Directive No. 18/2005/CT-TTg on the development of plans for economic and social development and state budget estimates for 2006

DIRECTIVE OF THE PRIME MINISTER

Regarding the development of plans for economic and social development

and the state budget estimate for the year 2006

The year 2006 is the first year of the five-year plan from 2006 to 2010, which holds significant importance in creating a strong foundation for high and sustainable growth throughout the period from 2006 to 2010, further enhancing the quality of life for the people. The construction of the plan and the state budget estimate for the year 2006 is carried out concurrently with the development of the five-year plan and the state budget estimate for the period 2006 to 2010, pending the National Assembly's approval of the main development goals of the five-year plan from 2006 to 2010. The Prime Minister requests that all Ministries, sectors, localities, and State-owned Enterprise 91 thoroughly implement the policy of continued reform as stated in Resolution No. 9 of the Ninth Plenum, fully exploit potential and advantages, create favorable conditions for rapid economic development, and specifically incorporate the following main goals and tasks into their 2006 plans:

A. MAIN GOALS AND TASKS OF THE PLAN FOR THE YEAR 2006

I. OBJECTIVES:

1. Strive to achieve high and sustainable economic growth rates. Make significant progress in the quality of growth, competitiveness, and efficiency of the economy. Accelerate the transformation of the economic structure and labor force towards a faster increase in the proportion of services and industry. Manage and utilize resources effectively to meet the requirements of economic growth, poverty reduction, environmental protection, and sustainable development.

2. Mobilize maximum investment capital for economic and social development. Attract more investment from the private sector and foreign direct investment. Enhance the effectiveness of investment from the state budget.

3. Prepare the necessary conditions to meet the requirements of international economic integration. Fully exploit advantages and minimize disadvantages arising from expanded international economic integration to serve growth. Fulfill all international commitments already signed. Create favorable conditions to rapidly increase exports; attract high-tech capital from abroad.

4. Vigorously promote socialization in cultural and social fields, improving the living standards of the people, particularly in cultural, educational, health, and sports development. Continue to build a sustainable social infrastructure, effectively addressing urgent social issues such as poverty reduction, employment, HIV/AIDS prevention, and social evils.

5. Further promote administrative reform, enhancing the effectiveness and efficiency of state administrative agencies. Promote grassroots democracy, strengthen dialogue between local authorities and business communities and residents.

II. MAIN TASKS OF THE PLAN FOR THE YEAR 2006

1. Create necessary conditions for the economy to develop steadily, sustainably, and achieve high growth rates.

Strive to achieve a gross domestic product (GDP) growth rate of 8%.

Continue to maintain a high and sustainable growth rate in the industrial sector. Develop products with high competitive advantages, gradually reduce and eventually eliminate unreasonable production protection according to international commitment schedules. Reduce production costs, eliminate unreasonable costs, and enhance the competitiveness of industrial products. Vigorously apply advanced technology to production and business activities. Strive for a 10.5% increase in the added value of the industrial sector (a 15.5% increase in production value).

Diversify service activities, reduce costs, and improve quality: postal telecommunications, transportation, tourism, finance, banking, auditing, legal consultation. Strengthen the domestic market and real estate market. Strive for an 8% increase in the added value of the service sector.

Develop agriculture towards higher productivity, quality, and efficiency linked to consumption markets. Accelerate the transformation of the economic structure in agriculture, forestry, and fisheries, improve land use efficiency, and strive to establish many fields achieving 50 million dong per hectare per year. Formulate proactive plans to prevent and control natural disasters and diseases. Strive for a 3.5% increase in the added value of the agricultural sector (a 4.5% increase in production value).

2. Continue to implement Resolution No. 3 and Resolution No. 9 of the Ninth Plenum on state enterprise reform. Firmly implement the restructuring and modernization of state enterprises according to the overall plans approved by the Prime Minister of the Ministries, sectors, localities, and State-owned Corporations. Continue to review and classify enterprises to privatize large-scale enterprises, including corporations; reorganize the operations of corporations under the holding company-subcompany model, forming several economic groups.

Vigorously implement laws on businesses and investment, creating favorable conditions for the resolution of administrative procedures, land, production sites... to mobilize maximum investment capital from the private sector for production and business.

