67197 JANUARY 2011 ABOUT THE AUTHORS VAT Media Campaign in Lao PDR Results in a SHAELA RAHMAN is a Strategic Communications Big Bang for the Buck Expert with the Strategy and Analysis unit (CICSA) of the Investment Climate Depart- Working closely with the client—the Tax Department of Lao PDR—and ment. She leads the strategic communication work stream World Bank colleagues, the Investment Climate Advisory Services team for the Global Tax Product under the Investment Climate designed and rolled out a multifaceted campaign to introduce a new tax in Business Line and is coauthor Lao PDR, one that surpassed our own expectations and contributed to of the “Strategic Communica- tions for Business Environment increased registrations and collections. This was the first time such a Reforms� toolkit. campaign had been mounted for an investment climate advisory client in KA YING YANG Lao PDR, and it happened within a very tight timeframe, so it wasn’t all is a Project Officer, Investment Climate, with IFC Advisory smooth sailing. This SmartLesson relates our experiences and lessons along Services in the Mekong. She joined IFC in November 2007. the way, demonstrating in particular how communications, if done well at Before that, she was with the the project pre-implementation stage, can help build client and partner International Organization for Migration (IOM) in Bangkok, goodwill for the technical work to follow. Thailand and was a community organizer for more than 10 years, working in racially and Background Subsequently, the Tax Department and IFC economically marginalized have been working jointly to implement the communities in the United A key problem of business taxation is VAT system and improve tax administration States. burdensome tax administration, which under the Tax Simplification Project for SMEs. APPROVING MANAGERS often encourages enterprises to avoid The project seeks to improve the overall tax Richard Stern, Program paying taxes. In Lao PDR, according to the regulatory environment, foster private sector Manager, Business Taxation, 2009 Investment Climate Assessment (ICA), growth in Lao PDR, and improve tax system Investment Climate Advisory more than 30 percent of firms cited tax or efficiency. This project also coordinates closely Services of the World Bank Group tax administration as major or severe with the Bank’s Public Finance Management obstacles. Support Program (PFMSP), especially in terms Cecile Fruman, Manager, of implementation support for VAT as well as Strategy and Analysis, The Value-Added Tax (VAT) was initially tax administration for small businesses. Investment Climate Advisory introduced to limit the impact of falling Services of the World Bank Group customs revenue. However, the VAT was Lessons Learned suspended on March 1, 2009, following Charles P. Schneider, Program pressure from the private sector—a sign 1) Address the client’s needs, but manage Manager, Investment Climate that there had not been enough taxpayer expectations. Advisory Services in the Mekong education to prepare for its introduction. This situation called for an urgent response: In late May 2009, IFC Advisory Services in the The Tax Department of the Ministry of Mekong received a request from the Tax Finance and World Bank colleagues on the Department in Lao PDR and our colleagues ground asked IFC Advisory Services for from the Bank’s PFMSP for urgent assistance assistance in developing an information in developing a strategic communications campaign to support the introduction of the campaign for the upcoming VAT, to be new VAT regime. The media campaign, introduced in January 2010. At the time, the which the IFC team helped develop and IFC advisory project with the tax authority was oversee, was part of the pre-implementation not yet in place, and any assistance provided activities of the IFC Tax Simplification Project would be part of our pre-implementation for Small and Medium Enterprises (SMEs). activities. We also did not have a dedicated IFC This nationwide campaign led to the communications officer based in the Vientiane government of Lao PDR’s launch of the VAT office, and our experience delivering such in early 2010. media campaigns in Lao PDR was focused on SMARTLESSONS — JANUARY 2011 1 Box 1: VAT Public Education Campaign—The First Public Relations Effort of its Kind by the Tax Department of Lao PDR The campaign was launched in November 2009 and was deployed via multiple media outlets, including 101 airings of a television ad on na- tional television and Lao Star channels during peak hours; 85 airings of an audio ad on national and Vientiane radio stations; print ads in 84 editions of prominent national and economic/business newspapers; and development and distribution of 4,000 brochures and 500 tax guideline booklets to taxpayers. An additional 1,500 booklets were cofinanced by the Bank’s PFMSP. A post-campaign taxpayer survey has revealed that 45 percent of the respondents were aware of the key messages of the campaign; 84 percent mentioned that the campaign was useful for them in that they learned more about the VAT system and its benefits; and 83 percent thought that the campaign would help change people’s minds toward VAT by reducing misconceptions and creating a positive image. Following the cam- paign, taxpayer registration