May 31, 2020 01:32

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Reform of financial policies: Develop effective and coherent resource mobilization policies

13:47 | 06/10/2019

VCN- Renewing the growth model and restructuring the economy aregoals for many countries around the world, including Vietnam. As the lifeblood of the economy, the financial sector has an important task to promote and pave the way in the process of restructuring the economy associated with renewing the growth model.  

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The Ministry of Finance has directed the strict implementation of disciplinein budget revenues and expenditures at all levels, branches, localities and units. Photo: Thuy Linh.

Private sector has not created a driving force for development

In order to carry out the renovation of the growth model and restructure the economy, the Ministry of Finance has advised and planned financial policies to mobilize and distribute production resources in society and transfer national financial resources to meet the needs of economic development, implement social policies and ensure security and defense.

The Ministry of Finance has directed the strict implementation of discipline inbudget revenues and expenditures at all levels, branches, localities and units. As a result, the proportion of recurrent expenditure decreased (in 2018, it was less than 62 percent of total state budget expenditure, the target is below 64 percent), the proportion of development investment increased (in 2018, it reached over 27 percent, the target is 25-26 percent).

Along with actively building and perfecting documents guiding the Law on Public Debt Management, the Ministry of Finance has stepped up the restructuring of public debt towards sustainability. The Ministry of Finance has strengthened the inspection, supervision and implementation of solutions for balanced and comprehensive development of the financial market, along with restructuring of state-owned enterprises through accelerating the equitization process, divesting state capital at enterprises, collecting sufficient dividends, profit after tax andselling capital in enterprises under the National Assembly's resolution.It can be affirmed that the financial policies have met the requirements. Restructuring the economy associated with renewing the growth model towards improving quality, efficiency and competitiveness. Innovation of the growth model and restructuring the economy have become more substantive; creating many important and clear changes.

However, speaking at the Vietnam Finance Forum in 2019, Deputy Minister of Finance Do Hoang Anh Tuan also admitted that the renovation of the growth model, change ineconomic structure andimplementation of restructuring national finance over the past 10 years has achieved initial results, but challenges and difficulties remain. This is reflected in the fact that, despite growth of 6.35 percentover 5 years, the quality of growth and innovation is limited.

Develop safe and sustainable fiscal policies

In order to innovate the growth model and restructure the economy in Vietnam, it is necessary to have breakthrough solutions and synchronous financial policies to create motivation. Proposing the solution, Prof. Dr. Nguyen ThiCanh, Ho Chi Minh City University of Law and Economics, said that the state needs to develop financial and fiscal policies towards safety and sustainability. Strict fiscal discipline should be strictly followed, so as not to break the approved budget plans. Minimizing spending on consumption, in which administrative spending on the State apparatus is considered quite cumbersome. Therefore, it is necessary to step up administrative reform, streamline staffing, and turn non-business units to financial autonomy to reduce the burden of non-business expenditures from the state budget.

“In the context of limited budget capital, the Government can develop infrastructure through forms of public-private partnership (PPP) investment in projects. However, PPP in Vietnam is not effective, so it is necessary to review the legal regulations and strengthen effective monitoring. It is necessary to complete the database of public investment projects and centralized monitoring systems in order to improve the quality of public investment reports, contributing to making decisions to implement effective projects,”Dr. Nguyen ThiCanhsaid.

As for financial policies in the future, Mr. Ha Huy Tuan, Vice Chairman of the National Financial Supervisory Commission affirmed that it is necessary to find financial resources such as property tax policy and mobilization of resourcesfrom land for economic restructuring.

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“Restructuring the economy, it must be made clear whether it is a means or a purpose, a specific orientation and what is its model like? In particular, policies to mobilize resources play an important role, so it is necessary to maintain a stable proportion of taxes and fees collection, as well assimplify policies and goals. Moreover, the budget revenue should be equal and fair, and the support should shift to the budget expenditure part,”said Mr. Ha Huy Tuan.

The Vice chairman of the National Financial Supervisory Commission also said that the policies of budget revenue and direct tax need to be preferential and expand the taxable area. For indirect taxes, it is also necessary to provide incentives, expand the taxable area and consolidate and simplify the tax rate. Attention should be paid to property taxes and this should be consideredan important source of revenue, the taxable prices are calculated according to the market prices associated with land planning and tax rates.

By Thuy Linh/Bui Diep