Directive No. 17/1999/CT-TTg On the development plan for economic and social progress and state budget estimate for 2000

DIRECTIVE OF THE PRIME MINISTER

On the development plan for the economy and society and the state budget estimate for the year 2000

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In the first six months of 1999, despite many difficulties, the situation of the economy and society continued to stabilize, agricultural production achieved relatively good results under adverse weather conditions, exports showed a gradual increase trend, exchange rates and prices remained stable, political security and social order were maintained. However, the economic and social situation also had some unfavorable developments, notably: the GDP growth rate continued to decline, industrial and service production increased slowly, the market and purchasing power were narrowed, many products had to be produced at a slow pace, basic construction was implemented slowly, budget revenue was low, unemployment and some social evils persisted acutely...

The remaining tasks for the last six months of the year are extremely heavy. The Prime Minister requests that ministries, sectors, and localities concentrate their efforts to implement well the Resolution of the Government's first session in July 1999 on measures to successfully fulfill the 1999 plan; while promptly implementing the construction of the 2000 plan according to the following contents and progress:

I- MAJOR TASKS OF THE DEVELOPMENT PLAN FOR ECONOMY AND SOCIETY IN 2000

The year 2000 is the final year of the five-year plan from 1996 to 2000, completing the goals of the economic and social development strategy from 1991 to 2000 proposed by the Eighth National Congress of the Communist Party of Vietnam, while preparing to implement the five-year plan from 2001 to 2005 and the ten-year economic and social development strategy from 2001 to 2010.

Although the economic situation in the region and the world still contains many unstable factors, many countries have overcome crises and recessions, showing signs of recovery; negotiations to join the World Trade Organization and signing the Vietnam-US trade agreement are progressing. Our country has additional opportunities to expand international trade and investment, while simultaneously facing heavier and more intense competitive pressures. At the same time, our agricultural production requires expanding the export of agricultural products to achieve new development; many industrial and service products must face fierce competition from foreign goods both in the domestic market and in the regional and international markets.

In this context, continuing the program of action in 1999, the economic and social plan for 2000 needs to focus on striving to achieve the general goal of: ending the decline in the growth rate of the economy, gradually creating a foundation for higher sustainable development; making significant improvements in competitiveness and efficiency of the economy, improving the effectiveness of investment, maintaining major balances and macroeconomic stability, and cleansing the financial and monetary sectors; addressing urgent social issues, promoting the process of socializing education, healthcare, culture, sports, gradually reforming the wage system; combining economic and social development with strengthening national defense and security, maintaining social order and safety.

To achieve these goals, it is necessary to thoroughly understand the Party's renewal policy and the Resolutions of the Fourth and Sixth Plenary Sessions (first meeting) of the Central Committee of the Communist Party (Eighth Term) to continue perfecting macro mechanisms and policies, harmonizing legal frameworks to improve and invigorate the investment and business environment, releasing and fully utilizing all potential of domestic economic components, combining with leveraging advantages to expand and enhance the effectiveness of international cooperation and economic integration with the region and the world; while enhancing the capacity and effectiveness of state management, especially in directing and supervising the implementation of laws and institutions.

Starting from the guiding ideology mentioned above, the development plan for the economy and society in 2000 needs to focus on solving some key issues in the following areas:

1. Continuing to concentrate efforts on developing agriculture and rural economy. Prioritize investment in water conservancy projects and disaster prevention; widely apply scientific and technological advances to agricultural production, primarily using high-yield and quality seeds and livestock breeds. Actively respond to adverse weather conditions to minimize losses caused by natural disasters. Effectively resolve policy and institutional obstacles hindering agricultural production and consumption; implement the unified function of state management and support throughout the entire process of production, processing, and consumption, including export of agricultural, aquatic, and forestry products, overcoming the disconnect between production organizations and the market.

