The State''''s role in provision of testing service for food safety in Vietnam: From socialization perspective

ABSTRACT Topic: The State's role in provision of food safety testing service in Vietnam - From socialization perspective Level of thesis: Master of Public Management Authors: Le Ba Anh,

V(.'C- i-d

UPPSALA UNIVERSITET UNIVERSITY OF ECONOMICS & BUSINESS,VNUH

UPPSALA UNIVERSITET

MASTER THESIS OF MPPM

The State's role in provision

of testing service for food safety in Vietnam:

From socialization perspective

Authors: Le Ba Anh

Pham Thi Ngoc Dung

Le Yen Oanh

Supervisor: Prof PhD Sven-Erik SvSrd

PhD Nguyen Manh Hung

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UPPSALA UNIVERSITET (SWEDEN) «&

UNIVERSITY OF ECONOMICS AND BUSINESS,VNUH

MASTER PROGRAMME OF PUBLIC MANAGEMENT

Le Ba Anh & Pham Thi Ngoc Dung & Le Yen Oanh

MPPM -Uppsala -Intake 1

The State's role in provision

of testing service for food safet> in Vietnam:

From socialization perspective

Supervisor: Prof PhD Sven-Erik Svard

PhD Nguyen Manh Hung

I i »•

Hanoi, Ma> -2011

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ACKNOWLEDGEMENT

The thesis is completed in the scope of the Master Program of Public Management Uppsala University by Le Ba Anh, Pham Thi Ngoc Dung, and Le Ydn Oanh Certainly, the thesis will impossibly be well completed without the valuable support of the Swedish and Vietnamese instructors as well as the leaders and employees of the agencies selected for the two case studies of the research

-We would like to express the gratitude to Prof Dr Sven-Erik Svard - Head of Political Sciences, University of Uppsala Sweden, for his orienting instruction in the process of topic selection, especially in limiting the scope of the research: to Dr Nguyen Manh Hung

- Director of Center for International Security and Strategic Studies, Institute of World Economics and Politics, Vietnam Academy of Social Sciences, who has accompanied and guided the research process and provided the group with \aluable knowledge and research materials

We sincerely thank the lecturers who enthusiastically imparted useful knowledge on public management during the master program to all class attendants We also thank the support

of the University of Economics and Business, the coordinators and program managers for their support and assistance

We would like to thank the National Agro Forestry Fisheries Quality Assurance Department (NAFIQAD) - Ministr\ of Agriculture and Rural Development, Committee on Science 1 echnology and Environment of the National Assembly Department of I-ood Hygiene and Safety - Ministry of Health, Sub-branch of NAFIQAD Region 6 - Can Tho,

Intertek Vietnam Co., Ltd for providing the group with references, inter\ iews and creating

favorable conditions for our group to access data sources: and informants involved in this research

Thanks for the support of our classmates, friends, and colleagues who have contributed ideas and information to the thesis

Respectfully

Le Ba Anh Pham Thi Ngoc Dung Le Yen Oanh

ABSTRACT Topic:

The State's role in provision of food safety testing service in Vietnam - From socialization perspective

Level of thesis: Master of Public Management

Authors: Le Ba Anh, Pham Thi Ngoc Dung, Le Y^n Oanh

Instructors: Prof Dr Sven-Erik Svard and Dr Nguyen Manh Hung

Master defense day: 17/5/2011

Objective:

In Vietnam, food contamination has led to thousands people suffering from food poisoning and an average of 60 deaths per year Consumption of unsafe food has an adverse impact on health and life quality of people Production of unsafe food also prevents the producers from entering the food market This creates an urgent need for strengthening the management of food safety, in which food safety testing plays an important role

In the current context of Vietnam's increased economic integration, the provision of public services in general, and food safety testing service in particular has been liberalized in line with the market mechanism and reform requirements As a result, there are two viewpoints on liberalization of Vietnam's food safety testing service:

1) The traditional viewpoint argues that because food safety testing sen ice has a

direct impact on life and health ol the people, it must be directly provided by the State agencies

2) The second viewpoint stales that food safety testing service should be provided by

the private sector, as long as the latter can meet the State's standard, and this has been done in man\ countries The State will focus only on some types of testing service such as verification, not-for-profit ser\ices, and services in the disadvantageous areas

Vietnamese term of "public service socialization" has recently appeared in this context

of liberalization The meaning of "socialization" should not be similarly interpreted in English Rather, it means the State retreat from pro\iding public services in areas where the non-public sector can undertake Vietnam's Law on Food Safet\ affirms socialization of food safet\ testing service as a long-temi measure to mobilize more resources for food safety management activities Ne\ertheless up to now, there is not

adequate research on socialization of food safety testing service, particularly the role oi

the State in this process

IV

Our research is to study State's role on the provision of food safetv testing service and

change of this role in the socialization process Our research question is: ''How does

the State's role change in the socialization of FS testing service?" Findings of our

research will supplement available researches on reform of public management model, and provide the evidence-based reference for relevant policy makers

Methodology:

Methods used in the research include: Literature review, case study, comparison and in-depth interview Data used in the research include the system of current policies, regulations of Vietnam, primary and secondary data from relevant survey, fieldwork data collection and in-depth interviews

We have developed a model of public services socialization in Vietnam with 3 major stages based on existing theories of public management, public services and the reality

of socialization in health and education sectors This model was tested against the case

of food safety testing service provision by analyzing the changes of State's role in the socialization process

We then analyzed the secondary data from the survey conducted by National Forestry-Fisheries Quality Assurance Department The data covers 4 groups of testing service providers, corresponding to different degree of socialization, to compare the efficiency, performance and capacity among different groups of providers From the results, we examine the room for further socialization in each group of providers

Agro-Next we examined two case studies: 1) a State-owned agency and 2) a private establishment (in the same geographic area) to compare the efficiency in the use of investment capital, and human resources, speed of investment for capacity building and service quality

Findings and Conclusions:

1 Findings of the research allow us to conclude that food safety testing senice falls in the category of extended public services (as defined by the \V'orld Bank) of which State is

not the only provider This conclusion is iu line with the 2""^ viewpoint mentioned

above Even though in principle, food safety testing service should be socialized in line with the market mechanism, some special kinds of testing service may not be provided

by the private sector, either because the latter is not readv to assume this role or because the pro\ ision of those services are too risky for them

2 The State's role in providing food safety testing service has undergone in 3 stages: 1)

the stage of direct State delivery: 2) the transitional stage: and 3) the socialization stage)

3 In-depth analvsis of two case studies indicated that the private sector had more

advantages than the public sector in terms of investment efficiency, use of human resources, the speed of quality improvement and development motivation Therefore, there is a need to help the private sector to enhance investment on service delivery in both quantity and quality In contrast, there is no need to increase the number of the

State-owned establishments, but to improve their service quality and the scope of autonomy

4 Findings in the research allowed us to strengthen the original model of public services

socialization with regard to the role of State in terms of: supply-demand assessment:

planning of service provision and establishment of output-based monitoring system of services quality

5 In our new model, the State is identified in the process of socialization of food safety testing service as having the following roles :

( H T o identify core and extended public services, and from this, identifving its responsibility and role towards each group of public services, the management and provision mechanism of public services;

(2) To assess supply-demand and plan the provision of public services, to identify

targets, itinerary and solutions for socialization oi food safety testing service in

each specific stage

(3) To promulgate management tools for food safety testing service, including policies and conditions to deliver services - the necessary condition to assure service quality

(4) To extend the scope and enhances the autonomy of public service providers and designs the itinerary to transform these establishments into the model of service delivery enterprises

(5) To promulgate preferential policies on investment, taxes, land and loans to facilitate the development of non-public models:

(6) To generate a fair competition environment based on the four pillars of governance: accountability, transparency, participation and predictability together with the reforms of administrative procedures and improvement in the responsiveness of responsible indiv iduals and organizations

(7) '\o develop a system of criteria, outpul-based monitoring and evaluation about

quality of the services

(8) To facilitate service users to give feedback on quality, and balance services delivery so that the State can refine policies appropriately

Limitations and recommendations for further studies

Our research has a limited scope Because of time and resource constraint, we were not able to conduct the survey and evaluation of service quality from the user perspective Our two case studies have not dealt with wide-ranged comparative criteria (e.g price, quality )

