VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL *************** NGUYEN HONG CUONG MANAGING PUBLIC SPENDING IN INFRASTRUCTURE CONSTRUCTION FOR THE VINH PHUC STATE TREASURY - AS
INTRODUCTION OF DISSERTATION
Necessity of the research
Public financial management (PFM) aims to enhance the efficient use of resources within public institutions, promoting transparency to prevent corruption and waste It holds officials accountable for decisions impacting long-term economic success and emphasizes the need for reform in Vietnam's public sector management This transformation seeks to streamline the political system, aligning it with the country's socio-economic development and international integration Additionally, PFM addresses the reduction of overlapping functions among ministries and localities, while improving the qualifications and responsibilities of officials in managing state resources effectively.
This thesis focuses on Public Finance, emphasizing the crucial role of the state budget as a key economic tool for the Government It is essential for maintaining macroeconomic stability and ensuring financial balance The state budget supports the regular operations of political agencies and units while facilitating infrastructure development investment This investment is vital for the socio-economic growth of the country and individual localities Consequently, the Government, including Vinh Phuc province, allocates a significant portion of its total budget revenue each year to infrastructure development.
Despite the government's focus on infrastructure development, the execution of budget policies has exposed several inefficiencies, such as issues in planning, budget allocation, and payment control, leading to wasteful spending of state resources To enhance the effectiveness and efficiency of public expenditure, a robust regulatory mechanism is essential However, the increasing demand for spending contrasts sharply with the limited budget inputs from taxes and fees, compounded by a complex management and control system.
2 necessary to reform administrative procedures in the management, allocation and control of payment of capital from the state budget
This is the reason why I chose the topic "Public Expenditure Management in Infrastructure Construction of the State Treasury of Vinh Phuc Province - Evaluation and Implications" for my thesis.
Objectives of Study
This study is to study the current status of the public spending of the Vinh Phuc province, identify issues and problems, then propose solutions to improve the performance
Study questions
The thesis will answer the following questions:
- What are the current issues and challenges facing the Vinh Phuc state treasury?
- What are the current mechanism of the infrastructure spending, its issues and challenges?
- What are the criteria that affect infrastructure spending performance?
- What are the criteria for evaluating the implementation of infrastructure spending?
- What are the solutions and measures to improve the performance of infrastructure spending control?
Scope of study
The thesis will study the data during the period 2018 - 2020
Structure of the thesis
The structure of thesis includes 5 chapters
- Chapter 2: Literature review and theoretical framework
- Chapter 5: Implications of finding and Conclusions
LITERATURE REVIEW AND THEORETICAL FRAMEWORK
Public finance and budgeting
Public finance encompasses all revenue and expenditure activities conducted by the state, reflecting the economic relations involved in the creation and utilization of public funds Its primary purpose is to facilitate the performance of state functions while addressing the needs and common interests of society as a whole.
The state budget is crucial in public finance, encompassing all estimated and actual revenues and expenditures within a specified timeframe, as determined by a competent state agency This budget is essential for fulfilling the functions and responsibilities of the government, as outlined in the State Budget Law No 83/2015/QH13.
Public expenditure refers to the spending by the government to fulfill its essential roles in delivering public goods and enhancing socio-economic welfare for the community It can be categorized into two main types: recurrent expenditure, which covers ongoing costs, and investment and development expenditure, aimed at fostering growth and infrastructure.
The government plays a crucial role in delivering services, combating poverty, and ensuring fair competition for businesses Public Financial Management (PFM) focuses on optimizing resource use by public institutions, promoting transparency to mitigate corruption and budget waste Additionally, PFM emphasizes accountability among officials for decisions impacting long-term economic growth Research in PFM highlights the significance of robust PFM systems in achieving these objectives.
A significant body of literature has explored the topic of Public Financial Management (PFM), particularly focusing on spending efficiency Research indicates that the public sector often demonstrates lower efficiency in financial utilization compared to the private sector For instance, state-owned enterprises tend to construct fewer buildings and infrastructure projects with the same financial resources than their private counterparts Furthermore, when it comes to building construction, state-owned enterprises typically require more labor, resulting in higher input costs and lower output compared to private enterprises.
Second, public finances are affected by spending that is too spread out While the private sector focuses their spending on narrower projects or sectors, public spending falls within a
4 broader range of commitments, most of which do not claim profits, leaving them unconstrained required to reduce costs
The increasing need for reform in public sector management is driven by the inefficiencies of state apparatus, overlapping functions, and inappropriate employment structures that strain national budgets A lack of accountability among officials exacerbates low efficiency and failed spending programs, highlighting the necessity for improved control over public expenditures In nations with subpar public spending, corruption is prevalent Research by Mohamed and Sheikh-Ali (2014) indicates that in countries facing social crises, such as Somalia, effective public spending is crucial for mitigating political and civil unrest They emphasize the importance of enhancing internal control systems and financial reporting to address these challenges.
Public expenditure management includes the following contents:
Budgeting is the basis for effectively allocating resources to meet the State's management requirements
Budget compliance involves creating budget estimates that have received approval from relevant authorities, in line with legal requirements It is closely linked to the State's financial objectives, aiming to achieve the expenditure targets outlined in the annual budget Additionally, effective tools are essential for tracking, verifying, and monitoring public spending.
The tools to monitor, check and supervise public spending are: National Assembly, People's Councils at all levels; Government Inspector, Financial Inspector, Provincial Inspector, State Auditor, State Treasury
2.1.4 Evaluation criteria for public expenditure management:
- The observance of financial discipline
- Public spending must be consistent with the medium and long-term economic development plan
- Ensuring the publicity, transparency and efficiency from the formulation, organization, implementation and settlement
- Ensure balance between development investment expenditure and recurrent expenditure
- Public expenditure management must be a leverage effect to promote other sectors to participate in public service provision, meeting the diverse and rich enjoyment needs of all subjects.
Public budgeting (establishment of state budget estimates)
Budgeting involves the management of both revenues and expenditures, encompassing the procedures through which governments determine spending allocations for various programs This process is essential for ensuring that expenditures do not exceed available revenues, thereby preventing budget overspending.
In various countries, public budgets serve multiple functions, including power allocation and planning Some scholars argue that budgeting incentivizes national economic growth Increased government spending boosts domestic demand, benefiting small and medium enterprises This, in turn, enhances social welfare for households and contributes to the stability and quality of the social environment (Sicilia & Steccolini, 2017).
Managerial reforms in budgeting emphasize a greater dependence on accruals and performance-based budgets, integrating both financial and non-financial performance aspects Users increasingly prefer non-financial performance measures and cash-based data, which significantly influence political and managerial decision-making.
