Directive No. 1792/CT-TTg_1 on Strengthening Management of Investment from State Budget Funds and Government Bonds

DIRECTIVE

On Strengthening Management of Investment from State Budget Funds and Government Bonds

In recent times, the mobilization and utilization of state budget funds and government bonds have made significant contributions to investment in building economic and social infrastructure, creating a favorable environment that promotes production development, poverty reduction, and improvement of people's living standards. However, due to excessive decentralization and lack of comprehensive management measures, there has been an excessive approval of projects beyond the capacity to balance state budget funds and government bonds, leading to prolonged construction periods, fragmented annual investment plans, poor investment efficiency, dispersion, and wastage of state resources. Meanwhile, in the future, state budget funds will be very limited, and government bonds cannot be issued in additional amounts compared to 2011 to achieve the goal of curbing inflation, gradually reducing the budget deficit, ensuring national financial security, and keeping public debt within permissible levels.

To address the aforementioned issues and shortcomings, based on the conclusions of the third plenary session of the Central Committee of the Communist Party of Vietnam (XIIIth tenure), in conjunction with continuing to implement Resolution No. 11/NQ-CP dated February 24, 2011 on key measures to focus on curbing inflation, stabilizing macroeconomic conditions, and ensuring social welfare, the Prime Minister requests ministries, ministerial-level agencies, directly subordinate agencies of the Government, other central agencies, provincial People's Committees, centrally governed cities, state economic groups, and state-owned corporations (hereinafter referred to as ministries, sectors, and localities) to implement certain principles and measures to strengthen management of investment from state budget funds and government bonds as follows:

I. Certain Principles for Management and Decentralization of Investment from State Budget Funds and Government Bonds

1. The formulation of planning, programs, and projects for investment from state budget funds and government bonds must closely align with the goals and directions of the National Socio-Economic Development Strategy for 2011-2020 and the Socio-Economic Development Plan for 2011-2015 at both national and sectoral/local levels.

2. Gradually adjust the investment structure towards reducing public investment. Enhance measures to mobilize domestic and foreign capital from various economic sectors to invest in socio-economic infrastructure projects with potential for capital recovery.

3. While awaiting amendments to the decentralization of investment management, ministries, sectors, and localities must strictly adhere to current regulations regarding the authority to approve investment projects (including new projects and those involving adjustments to investment decisions), while also implementing the following additional principles:

a) Authorities at all levels are responsible for strictly controlling the scope and scale of investment projects according to approved objectives, fields, and programs, only deciding to invest when clear sources of funding and the ability to balance funds at each level of the budget have been determined. Determination of funding sources and balancing of funds is a critical component and must be included in the project dossier before submission to the competent authority for approval.

b) The Ministry of Planning and Investment shall lead and coordinate with the Ministry of Finance to review the sources of funding and total project costs for projects under the Prime Minister's authority; projects using central government budget supplements for localities; and government bond funds.

c) Based on the provisions of this Directive and the allocated capital and investment areas, ministries, sectors, and localities shall decide on investment projects within their authority. Within ten days of issuing the investment decision, ministries, sectors, and localities must submit reports to the Ministry of Planning and Investment and the Ministry of Finance for examination and supervision.

Within thirty days of receiving the investment decision sent by ministries, sectors, and localities, and during the process of inspecting the implementation of projects by these entities, if it is found that the investment project decision or its implementation does not comply with the provisions of this Directive, the Ministry of Planning and Investment and the Ministry of Finance shall issue formal opinions for ministries, sectors, and localities to consider, adjust, and modify. If ministries, sectors, and localities fail to make adjustments or modifications, the Ministry of Planning and Investment and the Ministry of Finance shall report and recommend measures to the Prime Minister for handling.

For projects approved but not commenced by October 25, 2011, they must be reviewed again and implemented according to the provisions herein.

d) For projects decided upon without clearly defined sources of funding, levels of state budget funds; government bond funds, causing prolonged construction periods and waste, the person signing the decision shall be responsible for losses caused by such delays.

đ) Starting from 2012:

All approved investment projects must be implemented according to the planned capital allocation to avoid arrears in basic construction; any supplementary capital or internal reallocation within the industry or sector can only be carried out with the consent of the authority responsible for allocating capital. Ministries, sectors, and localities must independently balance their own sources of capital to resolve basic construction arrears within their responsibility and authority.

