in 2014 with regard to the government’s business regulations. 25. Did you read a draft version of a government regulation in the past year?

Yes (answer question 26) No (skip to question 35)

26. If yes, which regulation, in particular, did you read? _____________________________ 27. Where did you FIRST learn about the draft regulation?

Provincial representatives of the National Assembly

Relevant provincial authorities

Business and professional associations

Others (please specify): ………………………………………… …………………………………………

28. The above agency provided you with the draft regulation through which FIRST channel?

Phone call Website/ email Workshop Others (please specify): ………………………………………… …………………………………………

29. Did you give comments on draft government regulations in the past year?

Yes (answer question 30) No (skip to question 35)

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30. If yes, which regulation, in particular, did you comment on? _____________________________ 31. If yes, which channels did you use to give comments on government regulations? Check all that apply.

Provincial representatives of the National Assembly

Relevant provincial authorities

Business and professional associations

Others (please specify): ………………………………………… …………………………………………

32. Through which communication channel did you give comments on government regulations?

Phone call Website/ email Workshop Others (please specify): ………………………………………… …………………………………………

33. Did you receive any response to your comments?

Yes No 34. Do you believe that any element of your comments was or will be reflected in changes to the draft regulation?

Yes No 35. Do you know is there any draft regulation related to your enterprise being publicized to solicit comments/ inputs?

Yes No Now I would like to ask you a couple questions about compliance with regulations. To help focus our discussion, I would like to ask you specifically about the government requirement that all companies sign formal contracts with all their workers. 36. In your opinion, how many percent of enterprises do you think are in full compliance with this regulatory requirement?

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Almost None Few Half Most Almost All

37. Do you think that enterprises that are not in full compliance with this regulatory requirement face a danger of being punished by government authorities? How would you evaluate the potential risk?

Almost No Danger Some Danger Danger Almost Certain to be Punished

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Appendix 2: Placebo Presentation on VCCI

https://www.dropbox.com/sh/fvlcgpagx3hktgy/AADwQhwDU4IF9JPkXi1WjTK0a?dl=0

Appendix 3: Information Treatment on Government Regulation



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Appendix 4: Participation Comment Form

LAMINATED HARD COPY FOR CEO INTERVIEWEES

1 Organization by chemical types. Hazardous chemicals must be organized according to their chemical characteristics. In particular, this means chemicals that have the ability to react with each other should not be placed near each other. Similarly, chemicals that require different methods to extinguish fire – for instance those requiring water versus other solvents- must also be separated

2 Storage distance from wall and ground. All chemical storage containers must be placed at least half a meter from the wall, in order to avoid potential corrosion of warehouse structures. Hydrophobic chemicals have to placed on the stand that is at least one third of meter high

3 Warning signs. Equally important are the warning signs that correspond to each appropriate type of hazardous chemicals that is present on the business grounds.

4 Lightening protection. To avoid potential damage caused by weather, the warehouse must have lightning protection

5 Cleaning basin. There should be cleaning basin site directly outside the area of hazardous chemicals, so that employees can immediately cleanse off the chemicals from their bodies, eyes, and clothing when needed.

6 Vehicle sign & grounding wires. In order to transport flammable liquids, the vehicles must have a fire prohibition sign and grounding wires to avoid potential sparks that might ignite chemicals

7 Electrical system. The breaker, fuse, and socket outlet of the electrical system shall be installed outside areas containing easily flammable chemicals

8 Lighting system. The electrical system for lighting must be the type made for the prevention of explosions; it should also be carefully designed to avoid the penetration of gasses or dust into the lighting devices that might be flammable or combustible

9 Mixing & fire. When mixing the chemical liquid into the solvent in an exposed device, the regulation requires that it takes place at least 10 meters away from the areas with fire.

10 Welding. Welding and other activities that can create fire must not be done within 20 meters of flammable chemicals

11 Operator protection wall. The wall of the device and storage tanks, used for corrosive chemicals, must be higher than the operator position by at least 0.9 meters

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INTERVIEWER TABLET

INTERVIEWER INSTRUCTIONS:

Begin by introducing the point of this final participation section and handing the laminated hard copy to the CEO interviewee. Before reading the provisions, note the first question on business costs. Then read each provision, one by one, beginning with the bolded provision “nickname” and then reading out the entire rest of the text. Note that the bolded “nickname” is meant to give an easy shorthand way to refer back to this provision in subsequent discussion (without needing to reread everything). After reading each individual provision, quickly ask the interviewee if the provision will increase their costs.

INTERVIEWER SCRIPT:

The final activity for today is to get your feedback on the new draft regulation on worker safety in the handling of hazardous chemicals. I will read to you a list of 11 provisions in this draft regulation that VCCI’s Legal Department has identified as having the most potential to be meaningful to relevant businesses. Here is a laminated hard copy version listing out these 11 provisions. [Hand the laminated hard copy over to CEO interviewee.] As I read each provision, please consider whether you expect that complying with this provision will raise your current costs of doing business. Here we go! [NOTE: after reading each provision, with emphasis on bolded parts, ask the following concisely worded question: “higher costs?”]


Having gone through each of the provisions a first time, established the provision nicknames, and gotten a response on the costliness of each, ask the following question, which refers across all the 11 provisions.

INTERVIEWER SCRIPT

Those are the 11 provisions that VCCI has identified from the draft regulation as most likely to affect a business like yours. Now I would like to know: do you believe any of these provisions are NOT a practical means for increasing worker safety? If yes, please tell me which of these provisions, in particular, you believe are not practical ways for government to try to meet this goal. You can use the number or the bolded words to refer to the provision.


Mark each of the provisions named by the interviewee. Then introduce the third and final question that also refers across all the 11 provisions.

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INTERVIEWER SCRIPT

Now I would like to know your ultimate thoughts on which provisions of the regulation you think should NOT be included in the final version of the regulation. Please list which of these provisions, in particular, you believe should be taken out. You can use the number or the bolded words to refer to the provision.


Mark each of the provisions named by the interviewee. Now we come to the most important part: actual participation and feedback by the CEO interviewee. We want to get their thoughts on each of the provisions for which they had provided a “YES” to any of the three questions just asked. [NOTE: Let’s have the tablet programmed to do this automatically, creating an open-ended question for each provision for which there had been a “YES” to any of the three questions, that is appropriate for whatever combination of “YES” answers was given for that provision. We simply skip past provisions for which there were no “YES” answers across all three questions. The open-ended questions should be presented in their order according to the original list.]

INTERVIEWER SCRIPT

Now we have come to the most important part of our meeting today: the part where you give your specific feedback on how this draft regulation can be improved to make it work better for a firm like yours.

You said that the _________ provision [is costly, is impractical, should be dropped]. Please explain why you feel this way and how the provision could be changed to make it better.

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Repeat the above question until all provisions have been covered for which there was a “YES” answer to one of the three main questions. Then move to the very final question.

INTERVIEWER SCRIPT

This is my final question for you. Beyond what you’ve said already, are there any additional changes that you would like to see made to this draft regulation?

That was my final question. Thank you very much for your participation. It is very useful for VCCI to get your feedback on this draft regulation, so as to be able to pass it on to the drafting committee and hopefully have a positive effect on the overall business environment in our country. We hope you also found this a constructive process and that you will be interested to have further discussions with VCCI about continual improvement of the business environment for the betterment of our economy and our society. We wish you all the best with your business going forward.

evaluation summary: participation and regulatory ......understanding of new regulations and will...

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