The global financial crisis has led scholars to examine its impact on budgeting processes, resulting in a re-centralization that fosters fragmented decision-making This situation necessitates ongoing adjustments to budgets during both formulation and execution phases Consequently, there is a heightened focus on the need for stability in public finances, which involves adhering to fiscal rules and constraints, as well as promoting flexibility in budget execution.
Public management reforms highlight the significance of accountability, fostering transparency and effective communication regarding public organizations Citizens are now recognized as active participants in public governance, engaging directly in discussions and service provisions that impact their lives Consequently, budgeting necessitates external accountability, emphasizing the need for transparency, communication, and increased stakeholder involvement and participation, which warrants further exploration.
Fourth, public spending involves service delivery, thus increasingly require the involvement of multiple actors, including other governments or public sector entities, as well as private and nonprofit organizations
Fifth, studies on performance-based budgeting (PBB) focus on the description and explanation of implementation issues and obstacles of PBB the use of performance information in budgeting processes
Some scholars advocate for the integration of performance information into budgeting processes The implementation of reforms, experience with performance budgeting, and existing institutional frameworks shape the structures and dimensions of performance Findings indicate that municipalities favor performance budgeting that connects performance information to their expenditures, emphasizing that performance objectives should prioritize outcomes and outputs over the underlying performance indicators.
Challenges of public spending and budgeting
Recent studies on public budgeting in Europe highlight the growing demand for transparency and stakeholder involvement Anessi et al (2016) indicate that modernization movements have significantly shaped public budgeting practices over the past two decades, with many European studies published in leading public administration and accounting journals Scholars have proposed alternative conceptual frameworks to address public budgeting challenges, emphasizing that the transition to performance-based and accruals-based budgeting is ongoing, and the anticipated benefits are not yet fully realized Additionally, these changes have led to some unexpected and undesirable outcomes.
Second, corruption is a threat to the performance of public spending Monitoring and controlling are critical to handle this.
Role of budgeting for spending
Budgets serve essential political, economic, managerial, and accountability functions They reflect the preferences and power dynamics of stakeholders, embodying the outcomes of previous decisions and negotiations while setting the stage for future discussions Additionally, budgets delineate the extent of public intervention in the economy and influence the redistribution of wealth, thereby fulfilling a crucial economic role.
Budgeting plays a crucial role in holding managers accountable for achieving results and effectively utilizing public resources, thereby fulfilling a managerial function Additionally, it ensures that public organizations remain accountable to the general public, addressing the need for external accountability.
The role of non-financial performance information in the formulation and execution stages of budgeting goals is important.
Managing public finances and budgeting
Regularly publishing budget information and encouraging public participation are essential for enhancing transparency in public finance and ensuring effective parliamentary oversight The involvement of civil society organizations and donor agencies is also vital in fostering financial accountability Corruption in public spending is viewed as a long-standing issue rather than a sudden occurrence.
Factors affecting public spending performance
Public spending is significantly influenced by state budgeting planning, which encompasses various dimensions such as political science, public administration, accounting, psychology, and management studies This multifaceted process involves the interaction of diverse rationalities, logics, competencies, and professional identities.
Second, the complexity and variety of functions of budgeting depends on the interaction of different actors, cultures, professional identities and disciplines
Third, the variety of approaches and forms make the budget documents and budgeting processes variable over time The changing forms may make the implementation difficult
Budgeting is crucial for the effective distribution and representation of resources and responsibilities, as well as for ensuring accountability in emerging inter-organizational arrangements This highlights the necessity of understanding the process of consolidated budgets and the factors influencing the selection and design of related practices and processes.
Budget documents and forms are crucial for effective use; overly complicated formats hinder user engagement, while excessive simplification can limit the data's usefulness.
Studies in Vietnam on controlling capital expenditure for infrastructure spending from the
Numerous studies have highlighted the importance of managing capital expenditure for infrastructure projects within the state budget Most research in this area typically focuses on two main aspects: the oversight of regular expenses through the State Treasury and the regulation of investment expenditures related to infrastructure spending To deepen my understanding, I have reviewed several relevant studies.
A study by Bui Van Buong and Bui Van Trinh (2019) examined the management of infrastructure spending investment from the state budget in Tra Vinh from 2015 to 2017 The research revealed that the capital management procedures are cumbersome and not strictly enforced, resulting in significant risks of loss and waste Many projects in Tra Vinh have received advanced capital but have either not been implemented or have only partially completed bidding, leading to unmanageable debt To enhance control over capital expenditure for infrastructure projects, the Tra Vinh State Treasury aims to ensure processes are simple, fast, tight, economical, and practical, thereby minimizing risks and errors The authors proposed four key solutions: improving staff qualifications, applying information technology in management, streamlining payment procedures, and enhancing the capital expenditure control process.
The study "The Current Situation and Solutions to Improve Payment Control of Infrastructure Spending Investment through the State Treasury System" by Nguyen Thai Ha (2006) presents key theoretical concepts regarding infrastructure spending investment and its management through the state budget It evaluates the strengths and weaknesses of current management practices and suggests solutions for enhancing management quality However, it lacks a thorough discussion on the control of infrastructure spending investment expenditures.
According to a study of Ha Tien Dat (2018) on the control of capital expenditure for infrastructure spending from the state budget at the State Treasury of Hue City from 2015 to
A 2017 study evaluated the internal and external factors influencing capital expenditure control for infrastructure spending, identifying key elements such as policy mechanisms, operational processes, controller capabilities, and investor capacity as the most impactful on effective capital management Ha Tien Dat proposed several solutions to enhance capital spending control, including the need for the State Treasury to refine its decentralized organizational model, improve coordination in spending control implementation, strengthen the capabilities of controller teams, enhance processes, and foster a greater sense of compliance among investors (Ha Tien Dat, 2018).
Overview about Capital of Infrastructure Spending from the State Treasury
During reviewing the management and control of Infrastructure Spending from the State Budget at the State Treasury, the first thing to do is to clarify the ""infrastructure spending" and
"the state budget" The concepts and definitions are showed below:
The State Budget, as defined by the Law on State Budget (2015), encompasses all revenues and expenditures of the State, which are projected and executed within a specific timeframe by authorized State agencies to fulfill the functions and responsibilities of the State.
Infrastructure spending from the State Budget refers to the monetary capital allocated for investing in fixed assets aimed at enhancing and modernizing infrastructure to support socio-economic development This investment is a crucial component of the national economy and serves as a vital public financial resource for the country.
The management of infrastructure spending through investment capital from the State Budget involves a comprehensive set of measures and instruments that guide the formation and distribution of funds This strategic approach aims to achieve specific socio-economic objectives established for each period.