and VAT collection have increased by 60 percent and 40 percent, respectively, in the first three months. press coverage for events but not on large-scale information 2) Use multiple media to draw in more stakeholders and campaigns. However, given the urgency of the request (we audiences with limited access. had to develop and deploy a campaign within six months), and given our assessment of the importance of the timing, Due to the limited budget as well as a short time frame for we decided to draw in whatever resources were available rollout of the campaign (it would run for two months), we to deliver on this initiative. We brought in the expertise of needed to use our resources to the maximum and come up the HQ-based investment climate advisory services officer, with a set of campaign offerings that packed a punch and who had worked on designing strategic communications also provided widespread coverage. As such, we decided to components for several other tax projects, and a Vientiane- go with several media that our initial research (focus group based project officer to work with the client in putting discussions with our target taxpayer audience and other together this VAT campaign. stakeholders) showed to be the best means of getting our messages across to target audiences countrywide, a number While we satisfactorily delivered on what the client needed of which have limited access to some media outlets. This and requested from us (see Box 1 and Box 2), we were also included developing and disseminating brochures covering able to effectively manage their expectations on what we a wide range of issues related to the VAT, and producing could and could not do in the original scope of work. For newspaper, radio, and television advertising that was example, the campaign terms of reference (ToR) that the deployed intensively over the short campaign period. tax authority and our Bank colleagues initially outlined had included development and management of a comprehensive While they liked the content used in some of the media Web site for the tax authority. We thought this was more than in others (TV was found to be more effective something that should be a natural and ongoing function than brochures), people remembered the campaign and its of the customer service unit of the tax authority, and while messages most due to the fact that we used a multifaceted we were happy to provide assistance to shaping content for deployment approach. A post-campaign survey revealed a Web site, given the limited time and budget available, we that 72 percent of 143 respondents were familiar with the were not willing to take on the development and especially campaign as a result of the multitude of media outlets the ongoing maintenance of such a Web site. As such, we used. It is also important to note that the communications were frank with our client and Bank colleagues on this and campaign, which can only provide concise information that reached agreement on what we could realistically deliver is typically not highly technical, was followed up by within the timelines and resources involved. workshops, organized with IFC support, for taxpayers on the technical elements of the VAT. Box 2: Campaign materials (Top, left to right: Print Advertisement, Tax Guideline Booklet, Brochure. Next Page: Screenshot of TV ad)) 2 SMARTLESSONS — JANUARY 2011 and materials, especially the VAT guideline that was made available to VAT taxpayers. The tax advisor possessed strong technical knowledge and dealt with the tax officials on a daily basis. IFC’s project officer leveraged this trust and connection to facilitate the campaign implementation between the media firm and the Tax Department. In addition to the Tax Department’s director general, the IFC project officer, with the support of the tax advisor, reviewed all messages, especially those in English, to ensure that they were correct and easily understood. While this is typically not the role for the project team, it was essential in this case, given the local consultant’s limited English-language capabilities. Unfortunately, this gap in capacity is a clear weakness of many local consulting firms, but it can be overcome if there is suitable commitment from the project team to work with the consultant. Screenshot of TV ad. In addition to the tax advisor, another important aspect in the IFC-Bank coordination was that, through the PFMSP, 3) Innovation and client ownership are critical ingredients. the Bank had already laid a strong foundation with the government, in particular the Ministry of Finance. This This campaign was an innovation for our tax administration solid relationship helped IFC access the Fiscal Policy client. In fact, it is rare for government agencies in Lao PDR to Department, responsible for anticipating the impact of undertake information campaigns and, moreover, campaigns VAT and proposing policy changes that would improve that are developed with input from their clients (in this case VAT implementation. As a result, the local IFC team and the business community). Since the rollout of the campaign, the Global Tax Team were asked to submit and the wide visibility it has created across the country for recommendations on how to reform SME taxation the VAT, not only have taxpayers welcomed the campaign