2. Promptly remove difficulties and bottlenecks in industrial and service production; encourage deep investment, modernize equipment and technology, improve management to reduce costs, improve product quality, enhance competitiveness and production efficiency, increase product consumption and exports. State management agencies must work together with business associations and large conglomerates to propose specific policies and measures for each industry and product type, particularly those industries and services facing many difficulties such as coal, cement, steel, machinery, sugar, aviation, hotels... Accelerate the pace of shareholding reform for a portion of state-owned enterprises; implement the policy of selling, leasing, tax exemption, and transferring to labor collectives for small state-owned enterprises. Promote the transformation of 100% state-owned enterprises into limited liability companies, while reforming management mechanisms to enhance the initiative of enterprises in leveraging the leading role of the state economy.

3. Develop the domestic market, focusing on rural and remote markets. Enhance the ability of farmers to consume goods. Implement stimulus measures in production, construction, and consumption to increase domestic product consumption; lower prices to sell off surplus products.

Continue to amend, supplement, and promulgate new mechanisms and policies to encourage economic sectors to participate in exports and expand export markets; bring the operations of the Export Support Fund into a regular pattern, thereby fully utilizing its positive effects. Implement reasonable protection regimes in conjunction with policies and measures that genuinely promote domestic production to enhance competitiveness in line with the process of joining the ASEAN Free Trade Area, the World Trade Organization, and other international commitments. Strengthen trade promotion activities, seek and expand export markets for goods, particularly those with high potential for production development such as rice, rubber, tea, coffee, vegetables and fruits, meat, aquatic products, textiles, footwear, handicrafts, electronic products, small machinery...

4. Stimulate total social investment development, coupled with enhancing investment efficiency, especially state capital investment.

Develop and promulgate concurrently guiding legal documents for the implementation of the Enterprise Law, the Commercial Law, the State Bank of Vietnam Law, and the Credit Organizations Law; complete the drafting of the State-Owned Enterprise Law (Amended) to ensure a stable legal framework for the investment and business activities of enterprises and citizens. This work must be fundamentally completed in 1999 and further perfected in 2000.

State budget investment will continue to focus on building economic and social infrastructure, supporting difficult regions, effectively addressing the scattered, prolonged, and wasteful investment issues. Implement the newly issued regulations on investment management and construction in the economy, state credit investment, emphasizing the expansion of credit guarantee forms and post-investment incentives, coupled with reforming the credit mechanism and expanding the activities of commercial banks, gradually establishing a securities market to truly promote the movement of the capital market, facilitating all efforts to develop production and business in society, especially small and medium-sized enterprises.

Enhance the responsibility of state agencies in resolving obstacles to accelerate disbursement progress and improve the effectiveness of using foreign official development assistance funds; continue to improve the environment for attracting foreign direct investment, support projects that have been granted licenses to implement according to schedule, and enterprises that have been operating to improve their efficiency and comply with Vietnamese laws.

5. Implement national financial policy in line with the stimulus policy in construction, production, and consumption. Continue to abolish state budget subsidies for production and business service sectors; address the wage system in stages; promote the socialization of public services; supplement regulations and further intensify thrift practices in conjunction with improving the efficiency of state capital and asset utilization.

Actively resolve the issue of accumulated debts, making fundamental changes in the financial health of the banking system and credit funds, coupled with measures to reform and rectify state-owned enterprises.

6. Vigorously promote scientific and technological activities towards linking research and application to quickly apply research results to production and technological innovation, including management technology, in various industries and production/service facilities; overcome the administrative and subsidy-based operational and management mechanisms for scientific research organizations; ensure funding for research activities based on research outcomes. Strengthen environmental protection efforts.

7. Effectively address pressing social issues. Promote the summary and evaluation of the results of implementing national programs and target programs up to the year 2000 to plan for improved implementation efficiency in subsequent years. Establish comprehensive mechanisms and policies to promote the socialization of educational, healthcare, cultural, and sports activities to develop and improve the quality of these fields, while better assisting the poor to access public services.

8. Consolidate national defense and security, strengthen social order and safety. Rectify the administrative apparatus in accordance with the spirit of Central Resolution No. 7, enhance the enforcement of laws, maintain discipline and order in all economic and social activities.

