Garment industry benefits from less red tape

Firms have shown their appreciation after Minister Tran Tuan Anh annulled Circular 37 about inspection of formaldehyde content in textile and garment products as they said it is legally groundless, costly and time-consuming.

The circular was officially issued on October 10 last year by former minister Vu Huy Hoang and contained the same criteria as the document released in 2009 but with added requirements for sampling methods to reflect updated testing methods and quality management requirements.

After the circular was issued, it has received strong oppositions as firms had to pay an inspection fee of VND1.5-VND2.5 million (US$68-US$90) per sample no matter if they imported a metre of garments or one button and the formaldehyde content check usually took three to seven days.

The inspection fee for one firm could run into hundreds of billions of Vietnam dong a year. This problem has been brought up time and time again at conferences about removing difficulties for enterprises without any result until now.

According to the Central Institute for Economic Management, there are many unreasonable regulations that cost firms time and money. Nguyen Van Can, director of the General Department of Vietnam Customs, also admitted that there are many regulations similar to the Circular 37. He hoped the ministries and agencies would review the regulations to make their work more efficient.

"This has been carried out very slowly," he said.

According to the Central Institute for Economic Management, the Ministry of Industry and Trade violated the laws by issuing the circular because the textile products are not on the list of potentially unsafe goods under the ministry's management.

Only after the ministry had issued Circular 37, did they issue Circular 41 to add textile products to the list. Circular 37 remained groundless.

The firms complained that they were subjected to too many inspections and checks for the past seven years but only a very small amount of products have been found to violate the regulation. In addition, they have not detected any case of health hazards caused by excessive level of formaldehyde.

Statistics from Tan Son Nhat Airport Customs show that only six cases have been found to fail to meet requirement among 8,000 shipments the customs department inspects each year. The percentage of non-compliance never reached 1%.

The Ministry of Industry and Trade will propose a new circular to replace the Circular 37.

In its report on the implementation of Government's Resolution 19 on improving the business environment and national competitiveness, the Ministry of Planning and Investment said it would be a long time until they could achieve the goals of the resolution such as reducing the waiting period for getting a construction licence because of old regulations.

The ministry went on to say that there had been no real achievements in simplifying customs procedures as the inspection and testing fees hadn’t fallen since last year, while bribery seemed to increase.

However, the ministry couldn't say how much money firms had to pay based on regulations like Circular 37.

It's no secret that issuing unreasonable regulations is a way for state officials to legalise bribery and extract more from firms. So by abolishing Circular 37, the ministry has helped to prevent corruption, stopping those who invent and support such regulations, who take advantage of policies for personal interest.

Vietnam needs decisions like that of Minister Tran Tuan Anh because it will help create a favourable business environment, reform administrative procedures and boost enterprises like Prime Minister Nguyen Xuan Phuc said when he took office.