I. Background
The year 2007 is the first year of Vietnam’s integration into WTO that created many opportunities and challenges to our national economy as the whole. Given the political stability, all internal and external resources have been mobilized for a rapid and stable development of our economy. Based on the achievements in the past years, the public finance management reform process has been further accelerated with the best efforts of Government and support from the international donor community. Therefore, the cooperation and partnership in public finance management sector has confirmed its coordinating role in the reform progress.
II. Progress of cooperation in 2007
1. Information exchange among the members of the Working Group led by the Government has been maintained regularly in order to enhance the quality of reform activities in public finance management. The strong group-based approach applied in the previous year continues to prove its effectiveness in this year. The components of PFMMP have received the great attention from donors.
2. Preparation of Single Document: the consolidation of all the existing strategies, programs and action plans of financial sector and sub sectors has been basically completed by MOF with financial support of MTDF. This Document has been approved by MOF and become the basis for mobilizing both internal and external resources to carry out the reform activities in a consistent and systematic framework.
3. Technical Assisstance of multilateral an bilateral organisations in public finance management in 2007 has focused on the following issues:
• As a flexible tool to coordinate of donors’ assistance to the PFMMP, MDTF has implemented sucessfully the first phase (Phase I), and the second phase (Phase II) is now under preparation with some changes in order to further strengthen Government ownership and MDTF effectiveness.
• In regards to expenditure management, the State Treasury Development Strategy to 2010 and the Vision to 2020 has been completed and approved with MDTF financial support. The Public Finance Management Reform Project (funded by WB) continues to be implemented as scheduled (some activities of Component I such as analysis and design operational/professional procedures for TABMIS in future, establishment of accounting regime/system, establishment of enviroment and pilot examination system have been implemented. Tasks of Component II on setting up MTFF and MTEF have been implemented in the pilot units and achieved satisfactory results. The component III of Project is carrying out a study to build a program for public debt management in which debt scale will be fully defined). Through the Public Finance Project (component II of the macro-economic reform plan), GTZ continues to support the implementation of fiscal and budget policies as well as a public finance management system that meet a higher international standard.
• Revenues Management: Detailed Implementation/Action Program for Tax System Reform Plans is approved/ratified by the Government and begin to realize/carry out. Through PHRD assistance under WB administration, a project aiming at supporting tax management reforms with lending WB has been set up and approved. In the other hand, Tax Management Reform Project supported by JICA – Japan has completed its second year of operating and gained considerable results. Custom Modernisation Project (funded by WB) has also entered its second year of implementation with remarkable results including 4 components: (i) Custom System and Procedures, (ii) Organisation and Resources, (iii) Information Technology and Communication, and (iv) Technical Assistance for Project Implementation.
• Goverment’s Debt Management: aiming at acheving a consistent and comprehensive management of both domestic and foreign debts to ensure budget safety and initiative, there are some recent technical assistance programs focus on this area/sector.
• State owned enterprises Management: as some projects has been completed, this area is currently received less financial support from the donors has it was in the previous year.
• Public asset management: Australian Government is now assisting the sector through AusAid to draft the Law on Pulic Asset Management. Completion of legal framework on State property management is now the top focus of donors’ Tecnical Assistances. One of the main outcomes in this sector is that the draft Public Asset Management Law is being finalized for submission to the next session of the National Assembly.
• Price management: with donor support under MDTF, Vietnam’s policy system on price evaluation/assessment is being finalized and will be applied, staff trainings on price evaluation/assessment have received special attention.
• Implementation of recommendations of the Public Expenditure Review 2004: quality and effeciency of these recommendations have been improved thanked to the effective co-ordination of the working group and regular information update for all concerned partners.
• Policy building continues to receive UNDP support through VIE/03/010 project. Policy Consultive Group has been established and now operates effectively.
• Other areas (training, insurance, accounting, auditing, security market, financial policies, strengthening capacity for fiscal, tax an custom management etc.): continue to receive technical assistance in order to improve capacity through advisory, training, seminar, and thematic study such as the International Public Accounting Standard Introduction funded by WB. The ETV2 Project funded by the EC is under implementation and initial results has been reported.
• Some bilateral projects and cooperation programs were signed and are under implementation. Vietnam is moving towards the international standards on insurrance supervision management funded FIRST Fund; Econometric Model Establishment Project on analysing the impact of Individual Income Tax Law in Vietnam funded by Denmark; Capital Market Development funded by Luxemburg... and Cooperation Program with US Finance Department has been receiving US technical assisstance commitment on Tax, Insurrance and Credit Guarantee. III. Achievements of the partnership in the area of public finance management 1. Budget Expenditure Management: The State Budget Expenditure Management in Vietnam has achieved some remarkable results thanked to strong efforts by the Government to continue the reforms and improve the institutional framework. State Budget Law has been revised twice so far to institutionalize clearer and more appropriate State Budget Decision Authority of government agencies at all levels. The Law also has stronger focus on decentralizing State Budget Management and implementing all decrees on autonomy rights, self-control of fund and workforce for units using State Budget. Underlaw documents that instruct and unify expenditure control in both recurrent expenditure and investment for development expenditure of State Budget have been issued.