The further studies should increase the number of case studies and broaden the scope of study to not-for-profit and public-private-partnership models in service provision They should also develop evaluation indicators on quality of services by clients' perspectives

to have overall assessment of efficiency oi different models of public services

provision

VI

Contribution of the thesis:

Our thesis is one of few primary studies in the field of socialization of food safety testing service It has strengthened the theoretical basis of public management and specifically, of the changing role of the State in providing public services It has developed the model and identified the State role in provision of food safety testing service It also provides policy implications for the two models of public and non-public service providers

Our research results have helped the public sector managers see the current situation and the impact of State policies on food safety testing service provision and quality assurance Our research findings also figure out the State's role in socialization of public services, and identify some aspects that need State intervention but not yet addressed in the existing researches

Key words: Food safety, food testing, socialization State, public services, service

provision

TABLE OF CONTENTS

1 INTRODUCTrON 2

2 LITERATURE REVIEW 5

2.1 PUBi ICSFRVICE-S 5

2.2 T H E S T A T E ' S ROLE IN PROVISION OF PUBLIC SERVICES 5

3 SOCIALIZATION OF PUBLIC SERVICES 9

3.1 SOCIAIJZAMON OK PUBLIC SIRVIC liS IN VlI-TNAM 9

3.2 STAGES OF PL'BLIC SERVICE SOCIALIZATION IN VIETNAM 10

4 MANAGEMENT AND PROVISION OF FS TESTING SERVICE IN VIETNAM 13

4.1 T H E STAGE OF STATE DIRECT PROVISION OF TESTING SERVICE FOR FS 13

4.2 TRANSITIONAL PERIOD IN MANAGEMENT OF FS TESTING SERVICE 14

4.3 T H E PERIOD OF ENHANCING SOCIALIZATION OF FS TESTING PROVISION 16

4.4 CHANGE O F THE S T A T E ' S ROLE IN PROVIDING FS TESTING SERVICE 18

5 FINDINGS FROM SURVEY AND CASE STUDIES 20

5.1. FINDINGS FROM SURVEY OF I HE TESTING SYSTEM BY NAFIQAD 20

5.2 C A S E STUDY 1: 22 5.3 C A S E STUDY 2 24 5.4 SOME EVALUAI IONS FROM n i E CASE STUDII;S 26

6 CONCLUSIONS 29

6.1 Wn H REGARDS TO THE VIEWPOINT FOR SOCIALIZATION OF F S TESTING SERVICE 29

6.2 Till ROLF OF THE STATE TOWARDS SOCIALI/ATKW OF TESTING SERVICI: FOR FS 29

6.3 Willi REGARDS 10 POM-NTIALS OF SOCIALIZATION OF TESTING SI;R VICE FOR FS 3 I

6.4 LIMITATIONS AND PROPOSED FUTURE RESEARCHES 31

7 REFERENCES 32

7.1 FOREIGN DOCUMENTS: 32

7.2 DOMESTIC DOCUMENTS: 32

8 APPENDICES ^^^

8.2 APPENDIX 11: LlSIOF IN ILRVIEWEES 34

8.3 APPENDIX Ml: LIST OF SOME POLICIES ON SOCIALIZATION OF PUBLIC SERVICES 35

8.4 APPENDl X IV: LIST OF SOME DOCUMENTS ABOUT FOOD SAFETY MANAGEMENT 35

v n i

TABLES AND FIGLRES

Figure 4.1: Organization chart of NAFIQACEN 13

Figure 4.2: Organization chart of NAFIQAVED 15

Figure 4.3: Total volume of export goods tested through NAFIQAVED 1996 - 2006 16

Figure 5.1: Distribution of testing labs of different areas throughout the countrv' 20

Figure 5.2: Comparison of investment efficiency based on the testable targets 26

Figure 5.3: Comparison of efficiency of human resources use per testing target/year 26

Figure 5.4: Comparison of development speed of testing capacity 27

Figure 5.5: Comparison of improvement speed of testing service quality 28

Figure 6.1: The State's role in socialization of testing service of food safety 30

ACRONYMS AND ABBREVIATIONS

European Union Food and Agricuhure Organization Food and Drug Administration of the U.S

Fisheries Sector Program Support Hazards Analysis and Critical control points International Organization for Standardization Ministry of Agriculture and Rural Development Ministry of Health

National Fisheries Quality Assurance Center National Fisheries Quality Assurance and Veterinary Directorate National Agro-Forestry-Fisheries Quality Assurance Department Sanitary and Phytosanitary

Technical barriers to Trade Vietnam Association of Seafood Exporters and Producers World Trade Organization

L INTRODUCTION

In Vietnam, food contamination has made thousands of people suffered from acute food

poisoning On average, more than 60 people die each year Each person experiences gastrointestinal tract infection about 1.5 times per year Abuse of plant protection chemicals is one of the causes of cancer, brain damage, leukemia, kidney failure and even death Consumption of unsafe food has negative effects on health, work capacity and qualitv of life of people Absence of FS assurance also limits market access of high value agricultural products of Vietnam This poses a pressing demand to strengthen the FS testing service in Vietnam If public services are regarded as "activities to serve the basic needs of the society, the common interests of the community, the society" (Le Chi Mai, 2003), then like health and education, FS testing is considered a form of public service, not only because of its broad social impact, but also because it originally was provided and strictly managed by the State during the period of the commanded economy

The traditional viewpoint, which is strongly infiuenced by the centralized subsidy mechanisms, argues that provision of FS services, including testing service, is the responsibility of the State and it must be directly supplied through State agencies, using State budget and is not-for-profit This view also suggests that the nature of the private service provision is to earn profit, so it is dil'ficult to control the quality of service and therefore fairness for users is not guaranteed (since u.sers have to bear costs for profits of the business) Moreover FS is an important aspect, closely linked with the social security and directiv related to people's health This is a core service, and accordingly must be directly provided by the Stale

However, in today context of increased international economic integration, the public services such as FS testing service must be provided in a more competitive and efficient way in line with the market mechanism In this regard, the second viewpoint, which is more popular in many countries such as USA, Japan EU considers that this kind of service should be provided

by the private sector (e.g the Association for Protection of Consumers, the Food Standards Association ), or the Public Private Partnership model (PPP) on the basis of meeting the standards set by the State The State still provides FS testing service, but focuses on verification, non-profit, free of charge services or in disadvantageous areas Furthermore, while the State is responsible for ensuring FS, it uses food testing as a management tool Testing service is viewed

as not having the characteristics of a core public service, such as market failures, demand to be fairly supplied, political control, being uncompetitive, outputs are unidentified

In view of new public management school, the Government's role changes from "rowing" to

"sailing" The State does not need and should not deliver all kinds of services In many countries

in the \vt)rld public services provision role has been transferred to the private sector Range of transferred public services is expanded in the principle that what the other economic sectors may deliver, the State shall not participate For the services that other economic sectors do not want or not yet participate, the State shall take the full responsibility to provide

In Vietnam, along with the transition to the market mechanism, the State has socialized the provision of certain public services This is considered a typical process of Vietnam

Socialization oi public services does not only mean that the public services provision is

transferred to the non-public sector, but also refers to the proactive participation of non-public sector into the devcKipment and diversification of the service provision Eventually, quality of service through competition will be enhanced and people can benefit from better quality services

In that trend, the Law on Food Safety No 55/2010/OH12 of Vietnam does not onlv regulate FS management in the entire process of food production and consumption, but also stales the policy

of socialization of FS testing service as a solution to increase investment resources to overcome various existing weaknesses However, until now, there is not any research about the socialization of FS testing services in general and FS testing service in particular, especially the State's role in that process

This research explores change of the State's role in providing FS testing service during the socialization process

It aims to answer the question:

''How has the State's role changed in the socialization of FS testing service?"'