3. Increase the country's financial capacity; adopt policies to raise the domestic savings rate, striving to mobilize 37% of GDP for development investment; ensure state budget revenue for regular spending, debt repayment, and allocate a portion for development investment, with the budget deficit not exceeding 5% of GDP.

Continue to stabilize monetary conditions, purchasing power, and currency value, reduce bad debts and overdue debts, and improve the quality of banking service activities.

4. Enhance the effectiveness of external economic activities, seek new markets, and boost exports. Create favorable conditions to attract foreign direct investment; accelerate disbursement and effective utilization of official development assistance (ODA). Continue to implement the ASEAN Free Trade Area (AFTA) roadmap and other multilateral and bilateral commitments effectively during the process of international economic integration.

5. Raise the level of cultural and information enjoyment for the people, especially in remote, mountainous, and border areas, and preserve national cultural identity. Improve the quality and effectiveness of healthcare services. Continue to innovate and make clear progress in education and training development; develop vocational training systems; improve the quality of human resources with a reasonable structure.

Continue to effectively implement the Growth Strategy, Eradication of Poverty, and Millennium Development Goals. Develop a social safety net network to assist vulnerable groups and the poor. Strengthen efforts to protect natural resources and the environment.

6. Accelerate the administrative reform process on all fronts: perfecting the administrative system, reforming the administrative apparatus, enhancing the ethics and capacity of the cadre and civil servant workforce, financial reform, and modernizing the administrative system. Enhance the effectiveness and transparency of state policies.

7. Effectively address pressing social issues; particularly crime, drug abuse, HIV/AIDS, and traffic accidents.

8. Strengthen national defense and security, maintain national independence, social order, and safety, especially in key areas, border regions, islands, creating a stable political environment for economic development and international integration.

III. TASKS IN BUILDING THE STATE BUDGET FOR 2006

1. The state budget revenue forecast must be accurate and comprehensive according to the provisions of the law; it should be based on scientific analysis and forecasting, taking into account factors such as economic growth, market volatility, domestic and international prices, etc.; it must ensure positivity based on implementing measures to encourage production and business development, expand markets, develop revenue sources; fully implement commitments under the process of international economic integration; effectively implement measures to strengthen revenue management, prevent revenue loss, smuggling, and commercial fraud.

Build the state budget revenue forecast aiming to achieve over 22% of GDP, with tax and fee revenues accounting for over 21%. Domestic revenue (excluding oil revenue and land use fees) should increase by at least 12-14% compared to the actual performance in 2005.

2. The state budget expenditure forecast should focus on the following main tasks:

a) Investment development expenditures must allocate sufficient capital according to the progress of implementation for national key projects and works; prioritize increasing investment in economic and social development in mountainous, midland northern provinces, central coastal provinces, North Central region, Central Highlands, border areas with difficult conditions, ethnic minority areas, provinces with wide territories, large populations, weak infrastructure; prioritize allocation of capital for projects under the National Target Program, capital for implementing Decision No. 134/2004/QĐ-TTg dated July 20, 2004 of the Prime Minister on supporting production land, residential land, housing, and clean water for poor ethnic minority households; allocate sufficient counterpart funds for ODA projects; construction projects and basic works that will be completed and put into use in the year; key transportation and irrigation works; ensure sufficient planning and preparation funds; continue allocating funds for the consolidation of irrigation canals, rural transport development, infrastructure in flood-prone and slow-flood areas, tourism infrastructure, village craft infrastructure, market infrastructure, aquaculture infrastructure, support trade promotion activities, expanding markets,...

Only prepare the budget for construction investment for projects that have completed investment procedures and meet the conditions for capital allocation according to regulations; concentrate on allocating funds to settle debts, pay off outstanding construction debts according to the requirement that by 2006, the remaining construction debts should be basically settled according to the Resolution of the National Assembly.

b) Budget expenditure forecasts for education and training, culture, health, environment, science and technology, social programs; ensuring national defense and security; administrative management expenses of the state, party, and mass organizations should ensure funding for the implementation of systems and policies and prioritize funding for important goals and tasks decided. For public service units, implement financial mechanisms to ensure autonomy and responsibility, improve the efficiency of these units; continue to expand the implementation of personnel and budget quota mechanisms; enhance the efficiency of current financial management.

