Directive No. 49/2004/CT-TTg On Developing Services in the Five-Year Socio-Economic Development Plan 2006-2010

DIRECTIVE

OF THE PRIME MINISTER NO. 49/2004/CT-TTG
ON DECEMBER 24, 2004 ON DEVELOPING SERVICES
IN THE ECONOMIC AND SOCIAL DEVELOPMENT PLAN FOR 2006-2010

In recent years, the State has issued many policies and guidelines to create favorable conditions for service activities to develop. As a result, the service sector has shown positive changes, better meeting production, consumption, and living needs of the population, contributing to accelerating economic growth. Some service areas such as: postal and telecommunications; finance, banking, insurance; air transport; sea transport; tourism, labor export, etc., have seen rapid growth rates; service quality has significantly improved; they have attracted many workers, contributing to promoting exports.

However, the growth rate of the service sector remains low compared to overall economic growth; its share in GDP has recently tended to decline; the structure has shifted slowly; many services have not been formed and exploited effectively. The legal environment, mechanisms, and policies for developing services are still lacking and not synchronized; there is no coordination among sectors to support and complement each other's development. The quality and business efficiency of services remain low; value-added is low; prices of some industries are relatively high compared to those in the region and the world; some important services that are significant for national competitiveness have not developed at the appropriate level.

The main reasons for these weaknesses are that the understanding of the role of services in the economy by ministries, sectors, and localities is still limited; insufficient attention has been given; practical measures to promote development are lacking; there is a lack of experience in managing and operating; there is a shortage of information and data to build plans and policies; and there is a lack of updates on the actual operation of the domestic and international service market.

To leverage the achieved results and overcome the aforementioned weaknesses, to make a strong shift in the development of services, accelerate the process of economic restructuring, contribute proportionately to overall economic growth based on potential, increase the competitiveness of service products, attract more active participation from all economic sectors, foreign investment in the service sector, increase exports, meet the requirements of economic reform and the process of international economic integration, the Prime Minister instructs:

1. In the 2005 plan and the 2006-2010 period, the position and role of the service sector must be highly valued; consider the service industry as one of the key sectors for national economic development with the following objectives:

- Focus on developing service areas with potential such as tourism, insurance, air transport, sea transport, warehousing, transportation, finance, banking, auditing, postal and telecommunications, construction, labor export, etc.; encourage the development of new competitive services; strive to achieve a higher growth rate for the service sector during the 2006-2010 period than the overall economic growth rate; accelerate the restructuring of the industry and intra-industry service structure, gradually increasing the service sector's share in the national GDP, aiming to reach about 45% by 2010.

- Improve the quality of service products and the competitiveness of service enterprises in the domestic, regional, and international markets; intensify the exploitation of the potential and advantages of each service area; strengthen cooperation between service areas to compete and develop together.

- Promote the export of services and on-site foreign currency earning through tourism, financial-banking, remittance collection, and on-site sales, postal and telecommunications, air and sea transport services; reduce the trade deficit in services.

- Accelerate socialization to develop cultural, educational, health, sports, employment services, etc., according to market mechanisms, to meet the increasingly high demands of the people and gradually integrate internationally.

- Survey and evaluate the competitiveness of each current and future service area; classify services that need protection, temporary exclusion, complete exclusion for opening up service sectors and granting national treatment, most-favored-nation treatment to foreign service providers.

2. On the orientation of building strategies and planning for service development.

During the preparation of the 2006-2010 five-year plan, the Ministry of Planning and Investment proposed main directions regarding the structure, policies, and macro mechanisms to promote service development; relevant ministries and sectors should proactively build strategies, plans, and action programs for service development in their respective sectors, as well as specific solutions for implementation based on general orientations and sectoral development strategies.

a) On the general orientation of investment in service development.

- Continue to mobilize investment capital from all economic components both domestically and internationally to upgrade and construct new infrastructure, equip modern technical equipment to facilitate service development.

- State budget funds (central and local) should be prioritized for the development, consolidation, upgrading, and modernization of key infrastructure, particularly transportation, airports, seaports, postal and telecommunications, tourism, finance, and banking. Support modern technical equipment for major service sectors to enhance domestic and international competitiveness and better serve production and consumption needs.

- Open the service market according to international commitments, strengthen efforts to attract foreign direct investment in the service sector, accounting for over 30% of capital.