To answer this question, the research has verified the specific characteristics of socialization as

the process of gradually releasing the monopoly of the State hut not totally eliminating the State 's involvement in the provision of public services

The research develops a socialization model of public services based on the theoretical framework and practices in health and education services This model is then tested against the

I S testing service by examining the change ol Slate's role in different stages of socialization

The above process leads to the appearance of different kinds of public services providers

However, the important issue is not the number of service providers, but the quality and efficiency of service provision Therefore, comparing the performance of different kinds of service providers is important to help finding out the strengths and overcoming the weaknesses

To compare the performance of FS testing service providers, this research used the survey results of NAFIQAD about four FS testing service groups, corresponding to four different levels

of socialization, from low to high, including:

(>roup A: Testing labs of the State agencies under Ministries with managerial functions for FS Group B: Testing Labs of Research Institutes, Universities

(•roup C: resting Labs being State service delivery agencies in charge of FS

(iroup I): Testing Labs being non-public sector facilities (private companies, joint-stock

companies, foreign invested companies, association)

The research also conducted in-depth analysis of two case studies of the laboratories of Group C and n including:

1) NAFIQAD Branch 6 - Can Tho State senice delivery unit in the transitional process towards autonom>;

2) Can Tho INTERIl K Compan\ an establishmeni invested and managed by a private investor in line with the socialization policy

These two case studies are selected on the basis of the following criteria:

- The State-owned provider of testing service: to explore the stages of transition towards autonomy and the State's role during the time of FS crisis

- The private provider: to analyze the impact of socialization policy on provision of FS testing service

- One belongs to the public sector and one belongs to the private sector: to compare and evaluate the benefits of socialization, (i.e in term of efficiency of investment, and service quality )

Same location (both in Can Tho city) to rule out the effects of geographical difference Can Tho City is chosen because of its activeness in food production and trading with great testing demand, allowing justifying the balance in service demand-supply

- Two providers are in Group C and D, being the potential and capable labs to facilitate the socialization process

In-depth interview in the study field is used for these two case studies

The next sections of the thesis are structured as followings:

Part 2 - Literature review: This section reviews the works on public management, public service, and public service provision in Vietnam

Part 3 - Socialization of public services: This section provides a theoretical and practical basis

of socialization of public service in Vietnam The authors' views on classification of FS testing service are also presented in this section

Part 4 - Management and provision of FS testing ser\ice in Vietnam: This section presents

the changing role of the Slate towards the provision of testing serv ice for FS through three phases: From State direct provision (1) to State's management of the supply through State services delivery establishments (2) to socialization of service provision together with management (3) in Vietnam

Part 5 - Results of data analysis: Results of a survey conducted by NAFIQAD in 2010 on the

existing system of FS testing service in Vietnam; and findings of the two case studies

Part 6 - Conclusion: Research findings on the changing role of the State to provide FS testing service in particular and public services management in general; Contribution, limitations and further research

According to the World Development Report - World Bank (1997)':

- The core public sector includes the services (mainly pure public goods and services) that the government is the sole provider and all citizens are asked to receive when they are in need of such services Government provides this service based on a legal basis and principles of basic state management Such services can include law security, national defense and social welfare, environment, epidemic prevention services, property certification (properly, real estate), identification ( passports, visas, identity cards), certificates (birth, death, marriage), establishment registration (enterprises, associations and organizations)'

The extended public sector includes public services (mainly impure goods and services) of which providers may be the Slate and non State establishments (private, civil society,

communities) Ihe provision oi these services is fiexible depending on the needs of

consumers, non-monopoly, and this process can be free or not These services include health, education, urban transportation, information, infrastructure

The concept and scope of public services, even approached in different ways, are of a common nature, which is to serve the needs and common interests of society and the State is responsible for ensuring the prov ision of this service to society Even if the State transfers partly the

provision of public services to the private sector, it still plays a regulatory role to ensure

fairness in the distribution and overcome the inadequacies of the market

From ihe above characteristics, public services can be understood as the necessary activities to

serve the needs and common interests of the community and societ)\ directly delivered by the State or by authorized non-public partners

2.2 The State's rnle in provision of public serv ices

Depending on the nature and type, public service can be delivered directly b> the Stale agencies

or b) non-Stale sector Over time, the role of the Stale and other actors in the provision of public services has been significantly changed with the existence of different service providing models:

- The Slate agencies directly provide the public services: The Slate takes direct responsibility

to provide the public services relating to national security and common interests ot the

' Source: World Bank, World Development Report 1997

country that only public authorities have adequate legal status to do State also provides direct services in the sectors that are not favorable for market investment because of high costs or low profit

The State partly transfers the provision of services to non-State sector, including:

+ Delegating to private companies or non-governmental organizations to provide

some services and the State is responsible for ensuring the quality and often use funds allocated from the State budget for support

•f Forming joint-venture between the State and its partners to provide public services

on the basis of resources contribution, risks and profits sharing This form allows the State to reduce the investment budget and still participate in the direct management

to ensure common interests

-h Transferring responsibility of public services provision to non-state organizations for the services that these organizations are capable of delivering effectively These organizations are encouraged to operate with not-for -profit mechanism

-I- Privatizing public services, where State sells facilities to the private sector but still supervises and ensures the equality under the laws among the private providers, or the State outsources services to private sector that can perform well and eventually reduce number of staff in the public^

Fhe Slate must determine types of services it should lake the leading role in delivery: tvpes of services can be provided by the private sector and services can be jointly provided by Slate and private sector If State is overloaded in the provision of public serv^ices, the efficiency of public services provision will decline, creating negative impacts on the lives of people and social development

v»

' Retbnn ofpuhlic services in Vietnam (Ac Chi Mai ^APA 2003) Public services, management reform and

Graph 2.1: Model of public services provision

I

kcquircmcnb about clTiciencN

Source: Le Chi Mai, Lecture in the Senior Administration management course, NAPA, 2010

Before the 1980s, the role of the State and the public sector (e.g law enforcement and provision

of public services to society) focused on ''ruling", with limited attention to performance

Since the 1990s, there were quite a few researches on public management and Government reform (ADB, 2003; Boyle, 1995, Hood, 1995; Humphreys, 1998, Osborne and Gaebler, 1993; World Bank, 1997) including the issues of new public management, improving public service provision, management and public services There are also other practical works on public services provision in Europe, Australia and New Zealand (Anttonen, 1996; Boston, Jonathan et

al 1996; Pollit, and Bouchaert, 1995) These studies discussed the mode of the new public management, including the changing role of government from "rowing" to "sailing" or the State does not need and should not do everything but should decentralize to enhance the quality and

efficiency of its

In Vietnam, there are some

ht tatfifli, ^ Public

or

on public mMUfaflMnt from the views of State reform,

!• piMic adiiiiiiitirtiwi ftform in Vtcttani'* by

(Miniitry oT HofM Afhtri) in 2004,

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sector management and the role of State'^ by Vu Huy Tu (1999) and "Transferring the public services to non-state institutions - Problems and Solutions" by Le Chi Mai (2001)

Additionally, there are quite a lot of works relating to the public services, public finance reform, administration modernization, transferring public services to non-state institutions (Le Chi Mai, 2002; Dinh Van An, Hoang Thu Hoa, 2006: Dinh Van Mau 2002; Vu Huy Tu, Le Chi Mai, Vo Kim Son, 1998; Chu Van Thanh, 2004, Nguyen Ngoc Hien, 2002 Vo Kim Son 2002)

Besides, there are some papers of new public management in socialization of services in health, education, cultural and sports, services of common good (water supply and drainage, wastes and garbage collection ) Ministry of Finance of Vietnam is currently conducting a master project about socialization of some public services and continuity of reformed operation mechanism of public service delivery units However, we have not been able to access this project document

The above researches have initially examined the new public management model and its application in the Stale administration and public service provision in Vietnam For example, the book "Reforming public services in Vietnam." Le Chi Mai (2003) addressed that, in the process of globalization, along with the developed market economy, the public sector has faced major challenges in using efficiently the State resources to meet the demand of citizens State management model reveals the traditional disadvantages:

The Government apparatus is cumbersome, fhe maintenance cost increased while operational efficiency reduced Therefore, it is necessary to review the scope and role of the Government

Public services are of low quality, types are less diversified and prices are higher than those delivered by the private sector The strong development of science and technology requires adjustment and development of the administration

The democratization trend forced the Slate on one hand to accept the participation of the public into Slate management task, and on the other hand to intervene more deeply into the process of socio-economic, public sector reform and improvement of services qualitv

In other words, the internal and external social context requires the coordination and regulation

of personal aspirations to be in line with the interests of the communiiv The Stale and the public sector cannot act alone and solves all the social problems, but it must promote democratization associated with decentralization, to focus on p>erforming well the role of

"sailing"

^Source: hitp: vNww.xaliian.cpm niodulcsj>!iiVZmitlie.JS^Ai^

Reform of public services in Vietnam (Le Chi Mai, NAPA, 2003)