2.8.2 Characteristics of Infrastructure investment capital from the State Budget
From the concepts of infrastructure spending mentioned above, characteristics of infrastructure spending from the state budget can be summarized as follows:
Infrastructure spending from the budget is closely linked to state budget activities, particularly in the context of development investment The management and utilization of capital must adhere to the principles of decentralization in state budget spending Consequently, the formation, distribution, use, and settlement of this capital must comply with legal provisions and receive annual approval from the National Assembly and local authorities at all levels.
Infrastructure spending from the state budget serves as a crucial source of capital, surpassing other societal capital sources This funding primarily supports substantial development projects, laying the groundwork for a new economic environment and fostering economic growth.
Third, capital for infrastructure spending was unstable between periods of socio- economic development; The order of spending priority for each sector was not stable may from period to period
Infrastructure spending is characterized by fixed capital that has a long lifespan The funding for such expenditures in the state budget comes from both internal and external sources Internal sources primarily include taxes and various state revenue streams, such as resource sales, national property rentals, and income from other business activities External funding mainly consists of foreign loans, Official Development Assistance (ODA), and additional resources.
Sixth, the organizations using infrastructure spending from the State budget are very diverse, including State agencies and non-State organizations, but the State agencies still account for the majority
2.8.3 Classification of Capital for Infrastructure Spending from the State Budget
Based on requirements and managerial goals of each capital source, capital for infrastructure spending can be classified into many different ways
According to the nature of capital infrastructure spending, capital is divided into investment preparation expenses, investment implementation expenses (construction and installation, equipment expenses and other expenses)
According to the source and nature of capital, it can be classified:
+ Centralized capital for infrastructure spending: a large capital in terms of scale and proportion in the total capital for infrastructure spending from the state budget
Public capital, characterized by its investment nature, serves as a funding source allocated by the state budget for various social activities, including transport, education, and health care However, since this funding is utilized for investing in and repairing construction works, it is essential to apply a management mechanism similar to that used for capital construction investment in infrastructure spending.
+ National target program capital, target support program
To enhance infrastructure spending, it is essential to mobilize capital from both domestic and foreign sources, as state budget allocations alone are insufficient However, the socialization of capital for infrastructure investment falls outside the scope of this study.
2.8.4 The role of investment in infrastructure from the state budget
State budget capital for infrastructure is essential for all nations to provide the necessary material and technical conditions required for fulfilling the State's functions in security, defense, governance, and socio-economic development.
Controlling capital spending for infrastructure spending from the state budget through the
2.9.1 The concept of controlling capital spending for infrastructure spending
The State serves as the foundation for society, providing essential conditions for its functioning A commodity economy is crucial for generating the necessary resources for the state budget's creation, sustainability, and growth State budget spending involves the allocation and utilization of budget funds to support governmental operations and fulfill its responsibilities This spending encompasses a variety of complex elements, including recurrent expenditures, development investments, and other financial obligations.
State budget development investment spending encompasses various expenditures with distinct purposes It can be categorized into capital spending for capital construction and non-capital construction development investments Capital construction investment involves allocating a portion of monetary capital from the state budget to enhance fixed assets The primary goal is to strengthen, modernize, and improve the material and technical foundations, as well as the production and service capacity, to fulfill the State's functions and responsibilities effectively.
2.9.2 The contents of controlling infrastructure spending by capital from state budget disbursed by state treasury
2.9.2.1 Control and types of control
To keep operations aligned with objectives, managers need to consistently monitor and assess performance By comparing actual outcomes with established goals, they can implement necessary adjustments Effective management involves ensuring that the organization remains on the right path, with control processes in place to oversee activities and address any significant shortcomings.
Control is a significant activity in managing and operating a unit or organization The following reasons explain this:
The department's structure plays a crucial role in achieving objectives, while effective leadership can motivate employees However, there is no assurance that activities will unfold as intended or meet the goals set by management This underscores the importance of control activities, which serve as the final link in the management function, allowing managers to assess whether the organization's objectives are being met A competent manager must continuously monitor progress to ensure that tasks are completed and goals are realized Control activities are an ongoing process that connects operations with management oversight Without proper control, managers cannot determine if their goals and plans are yielding the desired outcomes.
Control is crucial for senior managers as it enables them to delegate authority effectively Many managers hesitate to empower their employees due to fears of mistakes and accountability, often choosing to work independently instead However, this reluctance can be mitigated by implementing a robust control system that offers valuable information and feedback on employee performance An effective control system is essential for managers to delegate responsibilities and allow employees to make decisions while ensuring they have the necessary feedback mechanisms to oversee performance outcomes.
Third, Control activities with their importance have shown through the following roles:
- Control aims to clarify the results performed, based on which higher-level agencies and units determine the priority order to have a corrective effect
- Predict the main direction of operations for each Department or the entire management system
- Timely detection of faulty parts, based on that, responsibilities, powers, and functions are determined for timely adjustment
- Meet the specific requirements of reporting with accurate figures for the senior managers to cross check with planned goals
- These are the bases for managers to make necessary, timely, and accurate decisions to minimize losses and bring about the highest efficiency
Based on the time of implementation of controls during the implementation of the policies and tasks set forth, we have three main types of control, including:
Preventive control, also known as pre-implementation control, involves anticipating potential issues to find proactive solutions that prevent them from arising This approach enables organizations to effectively manage future uncertainties and avoid mistakes before they occur, making it the most cost-effective form of control.
- Control implementation: By directly monitoring during implementation, capturing deviations and errors, taking timely remedial measures, and ensuring the implementation plan
Post-execution control, also known as feedback control, occurs after an activity has been completed Its primary purpose is to assess whether the plan was successfully executed and, if not, to identify the reasons behind any shortcomings This process allows for valuable lessons to be learned for future endeavors However, a notable drawback of this control method is the inherent time delay involved in its implementation.
According to Ordinance 15/SL signed by President Ho Chi Minh on May 6, 1951, the main task of the State Treasury is to manage state budget revenues and expenditures and is
The State Treasury operates within a structured vertical system, ranging from central to local administrative units, ensuring centralization and unity Each level of the State Treasury is responsible for its own operations, and in areas where a State Treasury has not yet been established, a branch of the State Treasury may still be created.
On January 4, 1990, the Council of Ministers established the State Treasury system under the Ministry of Finance through Decision No 07/HDBT The responsibilities of the State Treasury, as outlined in the Prime Minister's Decision No 108/2009/QD-TTg, include controlling payments, finalizing investment capital, and managing non-business capital investments related to the State Budget The State Treasury oversees the management of State budget funds and mobilizes capital for development investments by issuing bonds in accordance with legal provisions Additionally, it is authorized to establish transaction points in areas with significant transaction volumes, and both Provincial and District State Treasuries possess legal status and can open accounts at the State Bank and commercial banks as permitted by law.
