Directive No. 01/2004/CT-BXD on Enhancing the Effectiveness of Business Operations and Investment Development in 2004

DIRECTIVE

ON INCREASING THE EFFECTIVENESS OF BUSINESS OPERATIONS AND INVESTMENT DEVELOPMENT IN 2004

In 2003, thanks to correct guidance and close management, along with the efforts of cadres and employees of units under the Ministry, the value of industrial production and construction materials, construction installation, consulting, and exports achieved high growth compared to 2002. Units have leveraged their internal resources to invest in development, expand business operations, and shift their structure towards diversifying products and industries, transitioning from construction contracts to EPC general contracting roles, and taking on the role of project investors; investment in housing, urban infrastructure, and rural areas continued to develop; some units invested deeply, modernized equipment to improve construction productivity; marketing activities were intensified by units. The work of planning and managing plans by the Ministry has been significantly improved to reduce administrative procedures, increase initiative, and emphasize the responsibility of the Council of Management of State-owned Enterprises and heads of units under the Ministry.

However, the work of establishing and managing plans in some units still has shortcomings such as: when approving investment plans, they did not carefully consider advantages and difficulties, set overly ambitious targets but with low feasibility; the work of investing to shift the business structure in some units only shows product diversification but does not clearly define the main business industry of the unit; preparation for investment projects is still inadequate, market research and forecasting are not well prepared, financial balance for projects is not adequately calculated; some units lack experienced staff for investment work, not fully understanding the investment management procedures, thus some projects still lack necessary investment procedures.

To address these issues, to strictly implement the Law on State Budgets; Resolution No. 01/2004/NQ-CP dated January 12, 2004 of the Government on key measures to focus on directing and managing the state budget and economic plan for 2004; Decision No. 242/2003/QĐ-TTg dated November 17, 2003 of the Prime Minister on allocating the state budget for 2004; Decision No. 254/2003/QĐ-TTg dated November 27, 2003 of the Prime Minister on setting economic and social targets for 2004; Decision No. 271/2003/QĐ-TTg dated December 31, 2003 of the Prime Minister on issuing regulations for monitoring and evaluating enterprise performance; Directive No. 29/2003/CT-TTg dated December 23, 2003 of the Prime Minister on rectifying management of investment and construction funded by the state budget; and moving towards implementing the Construction Law, while further enhancing personal responsibility of unit leaders, the Minister of Construction instructs the Chairmen of the Council of Management of State-owned Enterprises, General Directors, Directors of companies, and heads of units under the Ministry to organize the implementation of the following contents:

 1. On planning and managing business operations:

a) The Council of Management of State-owned Enterprises, General Directors, Directors of companies, and heads of units shall be responsible for reviewing the 2004 plan and officially approving it, sending it to the Ministry of Construction no later than February 28, 2004. Reviewing, updating, and considering adjustments to the five-year business and development plan from 2001 to 2005 and sending it to the Ministry of Construction no later than April 30, 2004. During the review and adjustment process, the effectiveness of completed investment projects must be evaluated, and the feasibility, progress, and impact of ongoing projects must be considered in light of input factor fluctuations. Avoid setting overly ambitious targets at the beginning of the year that are unfeasible and then adjusting the plan at the end of the year to claim completion. The 2004 plan of units should aim for high growth rates to ensure the overall growth rate of the Construction Industry: construction installation at 20%, construction materials at 14%, consulting at 15%, and exports at a minimum of 20% compared to 2003, contributing to the national GDP growth target of over 8% for 2004 as per the National Assembly's Resolution and the Central Resolution No. 9 - Term IV.

The approved annual plan serves as the basis for unit implementation, and also provides the basis for the Ministry to monitor, inspect, and evaluate the implementation of unit development goals.

b) For construction material manufacturing enterprises: reassess the domestic market, strengthen market information work, intensify marketing efforts for product sales, especially exports, apply demand-stimulating measures to boost product sales, focusing on rural markets.

c) For construction installation enterprises: expand bidding for civil works, transportation, water conservancy, water supply and drainage projects,... Expand relationships, seek partners to form consortia and bid on large projects. Continue effectively implementing EPC packages. Organize production management and direct construction of awarded projects, manage technical quality, labor safety, and ensure project schedules (especially national key projects and cement projects). Firmly stop the practice of bidding below cost leading to losses during contract execution.

d) Consulting units need to intensify training, supplement, and update knowledge and management skills for staff. Quickly build a Vietnamese construction consulting team meeting the required capacity standards to take on tasks currently requiring foreign experts.

