World Bank asks Vietnam to control budget with strict, simple rules

By Anh Vu, Thanh Nien News

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A man files taxes in Hanoi. Photo: Ngoc Thang A man files taxes in Hanoi. Photo: Ngoc Thang


World Bank officials have asked Vietnam to simplify financial management to secure state income and reduce overspending.
During a meeting held to discuss the State Budget Law last week, Victoria Kwakwa, the bank's director in Vietnam, said the government needs to simplify tax procedures in order to ensure a stable source of income.
Companies doing business in Vietnam spend over 800 hours a year, on average, paying taxes and Kwakwa said that figure needs to be cut in half, at the very least. 
Private firms would be happy to pay taxes as long as the procedures were simple and transparent, she said.
Figures from the Finance Ministry released at the meeting showed an 18 percent annual increase in budgetary income since 2002 when the law took effect--or a five-fold increase 5.4 between 2003 and last year.
Income growth has allowed an annual increase of 13.5 percent in public investments, and VND700 trillion (US$33 billion) in wage increases during the last decade.
Do Viet Duc, deputy director of the ministry’s State Budget Department, said a large part of Vietnam's state income remains unstable.
He said 40 percent of the state budget comes from crude oil and exports, which are largely determined by fluctuating global prices.
He said the $83.48 billion public debt (equal to 56.2 percent of GDP) remains "safe" and probably won't exceed 65 percent by 2015.
But he also decried a high degree of excessive spending, without offering specifics.
World Bank officials added that Vietnam lacked discipline when it came to spending and cautioned that continuing its current management practices will lead to yawning deficits.
Finance Minister Dinh Tien Dung said he would try to fix that by demanding that specific officials and agencies justify their spending.
In the future, Dung said he would speak for the central government's spending only and let city/provincial officials explain how money gets spent in their jurisdictions.
The Ministry of Investment and Planning would be responsible for explaining overspending at state-funded projects, he added.
“The spender will have to do his own explaining from now on. The finance minister will only instruct, supervise and blow the whistle on anyone found doing wrong,” Dung said.
Dinh Van Nha, vice chairman of the legislature’s Finance and Budget Committee, told Thanh Nien that he’s concerned about the government’s overspending, as no official has ever been punished for doing so.
Nha suggested that the law include punishments for going over budget. The ministry and the legislature will discuss the law's implementation this October.
He said the leader of any government unit found spending more than assigned must be punished.
World Bank officials said that if the Vietnamese government wants better budget control, they need to let citizens get involved by publishing specific and timely reports on government spending.
Vietnam routinely releases such reports 18 months after the fact. But the global standard, according to the World Bank, is in fact six months.

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