2.9.2.3 Rules for control disbursement for infrastructure spending from the state bank
Controlling operations for capital spending for Infrastructure through the State Treasury is carried out based on the following principles:
The State Treasury will process payments to the investor based on the payment terms outlined in the contract, including the number of payments, payment periods, and conditions The investor is fully accountable for ensuring the accuracy and legitimacy of the work performed, including standards, pricing, and quality, while the State Treasury is not liable for these aspects Additionally, the State Treasury will manage payment records and oversee expenditures in accordance with the contract.
The State Treasury implements a payment control system based on the principles of "first payment, later control" for initial payments and "first control, later payment" for final contract payments This approach allows the State Treasury to issue clear guidelines on payment control methods, facilitating a smoother process for investors and contractors while adhering to state regulations.
Within four working days of receiving the complete payment documents as specified by the investor, the results will be returned based on the contract or the approved estimate for work performed without a contract, along with the payment amount requested by the investor.
14 the State Treasury shall control, provide payment capital for the project and recover the advance payment according to regulations
The project's annual capital plan only covers payments for completed volumes accepted by December 31 of the plan year, with a payment deadline set for January 31 of the following year This includes payments to recover advanced capital, unless the competent authority grants an extension for project implementation and payment.
If an international treaty regarding investment projects funded by Official Development Assistance (ODA) is signed by an authorized agency of the Socialist Republic of Vietnam and includes management regulations for payment and capital finalization that differ from national law, the treaty's provisions will take precedence.
The capital payment for each job or work item must not exceed the approved estimate or bid package price, and the total capital paid for the project should remain within the total approved investment Additionally, the capital payment for the project within a year, including advance payments and payments for completed work, must align with the full-year capital plan allocated for the project For ODA projects, advance payments and payments for completed volumes are not limited by the annual financial plan but must stay within the overall financial plan of the entire project.
METHODOLOGIES AND DATA
Stages of the research
The author follows the following research process:
Figure 3-1: Stages of thesis research
This thesis begins with a literature review of public finance and budgeting, examining key components, management practices, and factors influencing performance From this review, a framework was established to analyze the elements that impact performance Subsequently, the study conducted an analytical assessment of the performance of the VPST and identified potential solutions to improve it.
The author utilized a framework model to create a survey aimed at gathering feedback from clients receiving capital from the VPST, as well as from VPST staff regarding the existing mechanisms The analysis of the survey results reveals key issues related to public spending performance, control and monitoring processes, and the perceived quality of implementation and management of public spending within the VPST.
Analyzing primary data reveals the operational challenges faced by VPST, while secondary data from academic journals, websites, and government sources provides a broader understanding of the national economy and the economic context of Vinh Phuc province To effectively evaluate public spending performance, it is essential to comprehend this context.
The author proposes strategies to enhance the control and monitoring of public spending for the VPST, aiming to address threats and seize opportunities Insights from existing literature will inform the discussion on the implications of these findings and suggest potential solutions.
Methodologies
First, analyze the context by the PEST analytical framework
Second, conduct qualitative study, using a survey that capture the opinions of VPST staffs who managing the public spending
Third, research the reports and documents of Governments regarding the public spending
Identification of problems of the system
Forth, review literature regarding managing public expenditure to capture lessons of success and failures that can apply to the case of VPST
Survey
The study uses a survey to capture the assessments of the public spending implementations, performance, and procedures of VST The questions are described in the table below
The survey was designed by a professional experts and this thesis takes the form given by the local Vinh Phuc government
Table 3-1: The questions of Survey
STT Observed variables Description Vietnamese questions Variable names
I - VỀ BỘ MÁY KIỂM SOÁT CHI VỐN ĐẦU TƯ XDCB
1 How is the rationality of the organizational structure to control and monitor spending?
A well-defined organizational structure for managing capital expenditure in construction is essential It should clearly delineate the roles and responsibilities of each department, preventing overlaps and gaps in authority This clarity fosters effective oversight and mutual control among departments.
Cơ cấu tổ chức bộ máy kiểm soát chi vốn đầu tư XDCB được thiết lập hợp lý, đảm bảo chức năng và quyền hạn giữa các bộ phận không bị chồng chéo hay bỏ trống, từ đó tạo điều kiện cho việc kiểm tra và kiểm soát lẫn nhau hiệu quả.
2 The relevance of size and qualifications of controllers
The number and qualifications of controllers are completely reasonable
Số lượng và trình độ kiểm soát viên là hoàn toàn hợp lý
II - VỀ CÔNG CỤ KIỂM SOÁT CHI VỐN ĐẦU TƯ XDCB
3 The quality and update status of legislative procedures
Documents and regimes promulgated by the State are always updated in a timely and complete manner and controllers have specific instructions
Các văn bản, chế độ do Nhà nước ban hành luôn được cập nhật kịp thời, đầy đủ và kiểm soát viên có hướng dẫn cụ thể
4 The quality of payment documents All payment papers and template follow standardized form
Các chứng từ thanh toán đều thống nhất mẫu
III - VỀ QUY TRÌNH KIỂM SOÁT CHI VỐN ĐẦU TƯ XDCB
5 How relevance and quality The implementation of the mechanism Việc thực hiện cơ chế kiểm soát chi CP1
The mechanisms and procedures implemented at the State Treasury of Vinh Phuc are highly effective in facilitating and expediting customer transactions, ensuring a reasonable approach to capital expenditure for infrastructure investment This efficiency significantly enhances the overall transaction experience for customers.
6 How reasonable the annual allocation planning? The allocation of the annual capital plan is fast and the adjustment of the capital plan for the year is reasonable
Việc phân bố kế hoạch vốn hàng năm nhanh và điều chỉnh kế hoạch vốn trong năm hợp lý
7 How relevant is the application receptions? Do a good job of receiving applications and checking initial submission files
Thực hiện việc tiếp nhận hồ sơ và kiểm tra hồ sơ ban đầu tốt
8 How quality, detailed, and specific are the advance disbursement, payment procedures?
Procedures for payment and advance are specified in documents and regimes There is no situation where the budgeting and treasury units do not agree on procedures
Thủ tục thanh toán, tạm ứng được quy định cụ thể trong văn bản, chế độ
Không có tình trạng đơn vị sử dụng ngân sách và kho bạc không thống nhất được về thủ tục
9 How consistent are the spending applications files?
Simple payment record documents, consistent on how to fill in information, consistent on how to review contracts and acceptance minutes
Hồ sơ thanh toán đơn giản, thống nhất với nhau trong cách điền thông tin, thống nhất cách rà soát hợp đồng và biên bản nghiệm thu
10 How relevant is the spending commitment?
Evaluation of spending commitments Đánh giá về cam kết chi CP6
The analysis involved two distinct groups: expenditure controllers from the Vinh Phuc State Treasury system and customers of the Vinh Phuc State Treasury.