3 SOCIALIZATION OF PUBLIC SERVICES

3.1 Socialization ofpuhlic services in Vietnam

Even though the terms "public management and "new public management were not directly mentioned in the State official documents, the reform targets, specific policies in the master program of Administrative reform 2001-2010^ were towards the public management model through narrowing the State apparatus, replacing direct management by indirect management

through regulation, ^'transfer some work and services not necessarily to be delivered bv fhe

State to the hand of enterprises, social organizations, non-governmental organizations/' Decree

No 73/1999/ND-CP dated 08/19/1999 also stressed ''the State and social respect and treat

equally towards products and services delivered by both public and non-public facilities'';

Term "Socialization" appeared in Vietnam recently in the context of reform initiated in

1986 "Socialization" is used in Vietnamese with the following meanings^:

- The Slate retreats relatively its role in providing public services in areas where the public sector can undertake: the society or the private sector takes the responsibility to provide the services In general, people have the opportunity to use public serv ices delivered

non-by both the public and non-public sectors

Public service provision is affected by the supply - demand principle Since costs are shared between public and private sector, it leads to the trend that users (people) may use or deny a service

The state monopoly in service provision is reduced:

Socialization ofpuhlic services is a common trend in service areas such as health and education

in Vietnam today

In the education training sector: The State continues to fund universal education, and invest in

manpower training for targeted disciplines and careers that are difficult to mobilize social resources, or in disadvantageous and ethnic minority areas The Stale encourages establishing non-public educational and training institutions to convert public establishments into non-public ones It also encourages cooperation and joint training programs with high quality foreign training institutions and opening of the training institution with 100% foreign capital Ihe overall target is that, the majority of vocational training institutions and a part of training institutions that are not in charge of ensuring universal education will operate under the service delivery mechanism

In the health sector: The State continues to invest in health, ensuring the budget for the public

health facilities, basic health care policy for the poor and children under 6 years old Investment

is prioritized for preventive health system, and health facilities, especially in remote and disadvantaged areas 1 he State aims to strengthen and expand health insurance system Health insurance payers select the appropriate clinics b\ themselves: Pri\ate hospitals and clinics are encouraged to develop The Stale aims to eliminate monopoly in the export and import, manufacturing and supply of medicines Universal health insurance will be implemented

'^ Decision No I36'200] ^QD-TTg dated 17 September 2001 of Prime Minister

' Reference from the Article: Socialization in education and the State's role (Dr Hoang Ngoc Vinh, Director of Department, Ministr> of t ducalion and Irainmg) source: hup: pda.\ictbao.\n Iran^j-ban-doc Xa-hoi-hoa-uiao duc-vu-\ai-tto-cua-Nha-nuoc 20727765 478

transferring most of the public hospitals to operate under the form of service deliver}' Province: will have non-public hospitals

Thus, socialization is essentially a process of mobilizing resources in society to develop public services and make more people benefit from those serv^ices as well as be more responsible when using services Socialization carries the signs of a market economy in terms of demand -supply relationship Regarding the social meaning, socialization improves the quality, fairness and equality in society Socialization can be considered as a form of privatization, which means the participation of non-public partners

Mechanism and solutions of socialization include the followings:

- Stale creates and facilitates a healthy competitive environment in light of the law (to promulgate rules and standards about service quality, to supervise, evaluate the quality of services) to promote both public and non-public institutions to develop The beneficiaries are able to choose the appropriate service providers

To shift the operation paradigm ofpuhlic establishments toward public services provision,

to improve efficiency and quality of services and products:

lo transform a number of public establishments into public forms: and to develop public facilities with two basic types: public-private partnership and private-owned The State encourages the development of not-for-profit establishments

non-3.2 Stages ofpuhlic service sociali/aticm in \'ietnam

From the theoretical basis for public management, public services, socialization policies and social practices of a number of fields, it is possible lo generalize the process of socialization ol public service in Vietnam as follows:

The first stage (prior to socialization period, before the 1980s), the State undertook direct

responsibility for providing all public services to society Public services, regardless of being core or expanded, were deliv ered bv state agencies

77?^' second phase (transition phase of socialization, in the 1990s) Vietnam started the

administrative reform program and began separating the bodies of stale administration (providing core public services - public administration) and public service units (providing essential services of the extended public service group - public business - to the society)

Third phase (implementation of socialization ofpuhlic services, during and after the 1990s)

Vietnam continues lo boost the administrative reform program and extensively integrate into the world economy The separalivMi between state administrative agencies and public service units was clearer Ihe Slate diminished control over the public senice deliverv' agencies through self financine management mechanisn/ and then the auUMiomv about oreanization personnel and

finance*^ The policies on encouragement o\ tlie non-public sector's involvement were enacted

For testing labs, in addition to tcstius: labs of Group A, B C the testing labs of Group D startea

to appear and rapidly developed

* Decree 10 2002MD-CP in 2002 about the self-financing mechanism for public service delivery agencies

" Decree 43/2006/1^0-0? dated 25 04/2006 of the Ciovemment regulating autonomy, accountability mission

completion, organization, personnel and llnance for the public service deliveo agencies

Based on the theoretical framework and practices about socialization in two common areas of services of health and education, we develop the theory on the socialization of public service provision in Graph 3.1

Graph 3.1: Socialization process ofpuhlic service provision

State

I>ircct Suite pTOMSion A l l kinds o f public services

Separation of public administration and business units

Relative subgroup of pubbc serMces

i director state provisitm Core public senice

Public scTMce lacilitics Intended public services

Direct Stiitc provision Core public service Slate niunagcnicnl

O

* I-.xtendcd public service

Subgroup public services need socialization

Issuance of conditions, standards for serMCCs pro\ision

i t

ihc esttbltshmenl nWBgemcni to

;' tnori\ 1" icrrin

it

- To encourage the development of private service providers PPP, not-for-profit civil society through appropriate support mechanisms

The State ensures fair distribution of services and provides an environment for fair competition The State shall continue to directly provide services in areas that are disadvantageous or too costly for market investment

Customers give feedback on service quality so that the State can adjust policies to suit the requirements of each period

In order to verify the theoretical frame about socialization ofpuhlic services, the next part of the thesis will focus on analysis of management and provision of FS testing service in Vietnam

in different periods

1

4 MANAGEMENT AND PROVISION OF FS TESTING SERVICE IN VIETNAM

In Vietnam, FS management is assigned to the Ministry of Health (management of fooc circulation and consumption stages) and to the Ministry of Agriculture and Rural Development MARD, (managing throughout the process of production, pre-processing, processing, trading export and import of food original of agriculture, forestry, fishery products) According to FS management practices "fi-om farm to fork", the responsibility of MARD accounts for 90% o] total volume and have a decisive role in effective FS management The next part of this thesi; will focus on analyzing the operation of the National Fishery (Quality Assurance Departmen (NAFIQAD) as an agency to manage the provision of testing service for FS in order to secure < comprehensive perspective on the management of FS testing in Vietnam, through which tc clarify the role of the State in this practice

4.L The stage of direct State provision of FS testing service

After the initiation of international integration, seafood exports increased rapidly However until the 1990s, export market for Vietnam's seafood products was mainly Asian countries accounted for more than 80%, while the new EU market reached approximately 1% During thi;

period, Vietnam's fisheries have not directly penetrated the U.S market and Canada due to \hi

sanctions Throughout the worid, this was the period of strong reform methods to control FS Many technical barriers (TBT) and the sanitary and phytosanitary measures and FS (SPS) wert built

In 1991, the European Committee (EC) issued Directive 91/493/EEC pioneering ways to control

FS in the process "from farm to fork" From May 7/ 1994, only the countries with FS control principles and Hazard Analysis and Critical Control Points (HACCP) and a designated state agency with fttll authorized responsibility for safety control of aquatic food are permitted tc export to EU

In 1994Choosing EU markets as an obstacle to overcome and to penetrate into other markets the Ministry of Fisheries set up the National Fisheries Inspection and Quality Assurance Centei (NAFIQACEN) The fimctions of the Center include state management and provision ofpuhlic services on quality inspection and certification of aquatic goods for export, import and domestic consumption, and testing service for food and gcxxls safety and quality

Figure 4.1: Organization chart of NAFIQACEN

13

NAFIQACEN based in Hanoi and 6 branches located at key fishing areas Those branches included laboratories (LAB) which provided FS testing upon the Stale orders; and FS testing for quality certification for other clients