- Vigorously implement shareholding reforms, organize business operations under effective new models to mobilize social resources for investment and service development, primarily in the insurance, banking, tourism, passenger and cargo transport, postal and telecommunications, real estate trading, wholesale and retail goods, and other sectors.

b) On the orientation of investment in key service sectors

- Transportation services:

+ Maintain, consolidate, upgrade, and develop key transportation infrastructure facilities. Upgrade existing road transport projects, construct new key projects, gradually build expressway systems, initially connecting major economic zones, important traffic axes with high traffic volume, linking tourist areas, and distinctive cultural and historical sites in Vietnam. Improve the quality of passenger and cargo transport services to promptly meet the requirements of socio-economic development and public travel needs.

+ Renovate, upgrade, and harmonize the existing railway network, modernize information and signaling systems, enhance service quality, striving to catch up with regional standards.

+ Invest in and modernize the port system. Form some open ports according to the model, gradually increase transshipment services. Develop the national maritime transport fleet towards specialization and modernization. Renew the fleet by combining domestic construction and purchasing from abroad. Further promote the process of equitizing marine service enterprises. Enhance the quality and professionalism of exported marine transport and crew services, focusing on developing comprehensive marine service packages.

+ Invest in renovating, upgrading, modernizing, and constructing new international airport systems, operational and air control facilities. Purchase and modernize aircraft fleets to compete effectively in the regional aviation market. Gradually open the market to attract participation from international airlines.

- Tourism Services:

Vietnam's tourism industry must truly become a leading economic sector based on mobilizing all social resources to effectively exploit potential and advantages in natural conditions, ecology, cultural and historical traditions; striving to attract over six million international tourists and over twenty-five million domestic tourists by 2010. State budget capital will continue to focus on supporting investment in tourism infrastructure development, primarily national tourism focal points and regions with tourism development potential, especially tourist areas linked to cultural and historical sites that have been planned and developed until 2010, approved by the Prime Minister. Continue to support state budget funding for the implementation of the National Tourism Action Program.

- Construction Services:

Establish a legal framework and incentives to promote investment and construction activities, forming a construction market with increasingly broad, diverse, and rich scales; continue to decentralize, clearly define the rights and responsibilities of construction participants to ensure construction quality and effectiveness.

- Financial Services:

Create a favorable environment for organizations of all economic sectors to participate and compete equally in the financial and financial service markets; adjust mechanisms and policies so that the financial market and financial service market operate in accordance with economic conditions and fulfill international commitments on finance and financial services. Strengthen the financial situation and enhance the financial capacity of state financial service organizations. Increase the government's ability to control various financial services.

- Banking Services:

Promote the modernization of the banking payment system, strengthen banking conveniences to encourage economic components, including individual consumers, to use banking payment services, reduce the use of cash in commercial transactions, continue to build and perfect mechanisms and policies to attract remittances. Enhance the ability of commercial banks to mobilize funds, particularly medium and long-term sources, while simplifying procedures to continue expanding credit activities safely and efficiently in line with international practices, better meeting the capital needs for economic growth targets. Continue policies to diversify the operations of commercial banks towards new financial service approaches, meeting diverse customer needs, enhancing the competitiveness of domestic commercial banks in preparation for integration into the global and regional economy, especially when implementing commitments under the US-Vietnam Trade Agreement and post-WTO accession commitments.

- Postal and Telecommunications Services:

Build and develop a widespread postal and telecommunications network and information technology in a modern direction, improving the quality and competitiveness of services to better meet the requirements of socio-economic development, ensuring national defense security, and promoting the application of information technology according to the goals of the Vietnam Post and Telecommunications Development Strategy until 2010 and orientation until 2020, approved by the Prime Minister.

- Science and Technology Services:

Focus on developing strong types of science and technology services to serve the country's industrialization and modernization process as follows:

+ High-tech services, installation and operation guidance for production lines; repair, maintenance, calibration of machinery, equipment, testing tools, measuring instruments, scientific and technical equipment with automatic control units.

+ Data processing, calculation, analysis directly serving research, implementation, certification, and testing; preparing feasibility and pre-feasibility study reports.

+ Activities related to intellectual property protection; activities supporting technology transfer, applying new techniques in production, demonstrating technology; services related to information, consulting on science and technology, brokerage, and technology promotion; forms of organizations supporting technology incubation and business establishment; gradually building a technology transfer market.

+ Training, technical staff training, management and business knowledge enhancement and improvement activities.

- Labor Export:

Focus on developing and enhancing the effectiveness of labor export; exported experts and workers must undergo training to meet occupational requirements, language skills, physical fitness, work style, and labor discipline; increase the proportion of skilled workers, highly qualified workers, and experts for labor export; invest in developing a network of training institutions for labor export, with a focus on top vocational schools with high quality; reorganize and innovate state-owned enterprises towards specialization in this service activity; diversify ownership forms of labor export enterprises.

