Decision No. 211/2004/QĐ-TTg Approving the Orientation for the Development of Vietnam's Finance until 2010

Pursuant to …;

Approving the Orientation for the Development of Vietnam's Finance until 2010

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

On the basis of the conclusions of the Political Bureau as stated in the Central Committee’s Notification No. 147-TB/TW dated July 16, 2004 regarding the proposal on the Strategy for Vietnam's Finance until 2010;

At the request of the Minister of Finance in Document No. 51 TTr/BTC dated September 21, 2004,

DECISION:

Article 1. Approves the Orientation for the Development of Vietnam's Finance until 2010 with the following contents:

A. General Objective:

Ensuring sufficient national financial strength to proactively promote rapid, effective, and sustainable economic growth, capable of controlling inflation, stabilizing currency, prices, and markets; the system of policies for mobilizing and distributing finance is highly effective, ensuring fairness, dynamism, and suitability with the socialist-oriented market economy system, having an impact on opening up internal resources, attracting external resources, and using all resources effectively for the development of the country's economy and society; building a healthy, transparent, democratic national finance system that is strictly managed and audited, making finance a measure of the effectiveness of all economic activities, a driving force for the development of the economy and society; enhancing and modernizing state management capacity over finance based on promoting administrative reform, modernizing tools, and improving the quality of financial management staff; consolidating and enhancing Vietnam's financial position in international relations on the basis of ensuring independence, autonomy, and national financial security.

B. Specific Objectives:

1. Properly handling the relationship between accumulation and consumption, thrift and investment, increasing financial potential for economic and social development, ensuring national defense and security.

- Increasing the ratio of total social investment to GDP during the period from 2001 to 2010 to about 36-40%, of which state budget investment accounts for approximately 8%.

- Stabilizing the proportion of development expenditure (including expenditure financed by government bonds) at a level of 29-30% of total state budget expenditure.

2. Raising the ratio of GDP mobilized into the state budget from 20-21% to 21-22%, of which tax and fee revenue increases from 19-20% to 20-21%.

3. Increasing the level of expenditure on education and training, science and technology, culture in total state budget expenditure.

- By 2005, expenditure on education and training reaches 18% of total state budget expenditure; expenditure on science and technology reaches 2% of total state budget expenditure;

- By 2010, compared to total state budget expenditure, expenditure on education and training reaches 20%, expenditure on science and technology reaches 2.1%, expenditure on culture reaches 1.8%.

4. Controlling and maintaining the fiscal deficit ratio of the state budget at a level not exceeding 5% of GDP.

5. Controlling government debt and foreign debt of the country at a level not exceeding 50% of GDP.

6. Forming a comprehensive set of markets, including the financial market, financial services, and real estate market.

7. Completing the restructuring and renewal of state-owned enterprises, enhancing their efficiency and competitive ability.

8. Reducing the proportion of cash in total payment means, stabilizing purchasing power and the value of money, gradually increasing the convertibility of the Vietnamese dong.

C. Major Groups of Solutions:

1. Fully exploiting financial resources to develop the economy and society.

Implementing a consistent and unified financial mechanism and policy, creating a stable and attractive macroeconomic environment, promoting enterprises, economic sectors, various strata of the population, and foreign investors to invest capital for economic and social development.

Reforming and perfecting financial policies to attract domestic and foreign resources to promote the development of economic and social infrastructure, dynamic regions, and key economic zones to create breakthroughs in economic structure transformation.

Vigorously attracting indirect investment through the domestic financial market, using all channels, tools, and forms of financial investment effectively; encouraging the supply of goods and improving mechanisms to promote the development of the stock market as the main channel for raising funds for development. Perfecting financial mechanisms to facilitate localities in key economic zones issuing government bonds according to regulations for the construction of economic and social infrastructure. Actively raising funds on the international financial market through the issuance of government bonds, studying pilot implementation of the issuance of corporate bonds on the international financial market.

Mobilizing reasonable sources of income for the state budget based on tax and fee system reforms that are fair, unified, have a reasonable and consistent structure across three aspects: tax policy, tax administration, and tax advisory services, ensuring a favorable environment to encourage production and business development, promoting economic growth, and increasing corporate savings.

Strictly managing and effectively utilizing long-term plans of resources from land. Promoting the sale and leasing of state assets, including the sale and lease of rights to exploit and use infrastructure (roads, ports, educational facilities, service centers...), to replenish investment capital for the budget and improve asset utilization efficiency.