In 1999, the EU recognized NAFIQACEN as the only authorized state agency in Vietnam's FS control in the manufacture and export of seafood products to the EU (Decision 1999/813/EC or 16/11/1999) Overcoming these barriers, the market share and turnover of seafood expor rapidly increased For EU only, the total seafood export value increased to 40% in 2000 Ir

1996, only 36,046 tons of fisheries were tested, accounting for 26.5% of seafood exports, ir

1999, this figure was 170,148 tons, equivalent to 85-86% of total exports

The so-called "food safety crisis" led to basic change of the system during this period Ir 9/2001 Vietnam's fishery products were repeatedly warned lo be detected with residues ol banned antibiotics On 09/19/2001, the EU issued Decision 2001/699/EC enhanced inspectior Chloramphenicol (CAP) 100% of all seafood products originating from Vietnam CAP is th(

EU banned substances If it is delected, products will be banned lo reach consumers The cast quickly causes a chained reaction from other markets

In parallel with measures to prevent the use of CAP in production, the imperative requiremeni set forth was the capacity of CAP lesling corresponding lo the EU slandard (0.1 parts pci billion, ppb) lo have this capacity, equipment and trained personnel were needed Facing lh<: urgent crisis Slate was required lo act promptly A State budgel amount was approved to invesi for six labs under NAFAQACEN branches in 2002 After the inveslmenl laboratories basicalK met the requiremenls The situation of CAP infections in fisheries was controlled Or 02/10/2002, the EC issued Decision No 2002/770/EC lifting control for residues of Vielnam's fisheries Compelenl bodies in other countries also abolished Vietnam's seafood check-up

During the crisis period, for the common interests of the country, consumers and the food business, the role of the State is very important At those moments, it is impossible to rely on private investors because they normally invest only when profit is visible The State shall provide timely testing service when privatization is not ready and in the context of a crisis

(Mr Nguyen Tu Cuong, Fomer Director of NAFIQAVED)

The State's role in providing FS testing service in this period is typically characterized by direci State inveslmenl, managemenl and provision This problem can be displayed on two aspects;

1) Provision of FS testing service is the responsibility of the Stale, in the context where the private sector is not yet willing to invest; the testing service for FS is tended to meet ihe requiremenls more than meelim: the society's demand

2) The Slate must lake the ijL\sponsibililj| for inveslmenl on the testing sen ice because it is not '*• yet readv aboul policies to* invtilve other players (non-public sector) to participate into public service provision of food testing, vviiich are basic public services

4.2 1 ransitional period in management of FS testing senice

In the 2003 - 2007 period, fislicry business increasing!) developed, the expon turnover exceeded US$ 1 billion, and production of fisheries faced many new challenges of integration

process The markets continue to place great demands on food safety with the application of

stnct measures to control food imports to protect the health of consumers Domesticallv the

reforms require separating administrative role of state management and public career (actuallv

classifying the core public services with extended ones) In 2003, NAFIQACEN was transformed into National Fisheries Quality and Vetennarv Directorate Assurance (NAFIQAVED) The main functions moved from direct service supply to service provision

management The organizational structure of NAFIQAVED includes a newly set up Department

of testing service management Branches of NAFIQACEN were converted to Department for

fishery safety and quality assurance

Graph 4.2: Organization chart of NAFIQAVED

£

Dept

Admin &:

External relations

However, the model of the Sub-Department under the Department existed only during a short

time After more than a year Ministry of Fisheries decide to transform the regional

Sub-department into Regional Center for Fisheries Quality and Veterinar>' Directorate operating as a

public service delivery agency that is also in charge of the function of state management

Actually, the role of the department was moved from direct provision to management of the

testing service provision

- J

Administratizing the provision of testing service and the monopoly mechanism of the testing service provision hindered production and business activities, causing losses to the business community, the damage lo national interests "

(Mr Nguyen Huu Dung Vice Charman of VASEP)

^ ^ D « i i « this p « « H i i t a o e and mchaokofff for FS contuuied to timvc

A 00 *fVom fiMp ID foHc" ha5 been widel^ ' >yed mound the "' The Inhaintl taniin

''-f nrast K n^leMd in h&tk <f«nH«v and

I9d«

.0 qtmlttv

IOK u i p s t

IS

Graph 4.3: Total volume of export goods tested through NAFIQAVXD 1996 - 2006

Total volume of export goods tested through NAFIQ AMID 1996- 2006

Not only management requirements increased (90% of the sample to be tested), but testms demand of production and trading facilities also grew However, system capacity could mee only 50-60% of the service samples Testing system becomes overloaded, the service qualir reduced More State budget investment was not approved because of limited resources

Characteristics of the FS testing service provision at this stage indicate the followings:

- The establishment of NAFIQAVED is an appropriate step in the administrative refom process, initially separating the State management and ser\'ice delivery In terms o organization, opening a Testing Management Dept represented the viewpoint of changin; from direct delivery to management of the testing service provision

- Organizational model of service providers in the transitional process: The branch mode which was totally dependent on the parent organization was shifted to the model of regiom Department (state management agencies), an independent management unit with th expectation to be more proactive in meeting the social demand However, Sub regiom

model was quickly replaced by the regional center acting as a business unit with mai

function to provide services This is crucial inevitability of a reform process, showing th ineffectiveness of state intervention

For PS Iht SMe'i rok apved from meeting the reqwrements to ptrti

As the demand grows, the scale of fisher\ production and processing establishments increasec

in quantity By the end of 2007, there were 230 enterprises in the list of aquatic produei exporters to the EU (from 18 companies in 1999) Number of enterprises meeting the standard; and being permitted to export to other markets also increased Testing and certification capacit\ needed lo be developed lo meet the demand of export market and businesses

Increasing controlled quotas in accordance to the market demand was really the challenge foi testing capacity for FS Compared with 2000, targets for testing had to add 13 targets Tota export goods volume tested by NAFIQAD in 2006 increased by 266% compared to 2000 anc increased by 144% compared to 2003

In order to meet the managemenl requirements and society needs, the socializalion aiming U boost the capacity lo provide testing service for FS became urgent The new methods in servict supply have been established through the promulgation of policies and technical tools to replace the direct management and administration MARD promulgated Regulation on e\alualion designated the laborator\' and issued provisional regulalion on requirements for leslinj laboratories, equivalenl lo inlemational slandards

"TT/f standards issued by MARD on management of testing ser\'ice provision for FS was necessary and timely This is a milestone in the socialization process of this service Socialization is successful only in fhe presence of the State 's role through concrete and transparent policies, and management tools Fair competition will not really exist if fhe State does not provide a common standard for investors to provide services In the coming time, these rules and regulations should he hartnonized with international standards "

(Mr Luong Le Phuong Vice Minisler of MARD)

he role of ihe Stale in this period indicates the followings:

NAFIQAVED conlinued restructuring lo clarify' state management functions and ser\'icej provision activities through the transfer of all functions of state management from the regional centers in region Sub-Department al the Central and the Southern regions Thi; time, the regional centers ha\e become an independent regional unit directly pro\idinL services

Organizational model of the Department continued to maintain the Di\ ision of food safet\ testing management, carrying out the management functions for both public and pri\att testing services providers

For the first lime, the specific mechanism on testing service management was issued providers of testing ser\ice from both public and non-public sectors were evaluated basec

on technical standards and services quality management for licensing

The transforming process and the organizational model of the Department and the regional centers were associated with newly-issued policies of the State Decree 43/2006^'D-CP providing regulations on autonomy, accountability aboul mission completion, organization, personnel, financing mechanism for public serxice delivery agencies (replacing Decree No

10/2002/ND-CP) It reduced the inter\enlion of the Government towards public service

delivery agencies

17

- For FS testing ser\^ice: From meeting the "requirements", it essentially moved to meet the demand in the mechanism of fair competition between public and private establishments

The stronger appearance of private ser\'ice providers is to be noted The Government issued Decree No 79/2008/ND-CP stipulating the system for testing serxice for FS It created a legal basis and opened a mechanism for the formation of the private FS testing system

Box Mechanism of socialization of FS testing ser\ice

The testing labs under MARD MoST carry out the tasks (ff slate inspection and testing of food hygiene and safety: provide testing senice to organizations, and individuals within the scope of Stale managetnent