2. Budget Revenues Management: The implementation of 2005-2010 Tax System Reform and Modernization Program has achieved good results and has been implemented on schedule. It provides the foundation for reforms and modernization process for the following years. The pilot implementation of self-enumeration and taxes self-submit activities of business and other Reforms have gained some results. Concerning the custom sector, some initial objectives of the 5 programs approved by the MOF as part of the “Custom Modernization and Development Reform Plan for the period of 2004-2006” have been achieved, including: Institution and Mechanism Reform, training activities, Information Technology and Professional Equipment Modernization, and Infrastructure Modernisation.
3. Debt management: There are already essential legal documents including relevant government decrees and ministerial-level circulars regulating the publicity of financial status, state budget and public debt; improving step by step the publicity on public debt information. The creation of new Public Debt Management Program is an important step of Debt Management Reform.
4. Monitoring financial market and developing the bond market: Focusing on building a Financial Market Monitoring/Supervision Program through a government supervision agency, pushing forward/ further enhancing the bond market by issuing bonds…
5. Corporate financial management reform : The corporate financial management mechanism is being finalized in line with market economy, the financial management of the government assets in state-owned businesses which have been reformed, the financial policy system on business restructure has been created comprehensively, about 4 700 state-owned business have been restructured.
6. Public asset management: Public assets in administrative sector in the whole country has been systematized, checked, categorized and managed. This is the first step to establish systematically essential policies and legislative frameworks to manage public assets. Some Laws has been issued and promulgated like Land Law, Bidding Law ... regimes, norms and instructions on using and managing public assets in the administration sector have been improved.
7. Price management: The price system is becoming more transparent due to MOF efforts to establish and develop information network on prices and markets between Finance Services of cities and provinces in the whole country. Efforts to restrain price increase have reflected well market relations in the open-door market economy. IV. Key activities in public finance management to be implemented in the coming time:
Reforms in the area of public financial management will focus on implemention of each component in the Single Document:
1. Budget Expenditure Management: to continue implementing necessary technical assistance to reform expenditure management according to the final account of state budget allocation and consumption to ensure the economization, effectiveness, focus and consistency in state budget expenditure management, but at the same time to ensure the rights to state budget decision-making by government bodies at all levels. To continue to implement public administration reforms in State Budget Expenditure Management to strengthen its transparency, publicity and the ability to control budget expenditures.
2. Budget Revenue Management: to implement both Taxation and Customs reform projects (funded by WB) to set up an overall tax policy system, to simplify customs procedures, make it harmonious and in line with advanced international norms/rules. Simultaneously, improving Tax Collection System and Custom Progressive Management to increase staff capacities to meet the demand of Budget Revenue Management Process.
3. Debt Management: implement Debt Management Program to set up a focal point for public debt management, to reach the objective of fiscal stability and ensuring national financial security. To set up a modern debt management system to monitor public debt and debts borrowed by some main state-owned corporations, including: (i) method of recording debts syntheses, and (ii) method of defining, analyzing, resolving and managing fiscal risks.
4. Monitoring financial market and developing bond market: to implement a unified management and supervision system for the financial market in Vietnam, to create a management mechanism to monitor and coordinate different agencies; to increase the effectiveness and efficiency of financial market management and supervision; to ensure market safety, protect investor and national currency-financial security. To have a roadmap for securities development to 2010; to strengthen capacities for intermediary financial institutions; to diversify securities market products; to improve the interrelation between securities market and currency market in order to introduce appropriate national policies, control inflation and stabilise domestic currency; to improve coordination and ensure national financial security.
5. Corporate finance management reform: To create an optimal model of state capital management for enterprises with a suitable, complete and comprehensive mechanism in line with international practice in the context of post-WTO integration; to implement the Enterprise Law, and the Investment Law (2005); to promulgate a law on using state capital in business. To establish indicators and criteria for corporate governance which will be applied for all business, to issue comprehensive, completed and suitable regulations on finance monitoring according to international practice to apply for all foreign enterprises in Vietnam.
6. Public asset management: to revise, finalize and provide instruction on the implementation of the legal framework for public asset management; to assess all investment plans and public procurement, including expenditure on repairing and upgrading public assets for administrative agencies. To evaluate public assets using the “market prices”. To modernize technology and equipment, to apply information technology, to set up a unified nation-wide database for public assets to provide information to management agencies and the public; to set up a software of public asset management.
7. Price Management: To finalize the institutional framework and develop an assessment system of public asset according to “market price” and international and ASEAN practice. This can be used to compare with other international and regional price assessment system. V. Measures to strengthen the partnership
The working group of the Ministry of Finance is responsible for coordinating activities in international cooperation and developing the relations with donors’ community in the area of public financial management. The working group will continue to carry out its tasks and use the working mechanism that has been applied in 2007 as follows:
- To strengthen communication and policy dialogues;
- To improve the coordination to increase efficiency in mobilizing and utilizing donors resources;
- To promote the participation of relating units and departments in the Ministry of Finance and government agencies to improve the effectiveness of the forum;
- To maintain a regular biannual meeting;
- To continue to promote and facilitate information exchange, policy dialogue and agenda as well as working on new public finance management programs and projects.
| 
RSS