Mobilizing and attracting broad social capital to increase investment in public services, improving both quantity and quality. Promoting socialization by applying appropriate financial mechanisms for public institutions. Perfecting financial policies to encourage investors to provide public services.

2. Reasonably distributing and effectively using financial resources.

Improving mechanisms and policies for the rational, economical, and effective distribution and use of social investment resources, promoting economic structural transformation, developing synchronized economic regions, ensuring financial resources to achieve economic development goals while ensuring social equity and poverty reduction.

Enhance the guiding role of state financial resources in investment for economic and social development, with state budget capital mainly focused on building and upgrading socio-economic infrastructure, especially infrastructure in agriculture and rural areas; ensuring funds for key national projects and strategic priorities; supporting reasonable investment development in difficult regions.

Adjust the investment structure to accelerate the process of economic restructuring, particularly prioritizing investment in dynamic economic zones, restructuring the agricultural economy in rural areas; continue implementing mechanisms to encourage social investment in key industries, high technology, contributing to promoting technological innovation. Encourage investment in service development, especially financial services, banking, insurance, lottery...

Implement financial policies to encourage the development of dynamic economic zones as engines of economic growth, while creating conditions for other regions to develop based on their strengths, and increasing investment in difficult regions.

Actively allocate and utilize state budget resources effectively to meet requirements for economic and social development, ensure defense and security, and management activities of the state. Continue restructuring state budget expenditures based on clearly defining the scope of state budget responsibilities for various expenditure items, enhancing the initiative of localities and units, eliminating direct and indirect subsidies through the state budget, linking budget restructuring with administrative reform to fit the functions and tasks of the state, and promoting socialization to maximize resource mobilization for economic and social development.

Continue improving the mechanism of decentralization; ensuring both centralized unity, the leading role, and coordination of the central budget, while decentralizing strongly alongside strengthening responsibility and initiative in local budget management; striving to increase the number of localities that can balance their budgets independently.

3. Reform and develop corporate finance.

Build and perfect corporate financial policies and mechanisms to ensure equality, stability, transparency, creating favorable conditions for all types of enterprises to exploit and enhance internal and external resources to develop production and business operations and improve competitiveness in domestic and international markets.

Perfect financial policies and mechanisms towards accelerating the process of reform and reorganization, enhancing the financial capacity of state-owned enterprises through forms such as shareholding, transfer, sale, lease, merger, consolidation, dissolution, or bankruptcy of state-owned enterprises. Expand the scope of state-owned enterprises requiring shareholding, including holding companies and large enterprises.

Fundamentally reform the policies and mechanisms for managing state-owned enterprise finances by clearly separating the functions of state management and ownership management from business management; abolish the controlling mechanism; clearly define the rights of state agencies representing ownership over state-owned enterprises; apply the state ordering mechanism for the production and supply of public goods and services.

4. Develop financial markets and financial service markets to meet the requirements of attracting financial resources for development investment.

Diversify products on financial and financial service markets, increase the quantity and quality of products for the stock market based on accelerating the process of state-owned enterprise shareholding, linking shareholding with listing on the stock market. Encourage other types of enterprises, including foreign-invested enterprises, to list shares and raise capital through the stock market.

Upgrade the Ho Chi Minh City Stock Exchange Trading Center to a Stock Exchange, establish the Hanoi Stock Exchange Trading Center. Prepare conditions for gradually linking the Vietnamese stock market with regional stock markets.

Complete the legal framework regulating financial market activities, strengthen the linkage between money markets and capital markets in terms of policy planning, operational mechanisms, management, and supervision.

5. Expand foreign financial activities and actively integrate internationally in finance to consolidate and develop the national financial system.

Determine a reasonable roadmap for the development and gradual liberalization of capital flows under conditions of integration, implement diversification of sources of capital, and multilateralize partner relations. Improve foreign debt management. Establish a debt monitoring system, a set of indicators to evaluate the effectiveness of projects and programs using foreign loans, especially commercial foreign loans for enterprises under the self-borrowing and self-repayment mechanism. Enhance the efficiency of using the Foreign Debt Repayment Reserve Fund and organize timely debt repayment. Strengthen human resources and capabilities in managing foreign debt.

Perfect the legal framework for finance according to international standards to achieve successful integration; adjust and develop financial mechanisms and policies consistent with bilateral and multilateral commitments. Implement protection for domestic production and key financial institutions, banks, and trade entities with clear timelines and transparent procedures.

6. Enhance the capacity and effectiveness of financial supervision to ensure the health and financial security of the nation.

