Directive No. 29/2003/CT-TTg on Rectifying Management of Investment and Construction with State Funds

DIRECTIVE
On Rectifying State Investment and Construction Management

In recent times, state investment capital (including state budget capital, state development credit capital, state-guaranteed credit capital, and state-owned enterprise investment capital) has continuously increased, along with other sources of capital and the efforts of ministries, sectors, localities, and enterprises in managing investment and construction, creating significant changes in economic and social infrastructure, promoting structural economic transformation, enhancing the capacity of many economic sectors, and noticeably improving urban civilization in many cities, towns, and concentrated residential areas.

However, the management of investment and construction in general, particularly the management of investment and construction projects funded by state capital, still exhibits numerous weaknesses and shortcomings, leading to widespread and prolonged investment that is inefficient, increasing arrears in investment, becoming a prominent and urgent issue at present; negative phenomena are quite common in investment and construction, directly affecting project quality and causing significant losses and waste, which are deeply concerning issues in society.

To rectify this situation and create new improvements in enhancing the effectiveness and quality of state-funded investment in the socio-economic development plan for 2004, the Prime Minister requests all ministries, agencies equivalent to ministries, government agencies (hereinafter referred to collectively as ministries), provincial people's committees (hereinafter referred to collectively as provinces), and General Companies 91 to immediately implement the following tasks:

1. Ministries and provinces must promptly allocate investment capital and assign it to implementing units according to the following principles:

- Projects recorded in the 2004 investment plan must comply with current regulations on investment and construction management as stipulated in Decrees No. 52/1999/NĐ-CP dated July 8, 1999; No. 12/2000/NĐ-CP dated May 5, 2000; No. 07/2003/NĐ-CP dated January 30, 2003 of the Government on the Investment and Construction Management Regulations; Decrees No. 88/1999/NĐ-CP dated September 1, 1999; No. 14/2000/NĐ-CP dated May 5, 2000; No. 66/2003/NĐ-CP dated June 12, 2003 of the Government on the Tendering Regulations, and related legal documents.

- Before allocating capital, a review of ongoing projects must be conducted and handled in the following manner:

+ Firmly reduce or cancel projects and works that do not conform to approved development plans, those that do not meet the actual needs of industries, localities, or markets.

+ Do not allocate and assign capital to ongoing projects that have not completed required investment and construction procedures, whose benefits are unclear. Do not proceed with projects that have been decided upon but lack necessary investment and construction procedures or cannot balance funds according to approved schedules.

- New projects must ensure compliance with approved plans; have an investment decision made before October 31 of the previous year; and have technical designs and total budgets approved in accordance with the Investment and Construction Management Regulations.

For Class A projects, if technical designs and total budgets have not been approved but there is a need to commence work, then technical designs and start-up budgets must be approved by authorized persons and there must be lawful tender contracts. Within thirty percent of the total investment amount, technical designs and total budgets must be approved by authorized persons.

2. Ministries and provinces must concentrate and prioritize investment capital according to their financial balancing capabilities for 2004 and subsequent years. When allocating the 2004 investment budget, reserve a portion of the allocated capital to settle outstanding construction investment debts from the state budget up to 2003 for projects that comply with planning requirements and have complete procedures; repay preferential loans for implementing programs to reinforce irrigation canals, rural transportation, village industry infrastructure, and fisheries infrastructure; allocate capital for continuing important projects; and provide sufficient counterpart funds for ODA projects according to implementation schedules and agreements signed with foreign countries. After allocating capital for these tasks, allocate capital for new projects according to the requirements set out in Point 1.

Investment capital allocation must consider ensuring that approved projects can be completed within the prescribed timeframes (Class C projects must be financially balanced to ensure completion within two years from commencement; Class B projects must be completed within four years at most).

Ministries and provinces must direct and supervise the implementation of investment volumes without exceeding the planned 2004 capital allocation. Starting from 2004, the central budget will not allocate funds to settle construction investment arrears beyond the plan.

Project sponsors and local authorities must closely cooperate to implement land acquisition, clearance, and resettlement work from the beginning of 2004 to ensure construction progress and avoid situations where "capital waits for projects."

3. When allocating investment capital, localities must ensure a reasonable structure between economic and social infrastructure investments; specifically, education, training, and science and technology fields must guarantee the minimum funding levels assigned in Decision No. 242/2003/QĐ-TTg dated November 17, 2003 of the Prime Minister.

Central budget support funds must be allocated strictly according to the support targets listed in the plan. Provinces may adjust funding levels among tasks within the supported target, but they may not reallocate funds from one target to another. The central budget will only partially fund projects, and provinces are responsible for arranging additional investment funds from local budgets to expedite construction and put projects into use sooner.

4. The agencies managing the Target National Program shall strengthen guidance on business operations, urge, inspect, supervise the implementation of target national programs by ministries and provinces.