II. MAJOR REQUIREMENTS FOR THE STATE BUDGET ESTIMATE IN 2000

1. The state budget revenue estimate must be developed based on accurately calculating all tax revenues according to the provisions of tax laws and current collection regulations, including handling difficulties in implementing new tax laws.

The state budget revenue estimate must actively address the continuous decline in the ratio of gross domestic product mobilized into the state budget over recent years, while being feasible and consistent with growth and profitability in each sector, genuinely encouraging production and business development, coupled with measures to combat tax evasion and fraudulent trade, and tax avoidance. The import and export tax estimates must take into account factors related to continuing the process of joining AFTA, participating in international economic and financial organizations, and the impact of regional financial and monetary crises.

2. From the state budget for the year 2000, in addition to meeting the needs of regular expenditures with a spirit of even stricter thrift, it must appropriately handle the relationship between investment spending on material infrastructure construction and the initial requirement to address salaries. The general spirit is to prioritize capital for key projects of the State and counterpart funds to continue attracting foreign capital according to the signed agreements, first and foremost ongoing construction projects and those completed for use within the year; minimize the allocation of state budget capital for starting new projects. On this basis, allocate a portion of the state budget to address the salary system in accordance with the spirit of Resolution No. 7 of the Central Committee. Ensure the proportion of state budget spending for education and training, science and technology as stipulated in Resolution No. 2 of the Central Committee; at the same time, clearly define socialization goals and tasks in each field of education, healthcare, culture, and sports to mobilize additional social resources and gradually change the state budget spending mechanism. Ensure funding for national defense and security tasks.

3. The regular expenditure budget is built at a necessary, reasonable, and thrifty level. Implement cost-sharing for administrative and public services for some agencies and units with conditions at the central level and in localities. The selection of these agencies and units must be decided in 1999 to have a basis for establishing, allocating, and managing the budget of these agencies and units proactively from the beginning of 2000. Eliminate state budget subsidies for enterprises, do not allocate funds from the state budget to support scientific, health, and training activities of the State-owned Joint Stock Corporations (except in special cases as decided by the Prime Minister). Allocate budget reserves and supplement the Financial Reserve Fund in accordance with Decree No. 87/CP dated December 19, 1996 of the Government detailing the management levels, establishment, implementation, and settlement of the state budget, and Decree No. 51/1998/NĐ-CP dated July 28, 1998 of the Government amending and supplementing certain articles of Decree No. 87/CP dated December 19, 1996.

4. Balance the state budget.

Tax and fee collection must meet the reasonable and thrifty needs of regular expenditures and ensure repayment of due debts, adjust the salary system in one step and continue to allocate an appropriate accumulation rate for development investment.

The state budget deficit must correspond to the assured domestic borrowing capacity and preferential foreign borrowing, at a level below 5% of GDP. Do not borrow commercially abroad, do not issue and borrow short-term domestic loans with high interest rates to cover the state budget deficit.

5. Local government budget estimate.

- Establish the local government budget estimate must ensure the principle: The total expenditure shall not exceed the total local government revenue received; prioritize investment development expenditures, education and training, science and technology, environmental expenditures; allocate local government budgets in accordance with the prescribed levels in Decree No. 87/CP and Decree No. 51/1998/NĐ-CP (mentioned above) of the Government.

- Continue to implement the mechanism of allocating expenditures for certain objectives corresponding to the entire or part of the land tax revenue, land rental fees, land use fees, etc., as the budget allocation mechanism in 1999.

- Based on the state budget estimate for 2000 assigned by the Government, stabilize revenue sources and the distribution ratio of revenue sources between the central budget and provincial budgets. To encourage localities to strengthen revenue guidance and management, for revenue items shared between the central budget and local government budgets, the province or city that contributes more to the central budget than the previous year will receive half of the excess amount back from the central budget to the local budget. For the surplus revenue from import-export taxes, special consumption taxes on domestic goods and imported goods (excluding VAT on imported goods), apply specific annual reward policies for local budgets in accordance with the State Budget Law. These reward surpluses can be used for local infrastructure construction.