Ensure the allocation of state budget expenditures in 2006, including development investment, regular expenditures, and salary reform for the education and training sector at 18.6%; cultural information sector at 1.5%; science and technology sector at 2%; environmental sector above 1% of total state budget expenditures.

c) Budget expenditure forecasts for implementing the National Target Programs, Program 135, the 5 million hectare forest project, and other major programs and projects: based on summarizing and evaluating the results of implementation from 2001 to 2005, determine overall and annual targets for the period 2006 to 2010 to set expenditure forecasts to ensure effective and practical use of state budget funds and other legally mobilized resources.

Allocate budgets and mobilize financial resources to implement the salary reform program for the 2003-2007 period as decided. Ministries, sectors, central agencies, localities, and budget-using units consider this a critical task; continue to implement measures to generate salary reform funds at each agency and unit from retained income (at least 40%, except for the healthcare sector which is at least 35% of hospital fees after deducting drug, blood, chemicals, and transfusion supplies costs), reduce regular expenditures (excluding salaries and salary-like allowances) by at least 10%, and unspent salary reform funds from previous years transferred to the next year for continued implementation. Local budgets should use at least 50% of annual increased revenues to implement; for 2006, use at least 50% of the 2005 increased revenue and 2006 budget revenue compared to the 2004 budget estimate (excluding land use fees) to generate funds for salary reform. After using these sources, if there is still a shortfall, the central budget will provide support to ensure sufficient funds for salary reform as prescribed.

đ) The central budget and local budgets at all levels allocate contingency reserves according to the provisions of the State Budget Law to proactively respond to natural disasters, floods, epidemics, and handle urgent tasks arising outside the budget estimate.

Ministries, central agencies, local agencies, and budgetary units at all levels prepare their budgets strictly in accordance with the standards and norms determined by the competent authority; they must fully anticipate all expenditure tasks that will arise within the budget year; prioritize capital and funds for important tasks, and must not allow situations where additional funding requests are made after the budget has been assigned by the competent authority.

3. Regarding the work of preparing local budget estimates at all levels.

In 2006, which is part of the stabilization period from 2004 to 2006 as stipulated by the State Budget Law, local People's Committees at all levels shall prepare their local budget estimates based on the sources of revenue and expenditure tasks that have been stabilized through decentralization; the local budget estimates for 2006 shall be prepared based on the percentage distribution of shared revenues among budget levels and the supplementary balanced transfers from higher-level budgets to lower-level budgets (if any), as determined by the National Assembly, the Standing Committee of the National Assembly, the People's Councils, the Prime Minister, and the higher-level People's Committees in 2004. Therefore, when preparing the 2006 budget estimates, localities need to closely adhere to the goals and tasks of the state budget for 2006 as mentioned above and the provisions of the State Budget Law; particularly, attention should be paid to the following issues:

a) Preparing the state budget revenue estimate on the local territory: based on the assessment of the implementation of revenue tasks in 2005; forecasting economic growth and revenue sources in 2006 for each industry, sector, and economic entity on the local territory, including new revenue sources arising in the locality, to accurately calculate the revenue for each sector and each revenue item according to the regulations. The domestic revenue estimate (excluding oil revenue and land use fee revenue) should aim to increase by at least 12-14% annually.

b) Preparing the local budget expenditure estimate: must be based on the development tasks of the locality in 2006, current expenditure standards and norms, and the state budget revenue estimate on the local territory, to determine the share of local budget revenue according to the decentralized allocation. Within the scope of the determined local budget revenue, the specific local budget expenditure estimate should be prepared for each expenditure area, prioritizing the allocation as specified in point 2, Section III of this Directive and according to the provisions of the State Budget Law.

c) For funds from land use fees, localities should allocate the budget expenditure estimate for basic construction investment corresponding to the infrastructure economic and social projects and resettlement projects, land preparation for construction.

d) Proactively calculate the source for salary reform as prescribed in Clause d, Point 2, Section III of this Directive.

