Directive No. 27/CT-TTg on main solutions to address the situation of arrears in construction investment at localities

DIRECTIVE

On Main Solutions to Address the Situation of

Arrears in Construction Investment at Localities

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In recent times, due to various reasons, the situation of arrears in construction investment has occurred quite commonly and seriously at localities, causing consequences such as: unfinished construction projects, prolonged duration, poor investment efficiency; project sponsors lacking funds to pay for the value of completed work; many construction enterprises and contractors owing wages to workers, occupying each other's capital, not a few enterprises being dissolved and bankrupted; contributing to an increase in non-performing loans of banks,... This situation has adversely affected financial security, public debt safety, and sustainable economic growth.

The Prime Minister requests ministries, sectors, and localities to correctly recognize the adverse impacts caused by arrears in construction investment, focusing on implementing certain tasks and solutions to address and resolve the situation of arrears in construction investment at localities as follows:

1. Requirement to handle arrears in construction investment at localities:

a) Handling arrears in construction investment is an important component of restructuring public investment and restoring discipline in basic construction investment; simultaneously, it is one of the measures to stabilize macrofinance and ensure sustainable economic growth.

b) Handling arrears in construction investment shall be carried out in accordance with the provisions of Directive No. 1792/CT-TTg dated October 15, 2011 of the Prime Minister on strengthening management of investment from state budget funds and government bonds.

c) Each locality must review, identify clearly the responsibility of each level and agency (linked to individual responsibility) for the occurrence of arrears in construction investment in recent times. At the same time, they must balance their own sources of capital to resolve the issue of arrears in construction investment thoroughly.

2. People's Committees of provinces and centrally governed cities urgently implement the following measures to handle arrears in construction investment of the volume completed up to December 31, 2011:

a) Review, compile statistics, classify debts, determine specifically the causes of each item of arrears (objective, subjective); based on this, develop plans and timelines to resolve arrears in construction investment transparently, fairly, and strictly implement them.

b) The handling of arrears in construction investment will be gradually carried out according to annual timelines and reasonable priorities. Localities must develop plans to resolve arrears in construction investment using local state budget funds and other lawful sources, ensuring that by the end of 2015, the resolution of arrears in construction investment must be completed.

c) From 2013, priority must be given to allocating capital to resolve arrears in construction investment in the plan for allocating investment capital from the local state budget and consider this as a mandatory indicator in the process of compiling, allocating, and assigning the local state budget investment capital plan; ensuring that at least 30% of the volume of arrears in construction investment is resolved annually before May 20th.

Capital can only be allocated for new projects after sufficient capital has been arranged to resolve arrears according to the plan. Localities with large arrears in construction investment shall not be allocated capital for the commencement of new projects; at the same time, some projects must be suspended to focus on resolving arrears in construction investment as stipulated in this Directive.

Ministries and localities must proactively assess and determine the effectiveness, degree of completion, and utilization capacity of each project and construction to implement measures to minimize losses to unfinished construction projects due to arrears in construction investment:

- For truly effective projects with small remaining capital, concentrate on arranging capital to complete and put them into use to maximize benefits.

- For projects capable of partial utilization, complete and put into use sections according to the permitted capital capacity; remaining sections must be firmly suspended.

- For other unfinished projects, appropriate measures should be taken (such as changing the form of investment) or firmly suspend implementation.

e) Regularly (every six months, annually), localities have the responsibility to report the situation and results of handling arrears in construction investment to the Ministry of Finance and the Ministry of Planning and Investment for consolidation and reporting to the Prime Minister.

3. To prevent the emergence of new arrears in construction investment, from 2013, the People's Committees of provinces and centrally governed cities have the responsibility:

a) Strictly comply with all current laws in the field of investment management and construction.

b) Adhere to the provisions of Directive No. 1792/CT-TTg dated October 15, 2011 of the Prime Minister on strengthening management of investment from state budget funds and government bonds.

c) Strengthen inspection and supervision of the implementation of construction investment projects; proactively apply timely measures to prevent the emergence of new arrears in construction investment; clearly define responsibilities and impose strict disciplinary actions against agencies, organizations, and individuals causing arrears in construction investment.

4. The Ministry of Planning and Investment shall take the lead, coordinate with the Ministry of Finance and relevant agencies to review, amend, and supplement mechanisms and policies on managing capital from the state budget and government bonds to address shortcomings leading to the emergence of arrears in construction investment; guide the implementation of tasks and solutions outlined in this Directive.

5. The Ministry of Finance shall take the lead, coordinate with the Ministry of Planning and Investment and competent agencies to actively handle arising issues and obstacles within their authority or propose authorities with jurisdiction to handle them; at the same time, consolidate the results of localities' handling of arrears in construction investment, regularly (every six months, annually), report to the Prime Minister./.