III. PROGRESS IN THE DEVELOPMENT OF THE PLAN AND ASSIGNMENT OF IMPLEMENTATION

1. On progress

a) In July 1999, the Ministry of Planning and Investment and the Ministry of Finance guide the framework plan and budget allocation for 2000 for ministries, sectors, and localities as a basis for developing plans.

b) Before August 30, 1999, ministries, sectors, State-Owned Joint Stock Corporation 91, People's Committees of provinces and centrally-administered cities report their economic and social development plans and state budget estimates for 2000 to the Ministry of Planning and Investment and the Ministry of Finance for consolidation and submission to the Government.

c) During this period (August 1999), the Ministry of Planning and Investment and the Ministry of Finance organize meetings with ministries, sectors, and localities to promptly consolidate plans for submission to Party and State leadership bodies, while proposing budget allocation schemes for each ministry, sector, and centrally-administered city for submission to the Standing Committee of the National Assembly for decision.

d) After the Government has provided guidance to complete the state budget estimate for 2000 for submission to the National Assembly; the Ministry of Finance, the Ministry of Planning and Investment, and the competent authorities of target programs coordinate with relevant ministries to propose budget allocation schemes for each ministry, central agency, and the supplementary amount from the central budget for each centrally-administered city, and the budget for implementing target programs for each ministry, central agency, and locality, so that after the National Assembly decides on the state budget for 2000, they can promptly complete the requirements of the Government before submitting to the Standing Committee of the National Assembly for detailed allocation decisions.

2. Regarding division of responsibilities:

- By January 2006, submit to the Prime Minister a draft list of particularly important state-owned companies directly implementing some rights and obligations of the state owner by the Prime Minister;

- Take the lead in coordinating with the Ministry of Finance to build plans and major balances as a basis for guiding ministries, sectors, localities, and State-Owned Joint Stock Corporation 91 to develop the 2000 plan in line with the overall direction of national socio-economic development.

- Direct the development and consolidation of the socio-economic development plan for 2000 and work with ministries, sectors, and localities on this plan; take the lead in coordinating with the Ministry of Finance to forecast the investment development plan and allocate capital for basic construction projects in 2000.

b) The Ministry of Finance:

- Guide ministries, central agencies, and localities in evaluating the implementation of the state budget estimate for 1999; build the state budget estimate and notify the inspection figures regarding the revenue and expenditure budget estimate for 2000 to ministries, central agencies, and localities; determine the ratio of revenue sources and the amount to be supplemented to provincial budgets to be submitted to the competent authority for decision.

- Take the lead and coordinate with the Ministry of Planning and Investment and relevant agencies in building and consolidating the state budget estimate for 2000; take the lead in working on the state budget estimate with ministries, central agencies, and localities.

- Conduct an evaluation of the implementation of the state budget distribution ratio for provinces and cities over the past three years, and submit necessary recommendations to the Prime Minister.

c) Other ministries and sectors cooperate with the Ministry of Planning and Investment and the Ministry of Finance in developing economic and social development tasks and budget estimates within their respective areas of responsibility. Agencies in charge of national programs cooperate with the Ministry of Planning and Investment and the Ministry of Finance to work with relevant ministries, central agencies, and localities on tasks and financial estimates for 2000 to implement programs within their respective areas of responsibility.

Ministries and state agencies, based on their functions, calculate available resources, establish socio-economic indicators, solutions, new mechanisms and policies, or propose amendments and supplements to existing policies as a basis for planning and budget estimates, and notify the Ministry of Planning and Investment, the Ministry of Finance, and related agencies before the budget estimate is established.

d) People's Committees of provinces and centrally-administered cities direct, organize, and instruct Departments of Planning and Investment and Departments of Finance and Prices to closely coordinate with other departments and sectors in building socio-economic development plans and state budget estimates to be submitted to the People's Councils of provinces and centrally-administered cities for decision.

The Prime Minister requests that ministers, heads of ministerial-level agencies, heads of government agencies, and Chairpersons of People's Committees of provinces and centrally-administered cities organize the implementation of this Directive./.