đ) Building the budget estimate for mobilizing investment development funds must comply with the detailed regulations and guidance on implementing the State Budget Law as stipulated in Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government; ensuring that the balance of borrowed funds (including the amount expected to be borrowed in the year) does not exceed 30% of the local provincial budget's construction investment expenditure estimate (for Hanoi and Ho Chi Minh City, it should not exceed 100%). At the same time, local budgets must be allocated to repay loans and borrowed funds that are due for repayment according to the prescribed regulations.

e) When building the expenditure estimate, the outstanding construction debts and the amounts already advanced must be identified, and the local budget expenditure estimate for construction investment in 2006 must be proactively allocated to settle the accumulated construction debts according to the National Assembly Resolution; build the expenditure estimate for implementing national target programs (the local component) based on the evaluation of the results of the 2001-2005 period and the specific goals and tasks of each program in 2006.

g) Based on the arrangement and allocation of the local budget; taking into account the implementation of the supplementary budget estimate from higher-level budgets to local budgets in 2005, build the expenditure estimate for important projects and tasks to request targeted supplementary funding from higher-level budgets according to the provisions of Section (b), Clause 2, Article 29 of Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the State Budget Law.

4. Along with the preparation of the state budget estimates for the 2006-2010 period and 2006, ministries, sectors, central agencies, local agencies, and budgetary units should conduct a detailed analysis and evaluation of the results and effectiveness of budget spending in 2005. Simultaneously, they should focus on directing and organizing the finalization and approval of the 2004 budget settlement in accordance with the provisions of the State Budget Law. Promptly address any existing issues and violations discovered and recommended for resolution by auditing and inspection agencies.

5. The Ministry of Finance, in collaboration with relevant ministries and localities, shall evaluate and conclude on the implementation of Decision No. 21/2003/QĐ-TTg dated January 28, 2003 of the Prime Minister regarding state budget support for political-social organizations, social organizations, and social-professional organizations for activities linked to state tasks. Propose financial mechanisms for these organizations' operations in the upcoming phase.

6. From 2006 onwards, expenses for training, healthcare, science, and technology activities serving production and business operations of enterprises shall be considered reasonable costs according to the prescribed regulations. The state budget will not provide support for such activities in state-owned enterprises (Total Corporations 91, 90, and other enterprises).

B. PROGRESS IN DEVELOPING PLANS AND ASSIGNING IMPLEMENTATION TASKS

1. Regarding the progress in developing plans:

In June 2005, the Ministry of Planning and Investment and the Ministry of Finance issued guidelines for the framework of the socio-economic development plan and state budget estimate for 2006 to be used by relevant ministries, sectors, localities, and State-owned enterprises 91 as a basis for developing their plans.

During June and July 2005, ministries, sectors, localities, and State-owned enterprise 91 developed the socio-economic development plan and state budget estimate for 2006, and submitted reports to the Ministry of Planning and Investment and the Ministry of Finance before July 20, 2005, for consolidation and presentation to the Government.

For national target programs, Program 135, the project to plant five million hectares of new forests, Decision 186/2001/QĐ-TTg dated December 7, 2001, Decision No. 168/2001/QĐ-TTg dated October 30, 2001, and Decision No. 173/2001/QĐ-TTg dated November 6, 2001, issued by the Prime Minister, as well as other programs, projects, and proposals, ministries, sectors, and localities conducted evaluations of investment situations and implementation effectiveness during the period from 2001 to 2005; proposed programs, projects, and proposals to continue in 2006 and subsequent periods, and submitted them to the Ministry of Planning and Investment and the Ministry of Finance before July 20, 2005.

In August 2005, the Ministry of Planning and Investment and the Ministry of Finance compiled the socio-economic development plan and state budget estimate for 2006, and simultaneously proposed allocation schemes for key planning indicators and the state budget.

In September 2005, the Ministry of Planning and Investment and the Ministry of Finance reported to the Government on the socio-economic development plan and state budget estimate for 2006, for the Government to submit to the National Assembly according to the provisions of the State Budget Law.

Before November 20, 2005, the Prime Minister assigned the socio-economic development plan and state budget estimate for 2006 to ministries, sectors, localities, and State-owned enterprise 91 based on the resolutions of the National Assembly regarding the state budget estimate and tasks for 2006.

Before November 25, 2005, the Ministry of Planning and Investment and the Ministry of Finance provided detailed guidance to ministries, sectors, localities, and State-owned enterprise 91.