Testing centers, laboratories of scientific research institutes, universities and private laboratories being legally Qualified are permitted to deliver FS testing ser\'ice lo organizations and individuals

(Decree No.79/2008/ND-CP dated 18/7/2008)

With more favorable policies for investors together with the increased demand of serxices (or average 20%/year), many domestic and overseas investors began to provide FS testing service Particularly in 2007 - 2008, three private laboratories were set up In 2009 and 2010, there wert

11 additional facilities providing testing service for FS applied for license and they maini} concentrated in the Southern region where the production is dynamic and testing demand i; huge

To date, there have been 14 labs accredited as testing labs for safety of agricultural, forestry anc fisheries products

Thus, in reality, 14/56 laboratories (accounting for 25%) meet the requirements of regulatec standards on laboratory of FS for agriculture, forestry and fisheries Some survey report: showed that, approximately 60% of laboratories can mobilize capacity for FS of agriculture forestry and fisheries products on the national scale

lowever, the socialization speed of service was slow because the majority of policies, laws anc nanagement guidelines for testing food safety rules are mainly "framework." Some document: ire issued in the form of provisional regulation Ministry of Health is the agency responsible fo

>verall management of FS, but has not yet stipulated specific legal documents to providt nslruclions to manage the system of FS testing serxice

1.4 Change of the StateN role in providing FS testing ser\ ice

N\\h regards to the classification of testing serx'ice: Starting from considering testing as un

ictachable part of State management on FS, the functions of state management and FS testim viong to one organization Through administration reform FS testing is detached as a tool tc

•erve the Stale management and become an independent subject

Vilh regards to manauerial organization: 1 lie organizational structure is designed to move tron lirect deliverv to manaeemont of the testing service The testing management apparatus nc anger covers dependent\estmg labs only, but is in charge of general management tor all testini ervice regardless who are the providers Ihis is a necessarx model when socialization occurs

With regards to the mode of testing service deliverx: It has step by step moxed from meeting the requirements, from being a public tool to a tool that orients to serxing target

With regards to quality of service: When competition initiates (at least in the technical perspective), the assurance of serxice quality is prioritized for investment and eventually the results are more secured

With regards lo service management mechanism: Change of mechanism creates direct impact

on operation of testing service providers Stipulation and enforcement of policy generate stronger impact than efforts to meet the requiremenls on FS testing This mechanism allows supplementing other resources in addition lo the public resources

The above aspects indicate that the State's role on FS testing service gradualh moves from ''rowing - direci service delivery" to '^sailing'* - stipulation of policies, management tool, competition encouragement, orientation by targets, satisfaction of users but not of the Stale; problem solving by taking full advantages of the market position

W

5 HNDINGS FROM THE RESEARCH AND CASE STUDIES

5.1 The testing system of NAFIQAD

According to reports of the Minsitry of Health, at present, there are 72 testing labs delivering FS testing service all over the country" Another source said that this figure is over 1(X)*^

In accordance with Surveillane report of testing labs on the national scale (1st time in 2007 and 2nd time in 2010) carried out byNAFIQAD, verified it against the list of testing labs being members of VINALAB*^ and the list of testing labs accredited ISO 17025 of BOA*\ the existance of 56 testing labs is guaranteed

5.1.1 Geographical distribution of testing iabs

FS testing labs mainly concentrate in some big cities, transportation hubs, seaports, airports ol goods transit This distribution is appropriate xvith the method of checking the final product (before 1990)

Figure 5.1: Distribution of testing labs of different areas throughout the country

When the management mode of FS h

converted to control risks in the whole chain of production, trading anci consimiption of food "from farm to fork " the distribution of test laboratories is inappropriate:

Testing service is not connected with food production areas, causing certair barriers for service users

- Cost of services increased due tc additional costs to transport the lestinj samples

Lx)ng time consuming for retuminj testing results

Distribution structure and above mentionec limitations certainly need adjustments U

meet the demand of FS testing requirement

Currently, there are four types of tcstinj labs for FS in Vietnam (sec Table)

5.1.2 Competence of testing labs and potentials for socialization

Table 5.1: Croups of testing labs for FS

Group

Group A: Laboratories of state agencies under the

Ministries managing food safety

Group B: Laboratories of the research Institutes,

Universities

Group C: Laboratories are the business-oriented

service units under the state agencies on food safety

Group D: Laboratories in forms of Joint-stock

companies, private companies, foreign companies,

17

5

rs of labs ited ISO 025"

(Source: Compiled from Preliminary siirxey report of the NAFIQ.AD and other sources)

The testing labs in Group A: Accounting for low proportion (21%) being invested wit

limited equipment, being incapable of analyzing multiple targets The rate of testing lab accredited ISO/ EC 17025 standards is at average level (41.7%) Quantity of analyzed sample

is not large (mostly under 1000 samples per year) mostly to serve the purpose of inspection an checking Testing labs in this group face difficulties in the equipment and facilities investmer

because they depends on the state budget and do not have independent income These teslin

luhs are totally and directly managed by the Slate, directly serving managemenl decisions an there is almost under no pressure and have Utile molivation to improve the quality of service

Testing labs in Group B: Accounting for low proportion (18%) Many labs have adequat

equipment, but being incapable of analyzing many targets because they focus on research in certain professional areas The rate of testing labs accredited ISO 17025 standards is low (30%

Quantity of analyzed samples in each unit varies from 1000 to 15.000 samples per year) Eve

though these lahs are not strictly managed by ihe Stale they do not guarantee independence an objectiveness in service delivery

Testing laboratories in Group C: Accounting for a proportion (39%) Most of testing lab have been equipped with modern equipment, being capable of analysis of many targets an

diverse samples The rate of labs accredited ISO 17025 standard is high (86.3%) FS mdicatoi recognized are high (70% of the targets in group C are able to be analyzed) Facilities ar appropriate with analvtical capacitv (150.000 samples per year) Apart from the state budge investment, this group is proactive to charge service fee so they have resources in investing i equipment, facilities, and qualitN guarantee systems The> can accommodate large-seal analysis, and become a major force in providing testing service for tood safety slat management and social needs Regarding organization fomi testing laboratories are organize

as an independent entity, under the system of central administration agencies such as MoF

MoSr MARD Thcv have been managed bv the Slate hut recently State enacted polices o

" ISO 17025 is international standards: General requirements about iabs for testing and calibration

21

autonomy accountability for labs of this group^\ In principle, these labs are providing servia independently hut still are subjected fo Stale management

Testing labs in group D: Accounting for low proportion (21%) The labs in this group ai

equipped with more modem equipment, being capable of analyzing most of FS criteria on variety of forms Rale of testing labs accredited ISO 17025 is high (100%) with high number c

FS indicators recognized (64%) Facilities are consistent with the high anahtical capacity (ov<

4500 samples per year) Basically, these labs are independent and not managed by the State

The assessment of the above labs which correspond to different stage of socialization in FS testing service shows that:

- Testing labs of group A: Can only have minimal contribution to the provision of testir service to society

- Testing labs of Group B: Having potential lo add the capacity to provide testing service f( society, but need support to develop and apph management systems (e.g achievir ISCJ/IEC17025) and ensure the independence By then, the lahs of this group will fall im either group C or U

Testing labs of Group C: These will be the dominant forces in pro\iding testing ser\ice f( society, but it requires a mechanism to enhance the autonomy and investment resources, ar opportunities for accessing new technology

Testing labs of Group D: Although these labs are newly developed as results of tl socializalion of laboratories from 2008 ihey have potential to be the dominant forces i providing testing service for society thanks to the highly active in the in\estment resource and access to new technologies Especially important, these testing labs now are operating i the effective and profitable highl> producti\c mechanism

5.2 Case study 1:

Because of rapid growth of farming of aquatic products in the Mekong Delta, the most dynami area of fishery production, the demand for food safety testing increased fast In 1998, tl Ministry of Fisheries decided to establish Branch No 6 in Can Tho City under NAFIQACEN t meet the service requirements of the region

Being a specific unit to provide exclusive service in the area, all the testing needs in the regio had to be conducted through the branch Operation budget was from the State budgel an revenue of low fee (stale subsidies); staff salaries were paid by the Stale cost norms There w£

no pressure for the Branch lo improve service quality and de\ elopment other than pressure fror the superior agencies