Ministries and provinces are responsible for using the investment capital of assigned projects for their intended purposes and effectively, without loss or waste.

Provincial People's Committees are responsible for integrating and coordinating resources to implement the objectives and tasks of target national programs. Based on the characteristics, nature, and content of each program, and specific features of the locality, provincial People's Committees organize the integration of program goals and funds managed by the locality from the stage of allocating resources to avoid duplication, reduce management levels, and concentrate resources on priority objectives.

Organize inspections and supervision of program implementation at grassroots levels, mainly communes, wards, and towns. Promptly correct phenomena of lack of democracy and non-transparency in program implementation, and strictly handle cases of financial loss due to negligence or corruption.

5. The Ministry of Finance shall cooperate with relevant ministries to summarize and evaluate the results of implementing programs and projects funded by preferential credit; promptly promote the revision and supplementation of Decree No. 43/1999/NĐ-CP dated June 29, 1999 of the Government on state investment credit development towards narrowing the scope of investment lending, only supporting essential economic programs, fields, and products that cannot develop without state support. Focus primarily on important areas in economic structure transformation and promoting economic growth. Minimize new project start-ups, concentrate funds on ongoing projects. Reduce the number of interest rate tiers, moving towards applying a unified interest rate for all preferential credit borrowers.

The Development Support Fund needs to have plans to mobilize capital to meet the disbursement requirements of ongoing loan projects; at the same time, investors need to proactively calculate borrowing and repayment plans according to committed schedules.

From now on, the State will mainly implement post-investment preferential policies for new investment projects aimed at business purposes, including those of state-owned enterprises. If these projects invest in encouraged sectors or regions, they will continue to enjoy preferential policies under current regulations.

Any amendments and supplements to this Decree must be submitted to the Government for consideration and decision in the first quarter of 2004.

6. Implement transparency in the management and use of state budget investment capital. Strengthen strict inspection and auditing according to regulations to prevent loss, waste, and corruption in investment activities. Review economic and technical standards and norms to strive for reducing investment costs. The person signing the project proposal must be responsible for the information and data stated in the project dossier. The authorized person must be responsible when making investment decisions.

From now on, the investment structure and important projects or large investments within the jurisdiction of local authorities must be presented by the People's Committee to the People's Council for discussion, decision, and public announcement through local mass media. The Ministry of Planning and Investment shall submit to the Government for issuance of a specific decision regarding the responsibilities and authority of local government agencies and people's organizations in supervising projects within the jurisdiction of ministries.

Project leaders must publicly announce the content of investment decisions, investment plans (project name, construction scale, land area, investment capital, funding sources, investor, implementation schedule...) at the project site and at the People's Council and People's Committee offices where the project is located so that the public can participate in monitoring and inspection.

7. Ministries and provinces must strictly implement and report to the Prime Minister on investment supervision and evaluation work within their respective industries, fields, and jurisdictions according to Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government and guidelines issued by the Ministry of Planning and Investment in Circular No. 03/TT-BKH dated May 19, 2003.

8. The Ministry of Planning and Investment shall coordinate with relevant agencies to perform their assigned functions of supervision and evaluation of investment, organizing regular inspections, identifying shortcomings and violations, and requiring ministries, sectors, localities, and enterprises to address them or recommending timely measures to the Prime Minister.

9. Provinces should urgently establish Inspection Departments at the Department of Planning and Investment according to the Inspectorate Law promulgated in 1990; the Ministry of Planning and Investment should quickly improve its organizational structure, coordinate with the State Inspectorate and provinces/cities to implement Plan No. 05-KH/TW dated September 10, 2003 of the Central Committee of the Party on checking the implementation of the Politburo's conclusions on investment construction and land management and use.

Ministries and localities should actively identify and promptly reflect issues related to planning and investment that require inspection and audit.

Starting from 2004, organize regular inspections of investment plan implementation in various sectors and localities to ensure focused investment according to plan objectives.

10. Require ministries and localities to strictly comply with regulations on reporting quarterly, semi-annually, and annually on investment plan implementation to relevant agencies covering aspects such as capital mobilization, construction volume, quality and accidents of works (if any), allocation, payment, completed projects, additional capacity. For Group A projects and important national projects, the investor must separately report on investment plan implementation by the 20th of each month to the Ministry of Planning and Investment for consolidation and reporting to the Prime Minister, and to propose measures for organizing investment plan implementation according to schedule.

11. In the first quarter of 2004, the Ministry of Planning and Investment shall take the lead, coordinate with the Ministry of Finance and relevant ministries to review the allocation of investment capital for specific objectives and projects of ministries, sectors, and localities. If any issues inconsistent with current regulations are identified, they must be promptly addressed within the authority's jurisdiction; in cases exceeding such jurisdiction, timely reports must be submitted to the Prime Minister for consideration and decision.