following the introduction of the VAT into the general and the information they gleaned as a result, the tax tax law, which is currently under revision. department has been lauded for this achievement by other government counterparts, as the campaign was seen as a 5) Make sure a solid monitoring and evaluation plan is great tool that other agencies could emulate. built in. The active participation and leadership of the Tax Department Every strategic communications campaign should be director general during the development of the campaign followed by a pre- and post-evaluation survey to determine were also instrumental to the campaign’s success. Her decisive if the campaign succeeded in its goal by changing actions and timely approvals enabled the media firm to meet stakeholders’ minds and, in turn, their behavior to support tight deadlines and produce quality messages (for example, a particular reform. Our post-campaign evaluation in Lao the campaign slogan: Build a better Laos – Pay your taxes) PDR provided some good information and evidence that and materials that would help position the VAT positively. the campaign was well received by targeted stakeholders The director general’s understanding of the significance of and that registrations and VAT collections improved the campaign meant that she alleviated bottlenecks or following the campaign (see Box 1). However it does not lengthy administrative processes that would otherwise have give us proof that the campaign changed people’s delayed the campaign. perception and behavior toward the VAT. Although collections and tax registrations improved once the VAT The campaign built strong visibility and confidence for the was launched, it is difficult to attribute this result to the Tax Department, which in turn helped IFC Advisory Services campaign alone. The impact could be measured only if we build goodwill with this new client and also made our Bank had done both pre- and post-campaign surveys using the colleagues very happy with our work. Indeed, the number of same sample group. While we conducted smaller VAT registrations has exceeded expectations (see Box 1), so stakeholder focus group discussions prior to the campaign, the VAT is off and running better than envisaged. On our role it was not directly comparable to the broader post- in it, the government has said repeatedly that the campaign campaign survey conducted. was a tremendous help and enabled a launch that was successful. In this case, due to severe budget constraints (remember, this was the pre-implementation phase of the IFC Advisory 4) Partner with the Bank to leverage resources and client Services project), the media firm that developed and rolled relationships. out the campaign also conducted the post-evaluation survey. The pre- and post-evaluation surveys should ideally The IFC Vientiane-based project officer and the Bank- be done by an independent statistical analysis firm and appointed tax advisor to the Tax Department worked in not the same one responsible for the campaign. However, close coordination with each other, which contributed such surveys can be costly and in many cases well beyond significantly to the accuracy of the campaign messages the reach of communications budgets for IFC advisory SMARTLESSONS — JANUARY 2011 3 projects. Nevertheless, the survey does groups, has left a new client and Bank provide some good data about attitudes and counterparts singing our praises, and has behaviors of stakeholders toward tax reform caught the attention of other potential and can be used as baseline data for any government client agencies. evaluation conducted after the IFC Tax Simplification Project is completed. Communications in many IFC projects is an afterthought, done in an ad hoc fashion as Conclusion and when necessary (for example, media promotion around a particular event like a This campaign is testament to getting a big high-level workshop), and its value to our bang for the buck. Despite the many overall reform intervention is underestimated. challenges—a tight time frame and budget, But this project shows us that, if done right, limited local IFC experience and consultant communications can not only bring visibility capacity in designing and delivering such to the reform agenda but also enhance campaigns, a new client, and pressure from relationships among stakeholders, provide a Bank colleagues—and lessons, our work in useful service for a new client, and thereby lay Lao PDR to develop and launch this VAT a firmer foundation for Advisory Services campaign has been a resounding success, in project implementation. that it has been well received by target DISCLAIMER IFC SmartLessons is an awards program to share lessons learned in development-oriented advisory services and investment operations. The findings, interpretations, and conclusions expressed in this paper are those of the author(s) and do not necessarily reflect the views of IFC or its partner organizations, the Executive Directors of The World Bank or the governments they represent. IFC does not assume any responsibility for the completeness or accuracy of the information contained in this document. Please see the terms and conditions at www.ifc.org/ smartlessons or contact the program at smartlessons@ifc.org. 4 SMARTLESSONS — JANUARY 2011