Before December 10, 2005, ministries, sectors, and localities finalized the allocation plans for the socio-economic development plan and state budget at lower levels based on the tasks assigned by the Prime Minister and the guidance of the Ministry of Planning and Investment and the Ministry of Finance.

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 and coordinate with the Ministry of Finance to calculate and develop various options and major balances as a basis for guiding ministries, sectors, and localities in building the 2006 plan.

Take the lead and coordinate with the Ministry of Finance and related ministries to study and develop principles and criteria for allocating capital for basic construction investment for central ministries and agencies in 2006; criteria for allocating supplementary targeted funds from the central budget to local budgets in 2006 to support basic construction investment and other supplementary targeted funds, to be submitted to the competent authority for decision-making, serving as a basis for formulating allocation plans and assigning supplementary targeted funds for 2006 to localities.

Organize guidance on building and consolidating the socio-economic development plan for 2006.

Take the lead and coordinate with the Ministry of Finance to propose investment development plans and capital allocation schemes for basic construction; take the lead together with the Ministry of Finance and managing ministries and agencies of national target programs to propose plans and funding levels for these programs and projects. Consolidate the allocation scheme for the national target program budget.

Work with ministries, sectors, and localities on the socio-economic development plan, investment, and national target programs for 2006.

b) The Ministry of Finance:

Guide ministries, sectors, and localities in evaluating the implementation of the state budget for 2005; build a preliminary estimate of the state budget and notify the estimated revenue and expenditure figures for the state budget for 2006 and 2006-2010 to ministries, sectors, and localities according to their respective fields of responsibility.

Take the lead and coordinate with the Ministry of Planning and Investment and related agencies to build and consolidate the state budget estimate for 2006 and 2006-2010; work with central ministries and agencies on the state budget estimate. Work with provincial People's Committees when requested by them according to the provisions of the State Budget Law.

c) Ministries, state agencies, and State-owned enterprises 91:

Coordinate with the Ministry of Planning and Investment and the Ministry of Finance to develop economic and social development tasks and state budget estimates within their respective areas of responsibility.

Ministries and agencies managing national target programs, Program 135, the five-million-hectare forest planting project, and other large programs and projects take the lead and coordinate with the Ministry of Planning and Investment and the Ministry of Finance to work with related ministries, sectors, and localities on evaluating the effectiveness of implementing national target programs in recent years, proposing tasks, budgets, and funding allocation plans for 2006 within their respective areas of responsibility, and submitting them to the Ministry of Planning and Investment and the Ministry of Finance before July 20, 2005.

Ministries and state agencies, based on their functions and considering available resources, develop socio-economic targets, propose solutions, mechanisms, policies, and new systems or suggest amendments and supplements to existing policies to be promulgated before the budget estimate preparation deadline (before July 20, 2005), and notify the Ministry of Planning and Investment, the Ministry of Finance, and related agencies to serve as a basis for developing the plan and budget estimate.

d) Provincial People's Committees directly under the Central Government:

Guide, organize, and direct the Provincial Departments of Planning and Investment and Finance to closely cooperate with other departments and sectors in developing the socio-economic development plan and state budget estimate, reporting to central authorities as required; at the same time, submit them to the competent authority for approval.

The process of developing the 2006 plan was carried out concurrently with the development of the five-year plan for 2006-2010, based on Directive No. 33/2004/CT-TTg dated September 23, 2004, of the Prime Minister on the development of the socio-economic development plan for 2006-2010; Decision No. 211/2004/QĐ-TTg dated December 14, 2004, of the Prime Minister on the orientation for the development of Vietnam's financial sector until 2010; Circular No. 7681/BKH-TH dated November 30, 2004, of the Ministry of Planning and Investment on guidelines for the development of the socio-economic development plan for 2006-2010; ministries, state agencies, provinces, centrally governed cities, and the 91 General Corporations must urgently complete the development of the socio-economic development plan for 2006-2010, organize the collection of opinions from research institutions, non-governmental organizations, social strata, community residents, investors, and businesses, and submit them to the Ministry of Planning and Investment and the Ministry of Finance for consolidation and reporting to the Prime Minister.

The Prime Minister requests the ministers, heads of ministerial-level agencies, heads of government-affiliated agencies, chairpersons of provincial People's Committees under central governance, to implement this Directive./.