Establish an early warning system to promptly prevent risks that may undermine financial security, implement mandatory financial reporting, ensure financial transparency, and improve the budget expenditure control system. Conduct audits for units receiving state budget funds. Improve and enhance the capacity and quality of financial inspection and audit activities in all fields, particularly in the management and use of state budget funds, and construction investment management. Strengthen the organization and enhance the capacity of financial supervision, focusing on the Ministry of Finance.

7. Administrative reform in the financial sector to ensure smooth, high-quality, and effective financial operations.

Harmonize the system of regulatory legal documents and administrative procedures in finance; improve functions and tasks, consolidate and strengthen the organizational structure of financial management; standardize financial officials, build a sufficient number of civil servants in the finance sector with a reasonable structure and high professional qualifications; modernize financial management, apply scientific and technological advances to enhance the capacity and effectiveness of financial management.

D. Specific Action Programs:

The orientation for financial development until 2010 will be implemented through programs and projects as follows:

1. Program to reform the tax system until 2010 (Ministry of Finance to organize and implement).

2. Program to innovate and perfect the financial management mechanism for enterprises, including projects to establish financial mechanisms and policies to accelerate enterprise reform; projects to establish financial mechanisms for various types of enterprises; projects to enhance financial capacity and competitiveness of enterprises; and projects to establish a financial supervision system for enterprises (Ministry of Finance to organize and implement).

3. Program to innovate and perfect the financial management mechanism for public assets, including projects to establish financial mechanisms and policies for land management; projects to innovate financial management mechanisms and policies for infrastructure assets; projects to perfect the financial management mechanism for the public administration and service sector; projects to establish procurement and auction agencies for public assets in the public administration and service sector; and projects to enhance the capacity of public asset management (Ministry of Finance to organize and implement).

4. Project to effectively mobilize, distribute, and utilize investment capital, including projects to establish policies for mobilizing and investing capital (both domestic and foreign) (Ministry of Finance to coordinate with the Ministry of Planning and Investment to organize and implement).

5. Project to implement the State Budget Law, including improving management work, establishing budget policies and management mechanisms; project to innovate the budget expenditure structure (Ministry of Finance to organize and implement).

6. Project to establish a pilot mechanism for the State to construct housing and infrastructure for non-public institutions for long-term lease; encourage financial incentives and land use rights to promote the development of the non-public sector.

7. Project to implement the Insurance Market Development Strategy for the period 2003-2010 (Ministry of Finance to organize and implement).

8. Project to establish a comprehensive roadmap for developing and perfecting the financial market until 2010 (Ministry of Finance to organize and implement, coordinating with relevant ministries).

9. Project to innovate government debt management and external debt management (Ministry of Finance to organize and implement, coordinating with relevant ministries).

10. Project to innovate customs activities according to the Customs Law (Ministry of Finance to organize and implement).

11. Project to improve price management according to the Price Ordinance, including perfecting the price management mechanism, abolishing protective and subsidizing mechanisms through prices, eliminating dual pricing systems, establishing commodity trading exchanges; studying and drafting legal frameworks for anti-dumping and monopoly price control, internal transfer pricing control; strengthening the application of auction methods (Ministry of Finance to organize and implement).

12. Project to strengthen and innovate financial inspection work (Ministry of Finance to organize and implement).

13. Project to establish standards and quotas for equipping administrative agencies and civil servants (Ministry of Finance to organize and implement).

14. Project to reform administrative procedures and enhance the capacity of national financial management, project to innovate training, research, and improve the capacity of the finance sector's cadre and civil servants (Ministry of Finance to organize and implement).

15. Project to implement the Government's Decision on the plan for the development and application of information technology and modern management technology in finance and budget (Ministry of Finance to organize and implement).

Article 2. Implementation

1. Entrust the Ministry of Finance to take the lead, coordinate with the State Bank of Vietnam, the Ministry of Planning and Investment, relevant ministries and sectors, and provincial and municipal people's committees under the central government to organize and implement the Orientation for Financial Development in Vietnam until 2010.

2. Based on the content of the Financial Development Orientation stipulated in this Decision, the Ministry of Finance shall take the lead, coordinate with relevant ministries, agencies, and provincial and municipal people's committees under the central government to develop and implement annual and five-year activity plans in accordance with the national socio-economic development plan during the same period; guide, inspect, supervise, and compile reports on implementation periodically each year, report to the Prime Minister; organize mid-term reviews in 2005 and final reviews in 2010.

Article 3. This Decision takes effect fifteen days from the date of publication in the Official Gazette.

Article 4. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of People's Committees of provinces and centrally governed cities are responsible for implementing this Decision./.