At the time of IS crisis due lo antibiotic residues, all markets intensified Chlorramphenicol le:

in 2001 and 2002, o\ercrowding often occurred

'* Decree No.43,^2006^D-CP dated 25 04'2006 ot^ the Government regulating the autonomy, self-responsibiht

The mam cause of overcrowding situation was due to equipmem shortage inadequate staff, incomes from fees were not enough to recover co.sts while State budget was limited ill opportunities for improvemem must rely on State budget investment Moreover the branch itself (the model totally dependem on superior organization) cannot decide the reform of Us operational mechanism and staffing)

(Mr Nguyen Chinh former Director of NAFIQACEN Branch 6)

The Government issued Decree 10/2002/ND-CP dated 16 May 01 2002 on financial regim applicable to Stale's business-oriented units with revenues This was a reform policy to reduc the dominant Government's intervention into all public services providers Accordingly, ihes units have autonomy in the use of sources of revenue for operations The difference (if an\ between the revenues and expenditures are allowed to pay additional income, bonus, an purchase of equipment

NAFIQACEN was allowed to apply the new mechanism, the branches are proactive of labc use, and in the procurement of materials and chemicals and additional equipment Staff salar increased 2.5 limes more than the State salary norms Testing yield increased, time to return te* results decreased These motivations facilitated the branch lo improve quality of service develop the management program for testing lab in accordance with ISO 17025

In 2003, NAFIQACEN was shifted to NAFIQAVED; Branch No 6 was converted t NAFIQAVED Region 6 From operating under the business model (ser\'ices) it was changed l the model of slate management agencies with different managemenl mechanism In terms o finance, the unit must appK the State cost norms, all expenditures must be appro\ed by superio agencies and the Stale Treasury These establishments were not allowed to use comrade labors; the public officials were recruited and managed by a rather lough mechanism

That was a very difficult period The performance of testing and certification Jor ^oods was delayed because the payment process for purchasing chemicals and supplies must he processed through the State Treasury which normally lasted for months This was accordingly unaccepted by fhe vendor Time for returning testing results was often very slow at 3-5 days due to the lack of che/nical and low labor productivity, work motivation of staff was weak due lo delayed wage payment If in the earlier time, on average, about 50 samples were tested per day for prohibited antibiotics, and then during this time, only 20-30 samples were made per day

(Mr Nguxen Chinh, fomier Director of NAFIQACEN Branch 6)

Facing pressure from the business community, on 17/03/2005, Ministr\ of Fisheries issue( Decision No 15/2005/QD-BTS to transform the NAFIQAVED Region 6 into the NAF1QACE^ Region 6 Performance model was transformed from Stale managemenl agency lo public senid

delixery with higher level of independence The new model was applied to the Center will

revenues from the financial aulonom\ under Decree 10'2002ND-CP during period 2004-200< very close to the mechanism of the business That opportunity created faxorable conditions fo the regional center to develop comprehensively Quality of ser\ice (the targets inlemaliona standard ISO 17025) is significantly enhanced; liming to return the test results was muct shortened

in 2007 Vietnam joined the W TO This circumstance put pressures on rapid changes o subsidized model and ser\ices delivery monopoly The government continues to reform tht model of business activities, providing the public serxice units with high autonomy ir recruiimenu payroll, investment in capacity results and performance

23

At the same time Decree No 79/2008/ND-CP dated 18/7/2008 provided legal basis for th< system of socialized testing labs by the non-public providers Out of 14 private service providers through the country, on the operational area of Branch 6, there are 4 newly-set uj testing labs (INTERTEK, CASE center, SGS company and AGRIFISH stock Co.) Currently more testing service providers continue to apply for licenses This context pushed the regiona center to improve its capacity in providing FS testing service to compete with the private testinj laboratories

The establishment and development of NAFIQAD Region 6 (as an agency providing FS testin; service) showed the changing role of the State and impact of State policies in the process o socialization and transformation of state public service providers:

- The provision of testing service shifted away from the State monopoly closely attached will stale management of food safely to provide the service in accordance with the needs of thi society Through the conversion, in line with the increasing degree of autonomy, puhlii service units evolved stronger, and provide better service while the Stale does not need t( increase investment

The Stale's managemenl role through stipulating ihe inanagement mechanism creates direci an( basic impact to the performance of the testing proxiders towards quality and efficiency betle than the direci state delivery Moreover, this mechanism allows mobilizing additional resource from the non-public sector for services delivery

This conclusion creates basis for verifying the solutions proposed in the theoretical frameworl about ihc public services socializalion in the research model which is lo transform ihi operational mechanism of the public agencies lo autonomy in order to improve efficiency an( quality of services

5.3 Case study 2

INTERTEK Testing service (INTERTEK) is headquartered in the UK, with offices an( laboratories located in 117 countries woridwide, providing services of assessment, checking testing, and system certification in different fields such as industrial products, oil, food an* consumer goods

INTERTEK Viet Nam, established in 1998 is 100% foreign-invested Co belonging to Intertel group Initially, it operated as an agent of companies in the areas of assessment, evaluatioi services: and certification of managemenl systems

Right after the socialization of FS testing serxices is promoted; the company expanded its scop,

of business lo this area and now has offices and laboratories in Hanoi Hai Phong Ho Chi Mini City and Can Tho, providing analytical testing service in the fields of food, petroleum, textiles consumer goods, tcchnolog\', production lines

Seizing business opportunities from Mekong Delta region, which is the biggest region o agriculture and fisherv commodities production in Vietnam, the company eslablishec

INTF;R 11;K branch delivering testing service in Can Tho in 2008 That was only 6 months afte

the Government issued Decree 79/2008/ND-CP and 15 days after the MARD issued Decisior

No 3/12/2008 1 16/2008/QD-BNN promulgated the Regulalion on assessment and designatior

of testing laboratory for quality, safety of agriculture, forestry and fisheries

The cornpany chose to locate in Can Tho one of the central citv of the Mekong Delta ih< biggest farming and fishing area of the country with huge demand for testing service However ,t had to compete with NAFIQAD Branch No 6 which is the monopoly unit in the area with lot:

of experience and stable customers in the same field

With advantages of resources and international experience, the companv immediatelv investe(

in the most modem equipment for FS testing Analysis methods are orisinallv correlated o adjusted from international standards Quality management svstem of t'esting activities an implemented quickly, laboratory testing of food of INTERTEK Vietnam is now a member o the association AOAC chemical analysis of the U.S while the Agency Vietnam VILAS als( recognized testing laboratory achieved accreditation under ISO / lEC 17025 With the flexibh approach of investment and competition INTERTEK Can Tho established brand name for < private laboratory, being independent, capable of providing testing service, food and consume: goods testing

In May 2009, Can Tho INTERTEK registered for assessment of quality and safety of the testint laboratory of agriculture, forestry and fisheries products according to Decision No 116/2008/QD-BNN dated 03/12/2008 After quickly fixing errors discovered during the assessment process INTERTEK Can Tho lab was accredited bv MARD bv Decision 2595/QD BNN-QLCL on 15/9/2009 with 59 indicators

INTERTEK Can Tho applied a flexible policy in services delivery: establishment of a receptior and counseling team on all testing-related issues; Operation hours is until 10:00 PM working or Saturdays and Sundays to return results ASAP; returning results by fax email mobile service

to collect samples: approaching clients including farmers, producers, traders and througl associations to advertise the services capacity and quality

With private testing provider like INTERTEK we can even send and receive samples on Saturday lo make timely decision on exports business or lo register shipping schedule timely The policies to support clients such as mobile sample collecting, rapid results return are favorable These are added values thai public labs mostly do not have H'e are ready lo pay higher fee to receive these kinds of added values

(Sen ice users Can Tho)

The testing lab has about 400m2 area, with 22 personnel In 2008 the number of samples analyzed was about 47.000 .After being accredited by MARD to be testing lab for FS anc quality, the sample size neariy doubled in 2009 with 74.000 samples and 70.000 samples ir

2010 In addition to maintaining the quality in line with ISO 17025 in the areas of food anc fisheries, this lab can meet high international standards

The establishment and development o\' Can Tho INTERTEK ^ branch provide bettei

understanding of the impact of state socialization policies in FS testing service:

- Ihe private sector can afford providing FS testing services The emergence of private sectoi has an important contribution to meeting the society's demand, and bringing better options for service users

- Investment policies, and competition on service quality are challenges but also a driving force for chanues in FS testing service supplied by the State Fair and competitive environment not only creates incentives for private sector to invest in service provision but