The rating scale uses a 5-point Likert, with 1 means very low quality, or strongly disagree; 5 means very high quality, or strongly agree; 3 means neutral opinion.
Data
The thesis is going to use the data sources below
• Secondary: Department of Finance; Department of Investment and Planning; Project owners and management boards
ANALYSIS RESULTS
Overall Context of public budgeting and finance in Vietnam
This section will examine the context using the PEST analytical framework, highlighting how public spending influences various societal aspects Consequently, public budgeting and expenditure become critical areas of study, encompassing political, social, economic, and psychological dimensions This complexity invites diverse perspectives from various academic fields, revealing intricate and often conflicting viewpoints that challenge simplistic explanations.
The Vietnam Government has jointly set a long-term vision for the next 10 years (2021-
By 2030, the aim is to foster inclusive economic growth and social development through macroeconomic strategies that enhance and sustain revenue from the domestic economy, ultimately achieving national development goals (UNICEFT).
After over a decade of administrative reform, the Vietnamese Government is now prioritizing efforts to streamline processes and eliminate bureaucratic obstacles for citizens (Pham, 2022) The National Assembly's Resolution No 128/2020/QH14 emphasizes the need for effective state budget management and encourages coordination with monetary policy to stabilize the macro economy To foster business development and economic recovery while controlling inflation, the National Assembly recommends tax reductions for companies, despite the potential impact on the budget.
The National Assembly is urging the government at all levels to enhance discipline and reinforce the accountability of leaders in state organizations regarding the management and utilization of finances and the state budget.
The National Assembly (NA) continues to oversee and guide the management of state budget revenues while combating tax loss, transfer pricing, and tax evasion, aiming to reduce the tax debt ratio Members of the NA advocate for the expansion of electronic invoice implementation and the modernization of tax, customs, and state treasury systems They emphasize the importance of adhering to regulations regarding the auctioning, transferring, and leasing of public property, as well as land allocation in compliance with relevant laws Additionally, there is a push to expedite the equitization and divestment of state capital in enterprises as per the approved plans.
The National Assembly (NA) monitors budget collection to ensure government compliance with the estimated schedule, aligning with the economic cycle This automatic policy mechanism is pro-cyclical, alleviating burdens on the struggling economy and helping businesses and individuals cope with the COVID-19 pandemic By the end of 2020, relief measures for the private sector were estimated at 123.6 trillion VND, encompassing extended, exempted, or reduced taxes, land rents, fees, and charges (VEPR, 2020).
Resolution No 43/2022/QH15 by the National Assembly outlines fiscal and monetary policies aimed at supporting socio-economic recovery and development from 2022 to 2025 It emphasizes the effective use of capital to ensure project completion, particularly prioritizing site clearance for significant new projects The resolution also proposes a 2% reduction in the value-added tax rate for 2022 on goods and services currently taxed at 10%, with exceptions for sectors such as telecommunications, banking, and real estate This tax reduction, while decreasing state budget revenue, is designed to alleviate the financial burden on businesses and foster job creation for employees.
4.1.2 Economic aspect of the public finance
From 2010 to 2019, Vietnam's economy demonstrated significant stabilization, attributed to the Government's effective macroeconomic policies This stability is evident in the sustained high GDP growth rates, particularly from 2017 to 2019, with rates of 6.81%, 7.08%, and 7.02% respectively These results are particularly noteworthy given the challenging global economic landscape, including the war in Ukraine and stagnation in global trade, where most economies averaged only about 6.84% growth per year (General Statistics Office of Vietnam, 2021).
Between 2010 and 2019, total social investments in Vietnam consistently rose, maintaining a high average investment capital to GDP ratio of 33.5% The public sector is crucial to the country's economic investment structure, with primary funding sources including the State budget, State credit investment capital, and state-owned enterprises Notably, over 70% of public sector investment is derived from the State budget and state-owned enterprises (Lạng, 2020).
One indicator that reflects the strength or weakness of the economy is the Inflation index
Inflation has reached its lowest point in five years, with an estimated rate of 2.03% in 2021, a decrease from 3.2% in 2020 and 2.8% in 2019 Additionally, the Consumer Price Index (CPI) rose by 1.84% in 2021, compared to 1.8% in 2020 and 2.8% in 2019, according to the General Statistics Office of Vietnam (2022).
As of September 2021, the Ministry of Finance reported total revenue estimated at 1,343.3 trillion VND, with 1,077.4 trillion VND collected in the first nine months, representing 80.2% of the forecast and a 9.2% increase compared to the same period in 2020 The revenue growth was primarily driven by crude oil exports, import and export activities, land use fees, and domestic taxes from production and business Actual collections surpassed predictions by 14.5%, marking an 11.3% increase from 2020, with the mobilization rate into the state budget reaching 18.6% of GDP, exceeding the spending target of 15.5% of GDP Notably, revenue from crude oil remains at high levels.
Details of the revenues include:
- Revenue from crude oil for the whole year 2021 is 112.5 trillion VND, up 36% compared to
2020 (Ministry of Defense, 2021) Revenue from this source is still high
In 2021, the total balanced revenue from import and export activities reached VND 349.899 trillion, reflecting an 11.1% increase over forecasts and a significant 23.7% rise compared to 2020, according to the Ministry of National Defense.
- Aid collection: Expected to collect 8.1 trillion dong; The whole year implementation is 8.1 trillion VND (Ministry of Factory Management, 2021)
- Central budget revenue (Central budget) reached to 106.7 % of the prediction; local budget revenue (local budget) reached 128.2% of the prediction (VOV, 2022)
The Ministry of Finance estimates the state budget balance expenditure at 1,687 trillion VND, while the actual implementation in 2021 reached 1,709.2 trillion VND, representing 101.7% of the estimate Key areas of spending have shown significant results.
In 2021, the investment capital plan was set at 607,569 trillion VND, but the disbursement of development investment capital was slow, achieving only 80.6% of the Prime Minister's assigned plan, which amounted to 489.9 trillion VND As per the Law on Public Investment, any remaining capital from projects that can still be implemented will be carried over to 2022 for continued execution.
- Payment of debt and interest: Estimated VND 110 trillion; Implemented in 2021, implemented in 2021, is 105.9 trillion VND, equaling 96.3% of the estimate, down 3.8% compared
The forecast for 2020 has been adjusted primarily due to the issuance of government bonds in accordance with the established schedule and budget revenue Public investment capital will be disbursed effectively, ensuring there are no outstanding loans, and reducing the total outstanding loans by the end of 2020 in comparison to the planned capital construction for 2021.