- Allocation and advance payment of state budget funds and government bond funds from the State Treasury for investment projects (within the plan) must follow actual work volumes. For projects without actual work volumes, the maximum advance payment is 30% of the annual planned capital allocation. Further allocation and advance payment can only be made after settlement of completed work volumes. The Ministry of Finance and the Ministry of Planning and Investment shall implement and supervise compliance with this regulation.

- The allocation and advance disbursement of state budget funds and government bond funds from the State Treasury for investment projects (in the plan) must be based on actual work volume. For projects without actual work volume, the maximum provisional funding is 30% of the annual planned capital amount assigned. Further allocation and advance disbursement shall only be carried out after settlement of completed work volume. The Ministry of Finance and the Ministry of Planning and Investment shall implement and supervise implementation in accordance with this provision.

4. The allocation of state budget funds and government bond capital must be established according to the five-year investment plan in line with the socio-economic development plan and shall be broken down into annual investment plans. For the 2011-2015 period, an annual investment plan for 2011 and 2012 and a three-year investment plan (2013-2015) shall be established. The construction of the state budget capital and government bond capital investment plan for 2012 must take into account the overall balance of the 2011-2015 period. The Ministry of Planning and Investment shall lead and coordinate with relevant ministries and sectors to develop the three-year investment plan (2013-2015) to be submitted to the Prime Minister in the third quarter of 2012; including projections on the availability of capital and capital balancing by sector and field; the level of targeted supplementary capital for the three years (broken down annually) to enable ministries, sectors, and localities to proactively develop and implement investment.

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II. On the allocation of capital and the consolidation and assignment of the state budget investment plan for 2012.

1. For projects funded from the state budget, including: Capital investment of ministries, sectors, and localities and targeted supplementary capital from the central budget for localities:

a) Review and establish lists of ongoing projects being funded from the state budget (carry-over projects).

Projects subject to review must be those currently being funded from the state budget, included in approved investment plans, permitted by the Prime Minister to invest, or within programs and projects already approved by the Prime Minister.

Ministries, sectors, and localities shall organize reviews and establish lists of projects being funded by central budget capital, including: Lists of completed projects handed over for use before December 31, 2011 but not fully funded; Lists of projects expected to be completed in 2012; Lists of projects being funded by the central budget but lacking sufficient funding.

b) The allocation of capital shall be carried out in the following priority order:

- Prioritize funding for projects that have been completed and handed over for use before December 31, 2011 but not fully funded.

- Prioritize funding for projects expected to be completed in 2012 (based on the progress in the investment decision, capital balancing capacity, and implementation capability in 2012) and counterpart funding for ODA projects according to project implementation progress.

- Any remaining capital (if available) shall be allocated to some ongoing or new projects but must be limited to the maximum extent possible. New projects must be truly urgent, with a basic design decision and approved total estimate before October 25, 2011. For newly initiated projects, ministries, sectors, and localities shall submit them to the Ministry of Planning and Investment for review and submission to the Prime Minister based on the principle: The allocation of capital for new projects in 2012 must ensure that the total capital allocated for each project (including central budget capital, local budget capital, and other lawful sources) is at least 15% for Class A projects; 20% for Class B projects; and 35% for Class C projects compared to the approved total investment; Class B projects must be completed within five years, and Class C projects must be completed within three years.

- For projects currently being funded from the state budget but unable to secure funding in the 2012 plan, they will be categorized and handled as follows:

+ Category 1: For projects that can be converted to other forms of investment.

Ministries, sectors, and localities shall conduct evaluations, analyses, and establish lists of projects that can be converted to other forms of investment such as: BOT, BT, PPP, etc., including projects that can generate revenue to recover investment costs; projects that can be paid for through land use rights; projects that can be sold or transferred to domestic and foreign investors. The conversion of investment forms for projects currently being funded from the state budget but lacking continued funding sources must include plans to call for domestic and foreign investors to invest in specific projects. The Ministry of Planning and Investment shall be responsible for guiding procedures for conversion towards: The State withdrawing all invested capital from the project; The State contributing part of the invested capital together with enterprises to continue investing in the project and jointly exploit; The State transferring all invested capital in the project to the new investor.

+ Category 2: For projects that cannot be converted to other forms of investment, ministries, sectors, and localities shall proactively mobilize other lawful sources of capital to implement them. In cases where there are no other lawful sources of capital, implementation must be temporarily halted in 2012.

c) Consolidate and assign the state budget capital plan for 2012 to ministries, sectors, and localities and targeted supplementary capital from the central budget for localities:

Based on the proposal for allocating state budget capital to be submitted to the National Assembly, the Ministry of Planning and Investment shall guide the review and establishment of project lists, projected capital allocation by sector, field, and locality, including targeted supplementary capital for localities, and notify ministries, sectors, and localities before October 31, 2011.