-—al5irtmpr(n cs [he qualitv of service in both public and private sector

25

It is possible to conclude that the appropriate state policies on socialization facilitate the private sector investment in testing service provision towards a better quality and efficiency compared to what the State directly provides ^ This conclusion verifies one of the solutions in the theones about public management for the case of expanded public services to be socialized

to involve the private sector The State manages by legislation, technical regulations lo ensure the provision of quality services and equality

5.4 Some evaluations from the ease studies

Comparing some criteria on investment and provision of testing service between the public and private models, we found that:

5.4.1 In terms of investment efficiency:

Figure 5.2: Comparison of investment efficiency based on the targets that can be

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year

In spite of more advantageous position and investment opportunit\' for the public model the private investment shows to be more efficient In the private model, investment cost is VNC 90-150 million/testing target vs VND 220 - 250 million/target of public model Thus investment for provision of testing service by the private model is 15-180% more efficient thar the public one In other words, public investment is usually wasteful of resources or hlg^ indirect costs to the service provision

5.4.2 Efficiency of human resources use:

Figure 5J: Comparison of efficiency of human resources use per testing target/year

COMPARISON OF HUMAN RESOURCES EFFICIENCY

This result is contrary with survey findings of NAFIQAD which indicated that staffing capacity

of the public service providers is stronger than that of the private service providers In the stage

of direct state provision of services, the main cause to low productivity is the lack of motivation due lo strict wage mechanism, and promotion opportunities After the application of autonomy mechanism, those factors were improved so staffs are more motivated to work

5.4.3 Development speed of testing capacity:

Figure 5.4: Comparison of development speed of testing capacity

SPEED OF TESTING CAPACITY ENHANCEMENT

1 9 W 2000 2001 2002 2003 2004 2006 2006 2007 2006 2009 2010

Y M r

Tie development %p€ed of tettinf c«pKify » piWMi*! through in

yMTs As shvwa in mt graph 4, the

5.4.4 Speed of improvement of testing service quality:

Figure 5.5: Comparison of improvement speed of testing service quality

SPEED OF SERVICES QUALITY IMPROVEMENT

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Y e a r

This speed is manifested through the number of targets meeting international standards ISO

17025 divided by total number of testable targets over years

As shown in the Graph 5, investment for improvement of service quality in the public service providers only started when the autonomy mechanism is put mto practice When the competition with private sector appeared, the service quality went dowTi and mamiamed at 50% number of targets Meanwhile, in the private service providers, because of good investment resources, the speed of investment on service quality increased m line with overall mveslment and then reduced to balance and slightly higher than the public service providers This shows that competition has a positive impact on improving quality of ser\'ices However, it also brings negative results when the two kinds of service providers observe each other and do not invest sufficiently on quality This problem requires the State role in managing service quality

6 CONCLUSIONS

6.1 About socialization of FS testing ser\ice and the State's role

Pressure of civil society, democratization and international integration is both cause and motivation to push up the reform process of Government operation model, and reform ofpuhlic service provision in general and testing service for FS in particular

Results of research on managemenl of testing service provision for FS in Vietnam, and sur\'ey results of lesling service provision on the national scale and case studies allow the authors to draw out some conclusions as followings;

6.1.1 The viewpoint for socialization of FS testing service

FS lesling service is in the group of extended public services'^ Therefore, this service belongs

lo the groups of public services needed lo be socialized (according lo the 2"** viewpoint'"^) so that non-slate actors particularly the private sector can deliver the service together with the public sector in line with the market mechanism, and fair competition to improve the serxice quality

However, for some sub-groups of the testing service group, such as verification lesling arbitration, meeting the lesling requiremenls in the case of crisis of FS, disadvantageous geographical areas (where the private sector is not willing lo invest), the Stale needs to take ihe

responsibility to provide the services (according lo the \^^ viewpoinl)^" , in line wilh ihe principle "Z'^e Slate must take the highest and final responsibility to provide sufficiently public

services in quantity, quality and efficiency and also, the Slate is not the only provider of public services

6.1.2 The role of the State towards socialization ofFS testing service

The change of Slate's role through socialization of FS lesling ser\ice is specified in 3 stages: the stage of direct provision by the Slate; the transitional stage wilh initial separation between state managemenl body and business-oriented unit providing services; and the stage of full or mature socializalion ofpuhlic services provision in Vietnanr

Compared with public managemenl model, socializalion of public services in Vietnam is conducted more prudently, with slower speed due to the resistance by the centralized managemenl mechanism

It is necessary to supplement the model of socializalion of public services in the area of FS testing in the current stage to overcome some shortages, concretely:

- Lack of strategic nature, consistent planning with the whole socialization plan Studies

showed thai there is not any planning enacled to balance the supply - demand tor testing

service of FS ^o planning on levels of testing supply, on geographical area This shortage

will lead to spontaneous situation in socializalion and lack of specitic supporting pohcies

W l %Wx^^ • ' ' • ' * - ' > ' ^

'? Tho Stale in a changing world The World Bank ( l 9 9 7 ) « 4 | M | | | ^ J f >

' See Inlroduction ^PHHB

-" The traditional viewpoint addresses that FS testing service snou.a no PC •

^' Model ofpuhlic service socialization in Vietnam, uem j - Chan _

29

- The monitoring system on quality ofpuhlic services is in place but with low efficiencv with

input-based indicators and criteria There is a lark nf ^ tTt k ^ "^ ^ ' "

evaluation system in provision of testing ^ i c l OfFS " " ^ " ^ " ^ ^ '"^'"^""g ^

A process of socialization is conducted in the absence of strategic planning, with weak management of changes, will hinder the freedom of social resourees in s ^ ^ d e ^ v e ^ ^ obstruct the development and this is unsustainable "cuvery, ana

foll^^^^'*' ^^ ^'""^"^ * ^ ^ ^ " ^ ^ ^"^ supplemented model of socialization as the

Figure 6.1: The State's role in socialization of testing service of food safety

Stale

f Subgroup of publ ic services for socialization (1)

I)

Supply-demand assessment, planning ror service provision (2)

Issuance of conditions, standarxls for service provision (3)

(2) itMtopi aid iipiiaai piMning on

fer socialization of testing!

tipircttdispacifk

of

F5t on fl« hira of

(3) State promulgates managemenl tools for FS lesling ser^'iee, including policies and conditions lo deliver services - the necessary condition lo assure quality of the serxice

(4) State extends the scope and enhances the autonomy ofpuhlic service proNiders and desiens the Itinerary to transform these units lo the model of business-oriented service providers

(5) With regards to non-public models, it is necessary- to promulgate preferential policies on investment, taxes, land and loans lo facilitalc the conditions for grovMh

(6) State generates a fair competitive environment on the following pillars of Accountability, transparency, participation and predictability together with reforms of administrative procedures and improved responses of responsible individuals and organizations

govemance-(7) Stale develops a system of criteria, output-based monitoring and evaluation about quality of the services

(8) Service users have rights and are facilitated lo give feedback on quality, balance in supplying services for the sake of Slate regulalion refinement

6.1.3 Potentials of socialization of FS testing service

Testing labs of group D and group C are equally capable of ensuring the quanlily and quality of services when being granted with greater autonomy However, if assessing ihe efficiency, the private sector shows belter results

Considering the State's role, and strengths and weakness of the groups of lesling labs in the process of socializalion, there is a need lo focus on development of lesling labs of Group D through preferential policies and a fair competition For lesling labs of Group C, it is not necessary lo increase the quantity, but concenlraling on enhancing the capacity and quality Legal basis and mechanism^' is also needed to transform some labs of Group B to the model of Group D

6.2 Limitations and proposed further researches

This study has limited scope (studies on few models were conducted) The evaluation of service quality by services users was not done Some other comparison criteria of the case studies (e.g lesling duration, hospitality, competition capacity and development potential) preliminarily indicated that private service providers are performing better However, due lo the limits of lime and access to data, our team has not been able to collect sufficiently data aboul these indicators

The further researchers should increase the number of case studies and broaden the scope of study lo not-for-profit and PPP models in service provision They should also develop evaluation indicators on quality of services by clients- perspectives to have overall assessment aboul efficiency of ditferenl models of public services provision

''• Mechanism developmcnl of Decree No 1 15 -OOS'ND-CP about the autonom> mechanism, account

public scientific and technology establishments

31