3. To prepare for the development and organization of management mechanisms and policies for services for the remaining period of the 2001-2005 five-year plan and the 2006-2010 period, ministries, ministerial-level agencies, government agencies, provinces, centrally governed cities, sectors, and localities shall carry out the following tasks:

a) Based on the classification of services by the World Trade Organization and guidelines from the Ministry of Commerce and the General Statistics Office, ministries and sectors shall cooperate with provincial People's Committees and centrally governed city People's Committees to proactively develop strategies for the development of services under their jurisdiction, propose appropriate mechanisms and policies to promote services starting from 2005 and subsequent years, and include services in the content of the 2006-2010 five-year plan.

b) The Ministry of Commerce shall review and improve mechanisms and policies on import and export and trade in services in accordance with the institutions of the World Trade Organization (WTO) and the General Agreement on Trade in Services (GATS). Disseminate information and guide sectors and localities to prepare conditions for implementing commitments on trade and services after joining the WTO, commitments on liberalizing trade and services within the framework of ASEAN (CEPT/AFTA, AFAS, etc.) until 2010 and beyond. The Ministry of Commerce shall be responsible before the Government for compiling and directing the implementation of activities related to the import and export of services.

c) The General Statistics Office shall take the lead and coordinate with the Ministry of Commerce and relevant ministries and sectors to build and submit to the Prime Minister for issuance at the beginning of 2005:

- Service classification directories and directories for the import and export of services in line with international standard tables and expanded according to practical needs and requirements of Vietnam. .

- A system of statistical reporting on services and international trade in services; initially focusing on key service sectors such as postal and telecommunications, air transport, sea transport, insurance, finance, banking, tourism.

Organize the collection and compilation of statistical reports on services and international trade in services according to the prescribed regime to serve policy planning, management, and economic operations of the Government and inter-ministerial working group meetings on services (established by the Prime Minister's Decision No. 995/QD-BKH dated August 26, 2004 of the Minister of Planning and Investment).

d) The Ministry of Home Affairs shall take the lead and coordinate with the General Statistics Office, the Ministry of Planning and Investment, and the Government Office to review sectors and service activities that currently have unclear regulatory authorities; recommend to the Prime Minister in 2005 the supplementation of state management functions for relevant ministries and sectors. Coordinate with ministries and sectors to strengthen organizational structures and staff to implement statistical work in accordance with the Law on Statistics.

đ) The Ministry of Planning and Investment shall coordinate with the Ministry of Finance and related agencies to study amendments and supplements to investment mechanisms and policies for the service sector in the direction of encouraging socialization; expanding to all economic components, including wholly foreign-invested enterprises, to attract investment capital from countries with large investment markets, multinational corporations, focusing on certain service areas such as trade, tourism, finance, banking, transportation, postal services, telecommunications, etc.

e) Ministries, sectors, provincial People's Committees, and centrally governed city People's Committees need to allocate specialized personnel to monitor, statistically report, and compile service activities in their sectors and localities according to the standards and criteria of the service statistical reporting system and international trade in services; grasp the situation and report to the Ministry of Planning and Investment, the General Statistics Office, the Government Office, and other agencies according to the prescribed regulations on the development of services and issues requiring resolution (on the 20th of each month and at the end of each quarter) so that the Ministry of Planning and Investment and the inter-ministerial working group can compile and report to the Government during its regular monthly meetings about the development of services.

To actively integrate into the service sector, from now on, the Ministry of Commerce shall be responsible for immediately informing ministries, sectors, localities, and enterprises of international commitments on opening up the service market; ministries and sectors need to prepare well the conditions to implement commitments that Vietnam has signed or joined; direct service-providing companies to review their service activities in the sector to have plans to expand, occupy domestic markets, and customers before foreign service organizations operate in Vietnam; study appropriate mechanisms to attract additional capital, proactively open up gradually to major service markets such as tourism, air transport, sea transport, finance and banking, insurance, retail distribution, postal and telecommunications services, and some other types of services.

4. The Ministry of Planning and Investment shall take the lead and coordinate with relevant ministries and sectors to follow up and compile the implementation of this Directive and regularly compile and report to the Government on the results of implementation.

Ministers, heads of ministerial-level agencies, heads of government agencies, chairmen of provincial People's Committees and centrally governed city People's Committees, heads of budget-funded organizations, chairmen of boards of directors, general directors, and directors of state-owned enterprises shall be responsible for organizing the implementation of this Directive.