For recurrent expenditure: The allocation estimate is VND 1,036.7 trillion; Implemented in
Context of the VPST
4.2.1 Overview of Vinh Phuc province
Vinh Phuc province, established in 1950, covers an area of 1,231 km² and is strategically located in the Northern critical economic region It borders Tuyen Quang and Thai Nguyen provinces to the north, Phu Tho province to the west, and Hanoi to the south, while also being adjacent to Soc Son and East districts As a gateway to Hanoi and in close proximity to Noi Bai International Airport, Vinh Phuc serves as a vital link between the Northwest regions and the Red River Delta.
The province plays a crucial role in both regional and national economic development, comprising 09 administrative units, including 02 cities and 07 districts, along with 137 communes, wards, and towns Vinh Yen city serves as the economic, political, and cultural hub, while Phuc Yen city and the districts of Binh Xuyen, Yen Lac, Vinh Tuong, Tam Duong, Tam Dao, Lap Thach, and Song Lo complete the administrative structure As of 2020, the population stands at 1,041,400, representing a diverse mix of 07 ethnic groups, including Kinh, San Diu, Nung, Dao, Cao Lan, and Muong.
Despite global and domestic economic challenges, Vinh Phuc's economy has shown a rapid recovery, achieving an impressive growth rate of 8.03% in 2020, the highest in three years The agricultural sector faced numerous obstacles, including adverse weather, disease outbreaks, and fluctuating prices, which impacted farmers' livelihoods However, the added value of agriculture, forestry, and fisheries rose by 3.72% compared to 2019, surpassing expectations Additionally, the industrial and construction sectors experienced a significant production value increase of 15.72% A key factor in this economic resurgence is the presence of major companies in the region, such as Toyota Vietnam, Honda Vietnam, and Piaggio Vietnam.
In 2020, the province achieved its highest investment attraction results since its re-establishment, securing 92 foreign direct investment (FDI) projects with a total capital exceeding 450 million USD, marking a remarkable 97.32% increase in investment compared to previous years.
In 2019, the plan was exceeded by 182.32%, with several projects advancing rapidly into successful products Notable examples include Bangjoo Company and Cammsys Company from Korea, which focus on manufacturing and processing electronic accessories for digital cameras and mobile phones.
4.2.2 Overview of Vinh Phuc State Treasury
Vinh Phuc State Treasury was established on December 14, 1996, under Decision No 1138 TC/QD-TCCB by the Minister of Finance and officially commenced operations on January 1, 1997 As a direct organization of the State Treasury, it is responsible for managing state budget funds in accordance with legal provisions Vinh Phuc State Treasury holds legal status, possesses its own seal, and is authorized to open accounts at local branches of the State Bank of Vietnam and state commercial banks to facilitate transactions and payments as per the regulations of the State Bank of Vietnam.
VST locates at No 4, Kim Ngoc Street, Ngo Quyen Ward, Vinh Yen City
Decision No 1618/QD-BTC, effective from October 1, 2019, mandates that provincial-level State Treasuries are responsible for implementing legal documents, laws, strategies, and programs approved by competent authorities They must also promote legal education and ensure compliance with laws within their jurisdiction Additionally, provincial State Treasuries are tasked with guiding and inspecting district-level State Treasuries, managing state budget and financial reserve funds, conducting cash transactions, and performing state budget accounting duties as required by law.
The provincial-level State Treasury is responsible for monitoring state budget revenues and expenditures, as well as managing financial funds, loans, and repayments as mandated It also confirms state budget data and oversees the management of the state budget in accordance with established regulations.
As of December 2018, the provincial State Treasury system comprises 165 officials and employees, organized into seven professional departments and nine State Treasuries across cities and districts Notably, 30% of the staff hold professional qualifications at the master's degree level or higher, while 70% possess university degrees.
The Vinh Phuc State Treasury is governed by a Board of Directors consisting of one Director and two Deputy Directors It comprises several professional departments, including the Expense Control Department, Office Department, Inspection Department, Finance Department, and State Accounting Department.
Since the assignment of investment capital payment control in 2000, the contingent expenditure controllers in Vinh Phuc have seen improvements in both quality and quantity, with a total of 53 controllers in the State Treasury system However, there is a disparity in professional qualifications, as some staff members possess high expertise while others, particularly in district State Treasuries, face significant limitations Additionally, professional training programs and the issuance of new documents for this team have not been conducted regularly.
Over its 20 years of establishment and development, Vinh Phuc State Treasury has garnered numerous achievements and received various certificates of merit from authorities at all levels Notably, in 2005, it was awarded the Third-class Labor Medal, highlighting the dedication of its staff This recognition underscores Vinh Phuc State Treasury's significant role in the state financial management system, serving as a crucial tool for effective budget management in Vinh Phuc province, and reflecting the successful direction and administration from both central and local authorities.
Criteria to evaluate the performance of public spending
There are 4 criteria The first is how the public spending help to develop social – economy for the local region
Second, the public spending should help to improve structure of economy, meaning that it should invite more investments from the private sector to participate in the market
Efficient management of public spending is essential, ensuring adherence to planned budgets and standards established by the Ministry of Finance It is crucial to respect budgetary discipline in order to optimize the allocation of resources and maintain financial accountability.
Fourth, criterion is how the spending help to improve social security
Fifth criterion is spending must help to improve national defense
In addition, the budget plan and implementation must be transparent, and an independent third party to audit the implementation.
Performance of budgeting planning in Vietnam in general and in Vinh Phuc in particular
Vietnam has made significant strides in public financial management, as reported by the World Bank (2022) Key efforts include establishing budgetary discipline, enhancing decentralization to grant greater autonomy to various government levels and state-funded organizations, and improving fiscal transparency and accountability This progress is supported by better coordination among the legislature, executive, judiciary, and audit agencies (The World Bank, 2017).
In 2021, the Ministry of Finance implemented strict controls on public debts, focusing on sustainable restructuring By year-end, public debt reached approximately 43.7% of GDP, with government debt at 39.5% and outstanding national foreign loans around 39% of GDP The government's direct debt repayment obligation constituted less than 23% of total revenue, ensuring that the state budget remained within safe limits Additionally, the Ministry of Finance enhanced its oversight of prices and market conditions.
In 2021, effective management addressed real-world challenges, facilitated production and business growth, and maintained inflation control, resulting in stable market prices The average consumer price index (CPI) for the year rose by only 1.84%, successfully aligning with the inflation control targets established for 2021 (VOV, 2022).