Ministries, sectors, and localities shall conduct reviews and project lists and the level of capital allocation for the 2012 plan for each specific project to be submitted to the Ministry of Planning and Investment before November 15, 2011. Ministers, heads of government agencies, and other central-level agencies, Chairmen of People's Committees of provinces and centrally-administered cities, Chairmen of Councils of Members of economic groups and state-owned corporations are responsible for reviewing and determining project lists and capital allocation according to the above principles within the total projected capital for the 2012 plan announced for each sector, field, and specific program.

BASED ON THE RESOLUTION OF THE NATIONAL ASSEMBLY (SECOND SESSION, THIRTEENTH NATIONAL ASSEMBLY TERM) AND THE PROPOSALS OF MINISTRIES, SECTORS, AND LOCALITIES, THE MINISTRY OF PLANNING AND INVESTMENT REVIEWS AND COMPILES REPORTS TO THE PRIME MINISTER. THE PRIME MINISTER DECIDES TO ASSIGN THE MINISTRIES, SECTORS AT THE CENTRAL LEVEL THE INVESTMENT PLAN INDICATORS AND PROJECT LIST AS PROVIDED BY CURRENT REGULATIONS AND ASSIGN THE PROVINCES AND CITIES UNDER THE CENTRAL GOVERNMENT THE INDICATORS AND PROJECT LIST FROM THE SUPPLEMENTARY BUDGET FUNDS WITH SPECIFIC OBJECTIVES FOR LOCALITIES. THE PRIME MINISTER DELEGATES THE MINISTER OF PLANNING AND INVESTMENT TO ASSIGN THE TOTAL CAPITAL ALLOCATION PER SECTOR, FIELD, AND PROJECT GOALS; TASKS AND CAPITAL AMOUNTS FOR EACH SPECIFIC PROJECT TO THE MINISTRIES AND SECTORS; AND ASSIGN THE PROVINCES AND CITIES UNDER THE CENTRAL GOVERNMENT THE TOTAL CAPITAL ALLOCATION PER SPECIFIC PROGRAM AND CAPITAL AMOUNTS FOR EACH SPECIFIC PROJECT.

2. REGARDING THE LOCAL BUDGET BALANCE CAPITAL, LOTTERY CAPITAL, AND OTHER CAPITAL SOURCES WITH THE NATURE OF STATE BUDGET, BASED ON THE RESOLUTION OF THE NATIONAL ASSEMBLY AND THE PRIME MINISTER'S DECISION ON THE STATE BUDGET ESTIMATE AND DEVELOPMENT PLAN, THE PRIME MINISTER ASSIGNS THE PEOPLE'S COMMITTEES OF PROVINCES AND CITIES UNDER THE CENTRAL GOVERNMENT TO DETERMINE SPECIFIC GUIDELINES FOR REVIEWING, CREATING PROJECT LISTS, AND ALLOCATING CAPITAL IN PRIORITY ORDER IN THE 2012 PLAN BASED ON THE ABOVE PRINCIPLES AND GUIDANCE OF THE MINISTRY OF PLANNING AND INVESTMENT; DIRECT THE REVIEW AND COMPILE OF CAPITAL ALLOCATION SCHEMES TO SUBMIT TO THE SAME LEVEL PEOPLE'S COUNCIL FOR DECISION; BE RESPONSIBLE FOR THE RESULTS OF THE REVIEW AND THE CAPITAL ALLOCATION SCHEME IN ACCORDANCE WITH THE ABOVE PRINCIPLES, ENSURING CONCENTRATED CAPITAL ALLOCATION AND IMPROVING THE EFFICIENCY OF STATE BUDGET CAPITAL USE.

III. ON CAPITAL ALLOCATION, COMPILE, AND ASSIGN THE GOVERNMENT BOND CAPITAL PLAN FOR THE 2011-2015 PERIOD AND THE 2012 PLAN

BASED ON THE INITIAL ESTIMATE IN THE 2012-2015 PERIOD, THE GOVERNMENT BOND CAPITAL WILL ONLY MEET ABOUT 36% OF THE CAPITAL NEEDS OF PROJECTS IN THE LIST APPROVED BY THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY. TO ENSURE BALANCE AND EFFECTIVE USE OF GOVERNMENT BOND CAPITAL, IT IS NECESSARY TO STRICTLY IMPLEMENT THE POLICY OF NOT ADDING NEW PROJECTS, WHILE SIMULTANEOUSLY IMPLEMENTING THE REVIEW AND REORGANIZATION OF PROJECTS ALREADY IN THE LIST USING GOVERNMENT BOND CAPITAL AND ASSIGNING THE GOVERNMENT BOND CAPITAL PLAN FOR THE 2011-2015 PERIOD AND THE 2012 PLAN ACCORDING TO THE FOLLOWING PRINCIPLES:

1. REVIEW AND CREATE A LIST OF PROJECTS BEING FUNDED BY GOVERNMENT BONDS, INCLUDING: PROJECTS LISTED IN RESOLUTION NO. 881/NQ-UBTVQH12 OF JANUARY 4, 2010, OF THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY AND PROJECTS ADDED IN DECISION NO. 184/QĐ-TTg OF JANUARY 28, 2011, OF THE PRIME MINISTER ON ASSIGNING THE GOVERNMENT BOND CAPITAL PLAN FOR 2011.

MINISTRIES, SECTORS, AND LOCALITIES SHALL ORGANIZE THE REVIEW AND CREATION OF A LIST OF PROJECTS BEING FUNDED BY GOVERNMENT BONDS, INCLUDING: A LIST OF COMPLETED PROJECTS THAT HAVE BEEN COMMISSIONED AND PUT INTO USE BEFORE DECEMBER 31, 2011, BUT NOT FULLY FUNDED; A LIST OF PROJECTS CAPABLE OF BEING COMPLETED IN 2012; A LIST OF PROJECTS CAPABLE OF BEING COMPLETED IN 2013; AND A LIST OF REMAINING PROJECTS.

2. THE ALLOCATION OF GOVERNMENT BOND CAPITAL SHALL BE ACCOMPLISHED IN THE FOLLOWING PRIORITY ORDER:

CONCENTRATE ON ALLOCATING CAPITAL TO PROJECTS THAT HAVE BEEN COMPLETED AND COMMISSIONED AND PUT INTO USE BEFORE DECEMBER 31, 2011, BUT NOT FULLY FUNDED.

- PRIORITY SHALL BE GIVEN TO ALLOCATING CAPITAL TO PROJECTS THAT MUST BE COMPLETED IN 2012; IF THERE ARE REMAINING FUNDS, CONSIDERATION SHALL BE GIVEN TO ALLOCATING CAPITAL TO PROJECTS THAT CAN BE COMPLETED IN 2013 (BASED ON THE SCHEDULE IN THE INVESTMENT DECISION, THE ABILITY TO BALANCE FUNDS, AND THE ABILITY TO IMPLEMENT IN 2012 AND 2013)...

- THE REMAINING PROJECT LIST SHALL BE CLASSIFIED AND HANDLED AS FOLLOWS:

+ Category 1: For projects that can be converted to other forms of investment.

MINISTRIES, SECTORS, AND LOCALITIES SHALL EVALUATE, ANALYZE, AND CREATE A LIST OF PROJECTS THAT CAN BE TRANSFERRED TO OTHER INVESTMENT FORMS SUCH AS: BOT, BT, PPP, ETC., INCLUDING PROJECTS THAT CAN CHARGE FEES TO COVER INVESTMENT COSTS; PROJECTS THAT CAN BE PAID FOR WITH LAND USE RIGHTS; AND PROJECTS THAT CAN BE SOLD OR TRANSFERRED TO DOMESTIC AND FOREIGN INVESTORS. THE TRANSITION OF INVESTMENT FORMS FOR PROJECTS BEING FUNDED BY GOVERNMENT BONDS BUT WITHOUT ENOUGH FUNDS FOR CONTINUOUS ALLOCATION MUST BE DONE THROUGH A PROGRAM OR PLAN TO CALL FOR DOMESTIC AND FOREIGN INVESTORS TO INVEST IN SPECIFIC PROJECTS. THE MINISTRY OF PLANNING AND INVESTMENT SHALL BE RESPONSIBLE FOR GUIDING PROCEDURES SO THAT THE STATE WITHDRAWS ALL FUNDS ALREADY INVESTED IN THE PROJECT; THE STATE CONTRIBUTES PART OF THE FUNDS ALREADY INVESTED TO CONTINUE INVESTING IN THE PROJECT AND SHARING PROFITS; AND THE STATE TRANSFERS ALL FUNDS ALREADY INVESTED IN THE PROJECT TO THE NEW PROJECT SPONSOR.

