November 22, 2017 19:55

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Strong financial resources in Vietnam

11:08 | 28/08/2017

VCN- With 72 years of construction and development (28th August 1945 – 28th August 2017), the Finance has contributed much to the socio-economic development of the country. In recent years, the Finance has focused on revising the financial institution in a uniform and consistent manner; effectively mobilizing financial resources for development investment; restructuring the State budget and ensuring the national security and financial security. These are real highlights of the Finance.

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Over the past years, the Finance has restructured revenues and increased revenues for development investment. Photo: S.T.

Institutional revision for development

Being a multidisciplinary and multisectoral ministry, the number of legal documents of Ministry of Finance every year must be really large. In addition to the good implementation of budget mobilization with continuous policy mechanisms to revise, mobilize resources, tax policies, Customs, thereby promoting production and business, and enhancing national competitiveness. With that motto, many mechanisms and policies related to budget, taxation, customs, prices, public assets, land finance, insurance, and securities are always reviewed, amended and supplemented.

As a result, financial institutions have ensured synchronism, openness, transparency, stability, and suitability with practical requirements in the process of socio-economic development of the country and international integration. In particular, the Finance has focused on improving the State budget revenue management; stepping up the implementation of the mechanism of autonomy and self-responsibility in the administrative and public-service domain; strengthening management of public debt and foreign debt management; promoting the modernization of financial and financial services markets; restructuring and improving SOEs’ performance. In addition, the Finance will continue to revise and improve the financial law system to assist enterprises in developing and implementing tax and credit incentives for businesses, especially medium and small enterprises.

A number of new amended bills and Laws have come into effect, such as: the State Budget Law No. 83/2015 / QH13 officially came into force from year 2017; the Law on management and use of State capital investment in production and business; the Customs Law 2014 No. 54/2014 / QH13; the Law on Amendment of a number of Articles of Tax Law 71/2014 / QH13; and the Law on Public Property.

Currently, the Ministry of Finance is amending and supplementing the draft Law on Public Debt Management (revised) to prepare for submission to the National Assembly at the fourth session of the XIV National Assembly. Recently, the Ministry of Finance has finalized the Report guiding the Law amending and supplementing some articles of the Law on VAT, SST, CIT, PIT and Resource Tax. If the proposed roadmap is submitted to the Government and the National Assembly for approval, the above tax laws can be applied from 2019. This is the first time that the Ministry of Finance has amended 5 Tax Laws, which is a breakthrough in restructuring State budget revenue, in line with international practice.

Step by step restructuring the State budget

Reorganizing the budget, securing budget revenue to fund development investment, expenditure and social security are important tasks of the Finance. Every year, the leaders of the Ministry of Finance have directed the units to actively implement solutions; strive to drastically overcome the level of the budget revenue-expenditure estimate. Compared to the period 2006-2010, total state budget revenue for the period 2011-2015 increased by 1.9 times; tax and fee revenues increased by two times. The average State budget mobilization rate was about 22-23% of GDP (target is 23-24% of GDP).

The mobilization of resources at home and abroad for investment in socio-economic development is actively implemented to diversify forms of capital mobilization. From 2011 to date, mobilizing total social investment has been estimated at about 31% of GDP, by 1.8 times compared to the period 2006-2010. The allocation of resources is carried out effectively, ensuring efficiency, saving State budget expenditure; contributing to the implementation of the restructuring process. Total State budget expenditure for the period 2011-2015 reached an average of 27.78% of GDP. Expenditure structure shifted based on an increase of human spending.

Outstanding public debt, Government debt and foreign debt of the country are guaranteed, not to occur overdue debt status, guarantee the prestige of Government. By the end of 2016, the public debt / GDP ratio was estimated at 63.7% of GDP, Government debt at 52.6% of GDP, national debt at 44.3% of GDP, direct debt obligations of Government was 14.8% of total State budget revenue.

In the national 5-year financial plan for 2016-2020 approved by the National Assembly in its third session, the XIV National Assembly has determined: striving for total State budget revenue for 2016-2020 to be around 6,864 trillion VND, an increase of 1.65 times compared to 2011-2015; ensuring that the rate of mobilization into the state budget not less than 23.5% of GDP, and taxes, fees and charges shall be about 21% of GDP. Total expenditures in this period were about 8,025 trillion VND, of which the growth of spending on development investment accounted for 25-26% of total State budget expenditure on average; reducing the proportion of regular spending to less than 64%, striving to reduce the deficit by 2020 less than 3.5% of GDP, aiming to actively balance the State budget, ensuring public debt within the permitted limits.

These figures show the drastic action of the National Assembly and the Government in the coming time. Thus, the tasks in the coming time of Finance are extremely heavy. In order to realize the above objectives, it is necessary to improve the collection policy towards covering all sources of revenue, expanding the collection, especially new revenue sources. At the same time, step by step restructuring State budget; promoting administrative reform and strengthening management, financial supervision, ensuring public debt security.

Tightening financial discipline

At another point, if fiscal discipline is not serious, the initial goals set out will be difficult to implement. Balancing budget revenues in recent years has become more difficult, as economic growth is not as expected. Sharing with Finance, many members of the National Assembly expressed their view, in the event that the Ministry of Finance completes the revenue estimate, it is still necessary to tighten expenditures and intensify financial discipline to balance the budget. A delegate frankly stated that: "Because our country is poor but the public expense is wasted, the economy must be regarded as the top national policy”. Deputy Prime Minister Vuong Dinh Hue also directed the financial sector in the case that the province failed to achieve the target this year to adjust the reduction of spending. This is also the motto of the Government to tighten spending, ensure budget discipline. The Minister of Finance Dinh Tien Dung has repeatedly affirmed the view that the financial sector shall continue to tighten fiscal discipline, tighten control of budget spending, limitation of overspending and public debt.

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Accordingly, in accordance with the savings of the head of Government, the Finance has also piloted public-truck applications for a number of positions. Piloting the example of saving budget spending, the Ministry of Finance said: "It can be done." The Deputy Ministers of the Ministry of Finance and many leaders of ministerial units have not used State cars to go to the office. Many localities followed the Ministry of Finance's pilot policy. Although there are no specific statistics on the savings, it is certain that with careful calculation and thorough savings of the Ministry of Finance and some provinces, if the policy is applied nationwide, the saving figures will not be small.

By Minh Anh/ Hoang Anh