4.4.1 Budget and Expenditure during the last 3 years
According to Circular No 08/2016/TT-BTC from the Ministry of Finance, investors are permitted to open investment capital payment accounts at the State Treasury, ensuring convenience for transactions and compliance with payment control regulations The account opening process must adhere to the Ministry's guidelines regarding user accounts at the State Treasury Additionally, the Vinh Phuc State Treasury facilitates the opening of these accounts for each specific investment project, following the documentation requirements outlined in Circular No 61/2014/TT-BTC dated May 12, 2014.
Table 4-1: Payments of project management costs for public infrastructure construction projects from Vinh Phuc State Treasury (2018-2020)
Disbursement for project management cost 36,2 39,6 28,9 104,7 Payments via Account for Investment Capital 3,6 5,1 2,7 11,4
(Source: Vinh Phuc State Treasury, 2020)
Table 4-2: Report of budget disbursement for public infrastructure in 2018
Total number of levels January
2017 turns to 1,568,881 283,405 88,176 1,940,462 1,940,462 Advance accrual during the year 1,453,363 2,503,786
Advance overdue at the beginning of the year
Table 4-3: Report on financial disbursement for public infrastructure in 2019
Long-term capital plan 5,939 1,738,726 714,175 73,509 2,526,410 2,532,349 Prolonged capital disbursement rate
2019 turns to 7,511 1,439,183 283,405 88,176 1,940,462 1,940,462 Advance accrual during the year 2,508,957 2,332,349
Accumulation of income during the year
Advance overdue at the beginning of the year
Table 4-4: Report on financial disbursement for public infrastructure in 2020
Long-term capital plan 11,524 1,616,763 1,383,306 126,600 3,126,669 3,138,192 Prolonged capital disbursement rate
2020 turns to 13,578 2,106,952 859,440 370,667 3,337,059 3,350,637 Advance accrual during the year 5,992 1,416,501 861,252 415,653 2,693,406 2,699,396 Accumulation of income during the year
Advance overdue at the beginning of the year
4.4.2 The Strength of budgeting planning
The annual capital plan distribution is efficient, with reasonable adjustments and straightforward payment records Vinh Phuc State Treasury adheres to the Ministry of Finance's directives and State Treasury regulations, actively proposing solutions to address challenges This proactive approach enhances the effectiveness of capital construction investment control from the state budget, significantly contributing to the successful execution of local financial and budgetary tasks.
Effective management of capital for construction investments is crucial for enhancing physical infrastructure and fostering socio-economic development in Vinh Phuc The State Treasury of Vinh Phuc diligently adheres to the annual capital plan, prioritizing the swift and timely disbursement of funds for projects while ensuring strict oversight of payment records and compliance with regulations.
The Vinh Phuc State Treasury's Board of Directors has enhanced its oversight of payment processes and procedures, as well as capital advances for construction projects, to ensure compliance with regulations and timely processing of capital payments.
The State Treasury is committed to effectively addressing and coordinating with investors and construction contractors regarding their feedback on the conduct of officials, public servants, and bank users This collaboration aims to identify and resolve issues related to the management and disbursement of state budget expenditures Additionally, the State Treasury works closely with the Department of Finance and the Department of Planning and Investment to provide guidance to the People's Committee of Vinh Phuc province, ensuring that the operation and management of the state budget adhere to regulations throughout all stages, from planning and verification to allocation, implementation, and finalization, thereby facilitating timely disbursement to various departments.
The management and oversight of investment expenditures have successfully streamlined the one-stop transaction process, ensuring a smooth operation without any difficulties or document backlogs Compliance with the State Treasury regulations and the Government's Resolution 70/NQ-CP has been maintained, facilitating timely disbursement and efficient capital recovery.
The construction of a new Infant Hospital in Vinh Phuc province exemplifies project efficiency, with a total capital requirement exceeding 500 billion VND from an annual budget of over 10,000 billion VND Approved for implementation between 2018 and 2020, the project was successfully completed on schedule.
The actual capital disbursements perfectly aligned with the budgetary plan, demonstrating no violations The project has received high praise from the Vinh Phuc community, as it addresses the previous lack of a hospital for infants and mothers With the newly constructed facility equipped with modern technology, the quality of care for pregnant women and their infants has significantly improved.
4.4.3 The Weaknesses of public investment in Vietnam in general and in Vinh Phuc in particular
Despite positive outcomes, Vietnam faces several limitations in its development State budget investments remain fragmented, leading to low efficiency in many infrastructure projects When compared to other countries at a similar development stage, Vietnam's investment coefficient is notably higher, indicating that the country's growth model heavily relies on investment capital, yet the overall investment efficiency remains suboptimal.
The current investment structure in the state sector faces significant limitations, primarily focusing on areas where private sector participation is feasible Investment capital remains dispersed, leading to delays in project progress, with some initiatives lagging behind schedule for decades, which in turn escalates investment costs Additionally, the regional investment structure is poorly organized, and the effectiveness of development planning is lacking.
Thirdly: The preparation for investment projects is still very poor, the quality is not high, when implementing it has to make adjustments, causing a waste of time
Fourth: The project implementation work of the investors is still limited, such as the work of site clearance, inspection and supervision of contractors to organize the construction
The limitations of public spending in public infrastructure activities still have limitations mainly due to the following reasons:
The current political fluctuations and declining global and domestic economies have weakened aggregate demand, making it challenging to attract investment capital for socio-economic infrastructure development Additionally, unresolved issues from previous public investments persist, and ongoing management of outdated and delayed projects remains necessary.
Legal institutions governing public investment lack synchronization and unity, leading to overlapping provisions in related legal documents This has resulted in confusion regarding the implementation of the Law on Public Investment and its accompanying guidelines Additionally, there is a disparity in the understanding and approach to implementation among various ministries and branches.
44 localities are still different, leading to a long time in completing procedures for public investment projects.
Survey results of the Assessment of VST’s spending control and monitoring
This part assesses and evaluates the control of infrastructure spending spending from the state budget at Vinh Phuc State Treasury in the period of 2018-2020
It is essential to differentiate between customer ratings and staff ratings, as staff members often give higher ratings to the system compared to clients For analysis, the reports were categorized into two groups: the expenditure controllers of the Vinh Phuc State Treasury system and the customers of the Vinh Phuc State Treasury.
4.5.1 Assessment from State Treasury staff
The Capital Investment Control mechanism is generally viewed positively by staff, with an average CC1 rating of 3.8, indicating a strong perception of the organizational structure's effectiveness in controlling and monitoring spending However, a minority of staff members expressed lower ratings regarding its rationality.
Most staff expressed satisfaction with the size and qualifications of controllers, achieving an average CC2 rating of 4.25, indicating a high to very high level of relevance.