đ) Enterprises implementing projects for housing development, urban technical infrastructure, transportation infrastructure, and industrial zones shall carefully study the project's output characteristics and local mechanisms and policies. They shall complete each phase of the project in a phased manner, put it into operation to recover capital, and avoid scattered investment. They shall study management models for secondary investors' construction activities, transfer procedures, issuance of ownership certificates, etc., propose measures to limit speculation, and suggest market management mechanisms for real estate to the Ministry. Encouragement shall be given to investment in water supply, especially inter-regional and inter-provincial projects and those serving townships, market towns, and rural clusters through self-raised corporate funds.

e) All production and business activities must be vigorously promoted according to the planned orientation; enhance product competitiveness, strengthen marketing efforts, brand building, and promotion; review and classify receivables and payables, and resolutely handle uncollectible debts to improve corporate financial health; reorganize organizational structures, labor force composition, innovate technology, increase labor productivity, product quality, and reduce production costs; strive to achieve high growth targets while focusing on improving economic efficiency, enhancing competitiveness, and aiming for stable and sustainable development.

2. On the management of the 2004 investment development plan

a) All units, primarily state-owned corporations, must thoroughly review all ongoing and planned investment projects within the 2001-2005 five-year plan and towards 2010; clearly identify and focus investments on core business areas to shift production and business structures and ensure sustainable development.

b) The Board of Directors of State-Owned Corporations shall assign a member of the Board to oversee the consolidation and monitoring of investment implementation progress, organize regular supervision and evaluation in accordance with regulations, and report monthly and quarterly to the Ministry for compilation and reporting to the Government. Monthly, quarterly, six-monthly, and annual reports on investment must reflect the actual investment volume and disbursed capital corresponding to each reporting period.

c) Vigorously promote guidance and urging of self-inspection and inspection of construction investment and land management usage according to Decision No. 273/QĐ-TTg dated April 12, 2002 of the Prime Minister. Through inspection, audit, and supervision, enhance and firmly combat waste and inefficiency in construction investment and land management.

d) For state budget investment funds: based on the 2004 investment capital plan assigned by the Ministry, the investor must promptly organize implementation in accordance with current regulations, determine and report specific progress to the Ministry to complete each project component early for use. For survey, design, and planning funds, the Project Management Board, relevant Departments, Planning and Architecture Bureaus, Construction Departments of provinces and centrally-administered cities where projects are located must coordinate to urge and support the assigned unit to ensure project implementation and disbursement schedules.

đ) For state investment credit and guaranteed credit funds: following the Government's directive, in 2004, the scope of lending will be narrowed, and interest rates adjusted, mainly concentrating these funds on cement projects and domestic product localization programs. Therefore, units with eligible projects must accelerate investment preparation and promptly address procedures during project implementation, particularly land clearance and bidding processes. Projects receiving post-investment interest rate support must proactively handle necessary procedures from the beginning of the year.

e) For other sources of funds: units shall actively develop plans closely aligned with actual conditions, consistent with master plans, and approved by competent authorities. The Board of Directors, General Managers, and Unit Heads must carefully consider options, clearly define funding sources and new product marketability before deciding to invest and bear responsibility for project effectiveness, especially when investing outside the enterprise (such as in securities, football, etc.), or overseas, adhering to the principle that "the person deciding to invest is personally responsible for the project's effectiveness." If a project has been approved but is found ineffective during preparation, it should not proceed; unproductive projects must be halted decisively; ongoing projects must be reviewed, unnecessary components reduced, and localization strengthened to lower investment costs.

g) Units should select responsible, ethical, and experienced staff for investment construction management; review internal regulations; enhance decentralization linked to individual responsibility; minimize internal administrative procedures; and proactively organize training sessions for project management staff.

h) Investment supervision, evaluation, and final accounting must be considered crucial tasks in investment management.

i) Investment preparation work needs to be given even greater emphasis. Projects included in the plan for the year 2005 must complete procedures to obtain investment decisions before October 31, 2004, in accordance with current regulations on investment management and construction, particularly projects utilizing state budget funds. Projects must have all required procedures in place before they can commence, especially ensuring sufficient capital to implement the project while maintaining quality and schedule. For new urban area projects, depending on their nature and scale, all technical infrastructure works must be completed entirely or partially before organizing the commencement of construction.

 3. Implementation:

The Chairmen of the Councils of Management of State-owned Corporations, General Directors, Directors of Companies, and Heads of Units under the Ministry shall organize the implementation of this directive and report periodically to the Ministry monthly (before the 15th) to promptly address and resolve issues to achieve annual targets.

The Planning and Statistics Department is assigned to lead and coordinate with relevant bureaus and departments to guide, urge, and organize inspections of the implementation of this directive./.