+ GROUP 2: FOR PROJECTS THAT CANNOT BE TRANSFERRED TO OTHER INVESTMENT FORMS, MINISTRIES, SECTORS, AND LOCALITIES SHALL ACTIVELY USE LEGAL CAPITAL SOURCES TO IMPLEMENT THEM. IN CASE THERE ARE NO LEGAL CAPITAL SOURCES, THE IMPLEMENTATION SCHEDULE MUST BE POSTPONED AFTER 2015.

3. COMPILE AND ASSIGN THE GOVERNMENT BOND CAPITAL PLAN.

THE MINISTRY OF PLANNING AND INVESTMENT SHALL GUIDE THE REVIEW AND CREATION OF PROJECT LISTS BEING FUNDED BY GOVERNMENT BONDS BEFORE OCTOBER 31, 2011.

BASED ON THE ABOVE REGULATIONS AND GUIDANCE OF THE MINISTRY OF PLANNING AND INVESTMENT, MINISTRIES, SECTORS, AND LOCALITIES SHALL REVIEW ALL PROJECTS BEING FUNDED BY GOVERNMENT BONDS AND CREATE SPECIFIC PROJECT LISTS, SUBMITTING THEM TO THE MINISTRY OF PLANNING AND INVESTMENT BEFORE NOVEMBER 30, 2011. THE MINISTERS AND CHAIRS OF THE PEOPLE'S COMMITTEES OF PROVINCES AND CITIES UNDER THE CENTRAL GOVERNMENT SHALL BE RESPONSIBLE FOR THE RESULTS OF THE REVIEW AND THE DETERMINATION OF THE PROJECT LISTS ACCORDING TO THE CRITERIA SET OUT IN THIS DIRECTIVE.

BASED ON THE NATIONAL ASSEMBLY RESOLUTION ON THE TOTAL GOVERNMENT BOND CAPITAL FOR THE 2011-2015 PERIOD AND 2012, THE MINISTRY OF PLANNING AND INVESTMENT SHALL COMPILE THE REPORTS OF MINISTRIES AND LOCALITIES, PROPOSE THE CAPITAL ALLOCATION SCHEME TO THE PRIME MINISTER FOR REPORTING TO THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY. BASED ON THE RESOLUTION OF THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY, THE MINISTRY OF PLANNING AND INVESTMENT SHALL PRESENT THE PRIME MINISTER'S DECISION TO ASSIGN THE TOTAL GOVERNMENT BOND CAPITAL AND THE PROJECT LIST TO MINISTRIES, SECTORS, AND LOCALITIES. THE PRIME MINISTER DELEGATES THE MINISTER OF PLANNING AND INVESTMENT TO ASSIGN THE PROJECT LIST AND CAPITAL AMOUNTS FOR EACH SPECIFIC PROJECT TO MINISTRIES, SECTORS, AND LOCALITIES.

IV. IMPLEMENTATION ARRANGEMENTS

1. Ministers, Heads of central government agencies, Chairpersons of People's Committees of provinces and centrally governed cities, Chairpersons of Councils of State-owned Economic Groups and State-owned Corporations shall, based on their functions, tasks, and the provisions of this Directive, promptly organize and implement to ensure the effective allocation and utilization of state budget capital and government bond capital.

2. The Ministry of Planning and Investment shall have the responsibility:

a) Guide and compile plans for state budget capital and government bond capital, report to the Prime Minister for decision.

b) Guide procedures for changing investment forms for projects currently being invested with state budget capital and government bond capital as stipulated in Sections II and III of this Directive.

c) Take the lead and coordinate with the Ministry of Finance to submit to the Prime Minister necessary measures to handle issues related to projects that must be temporarily suspended or delayed in implementation according to the plan.

d) Take the lead and coordinate with relevant agencies to develop and submit to the Government in the first quarter of 2012 a Decree on medium-term investment plans.

3. The Ministry of Finance shall take the lead and coordinate with the Ministry of Planning and Investment to determine sources of revenue and balance the state budget revenues and expenditures, the capacity to issue government bonds, and financial balances related to national financial security in the five-year plan and annually; review and submit to the Government for amendments to the scope and subjects eligible to use state development credit funds under Decree No. 75/2011/NĐ-CP dated August 30, 2011.

4. The Ministry of Construction shall take the lead and coordinate with ministries, sectors, and localities to issue a decision adjusting construction investment standards for classrooms under the program to reinforce school buildings and provide housing for teachers to suit actual conditions in each region by November 15, 2011.

The Ministry of Planning and Investment shall be responsible for guiding, monitoring, urging implementation, and regularly reporting quarterly to the Prime Minister on the situation, progress, and results of implementing this Directive./.