Table 4-5: Assessment from staffs on Capital Investment Control mechanism/ apparatus
Variable Description N Mean Std Deviation
CC1 How is the rationality of the organizational structure to control and monitor spending? 48 3.81 1.347
CC2 The relevance of size and qualifications of controllers 48 4.25 0.838
Staff members expressed concerns about the investment capital control and monitoring tools, indicating that the quality and update status of Legislative Procedures were lacking The average rating was nearly 3.5, which falls below the "Good quality" threshold.
Regarding the Disbursement/Payment application documents, in overall, respondents were satisfied with the average rating reached 4.00, which means in good level See the Table below
Table 4-6: Assessment from staffs on Investment Capital Control Tools
Variable Description N Mean Std Deviation
CT1 The quality and update status of legislative procedures 48 3.54 0.589
CT2 The quality of disbursement/payment documents 48 4 0.945
Third, regarding the staffs' assessment on the Procedures for Control of Construction Investment Capital, in overall, the assessment is mixed
Staff members expressed concerns about the annual allocation planning, which received an average rating of just over 3.4 They noted inconsistencies in the spending application files, particularly regarding the complexity of payment record documents and the variability in required information, leading to an average rating of 3.75 for CP5 Additionally, the review process for contracts and acceptance minutes was found to be inconsistent, resulting in an overall CP6 rating of 3.78, which falls below the acceptable level.
The article highlights three positively rated aspects of the service Overall, staff members noted that the mechanisms in place, including procedures and processes, effectively facilitate client transactions, achieving an average rating of 4.19, indicating a good level of performance Additionally, the organization and implementation of application receptions received a commendable average rating of 4.13, also reflecting a good level Furthermore, the advance disbursement and payment procedures were rated positively, with an average score of 4.13, signifying a good level of service.
Table 4-7: Assessment from staffs on the Procedures for Control of Construction Investment Capital
Variable Description N Mean Std Deviation
How relevant and quality mechanism (procedures, processes) that facilitate customers to complete and speed up transaction
CP2 How reasonable the annual allocation planning? 48 3.4 0.468
CP3 How relevant is the application receptions? 48 4.13 0.866
CP4 How quality, detailed, and specific are the advance disbursement, payment procedures? 48 4.13 0.789
CP5 How consistent are the spending applications files? 48 3.75 0.668
CP6 How relevant is the spending commitment? 48 3.78 0.648
4.5.2 Assessment from Clients applying and receiving capital for infrastructure construction
We should distinguish between customers rating and staffs rating, as staffs tend to rate the system higher than the clients There were 75 responses in total
The Capital Investment Control mechanism is perceived positively by clients, with a majority acknowledging that the organizational structure for monitoring spending is at a satisfactory level However, the average rating for this aspect, CC1, stands at only 3.9, indicating it falls short of being classified as good In contrast, clients generally agree that the size and qualifications of the controllers are commendable, reflecting a strong foundation in this area.
CC2 reached 4.00, which means in between high or very high relevance See the Table below
Table 4-8: Assessment from clients of VST on Capital Investment Control mechanism/ apparatus
CC1 How is the rationality of the organizational structure to control and monitor spending? 75 3.92 0.85 CC2 The relevance of size and qualifications of controllers 75 4 0.697
Second, regarding the investment capital control and monitoring tools, in overall, clients contended that the quality and update status of Legislative Procedures was not high The average
CT1 reached only 3.25, that means under the “Good quality” level For the Disbursement/Payment application documents, in overall, clients did not show satisfaction, with the average rating reached
3.76, which means in under good quality level See the Table below
Table 4-9: Assessment from clients of VST on Investment Capital Control Tools
CT1 The quality and update status of legislative procedures 75 3.25 0.725
CT2 The quality of disbursement/payment documents 75 3.76 0.654
The staff's evaluation of the Procedures for Control of Construction Investment Capital reveals a mixed assessment Specifically, CP2, CP3, CP5, and CP6 fell below the good level, whereas CP1 and CP4 achieved good levels.
Clients expressed that the annual allocation planning is only moderately satisfactory, with an average rating of just over 3.3 In contrast, the organization and implementation of application receptions were well-executed, achieving an average rating of 3.88, which indicates a performance below the good level.
The spending application files exhibit inconsistencies in the information requested, particularly regarding payment record documents, which are often complex Additionally, the required information lacks uniformity, as evidenced by an average rating of 3.12 for CP5.
The process to review contracts and acceptance minutes is not very consistent (the overall CP6 rating is 3.55, lower than the good level)
Respondents positively rated two key aspects of the mechanism that facilitates client transactions, with an average rating of just over 4 for the procedures and processes, indicating a good level of satisfaction Additionally, the advance disbursement and payment procedures received an average rating of 4.13, also reflecting a good level of performance.
Table 4-10: Assessment from clients of the VST on the Procedures for Control Of Construction Investment
How relevance and quality mechanism (procedures, processes) that facilitate customers to complete and speed up transaction
CP2 How reasonable the annual allocation planning? 75 3.31 0.637
CP3 How relevant is the application receptions? 75 3.88 0.77
Deviation CP4 How quality, detailed, and specific are the advance disbursement, payment procedures? 75 4.08 0.693 CP5 How consistent are the spending applications files? 75 3.12 0.697
CP6 How relevant is the spending commitment? 75 3.55 0.657
Summary of findings
The government plays a crucial role in service delivery, poverty alleviation, and creating equitable conditions for businesses to thrive, making the efficiency of public spending essential To optimize resource utilization from taxes, the Vinh Phuc Government must enhance its control over spending.
- The efficiency of public spending on public infrastructure is lower than that that of private sector (higher inputs while lower output and quality)
- The public spending in VP has suffered from over spreading spending
- In certain areas, that state bureaucracies were so corruptive that drained the national budget
- Certain local government have a poor quality of public spending programs, and there was significant corruption (the scandal of corruption of General Inspection services in Vinh phuc is an evidence)
In addition, VPST should do the following:
- Completing the process of controlling infrastructure spending is a top task of the State Treasury of Vinh Phuc province
The revision of payment principles, shifting from "pay first, pay later" for applications and multiple payments to a more secure "pay first, pay later" for payments or advances, enhances safety in capital transactions Additionally, streamlining the payment document transfer process strengthens the revenue and expenditure control system in Vinh Phuc Notably, the advance balance remains significantly high relative to the total disbursed capital due to the investor's authorized advance rate.
The rate of capital plan assigned in a given year does not restrict the application of 48; it is solely determined by the contractual rate Consequently, it is essential to enhance and finalize the processes for advance payment and recovery, ensuring compliance with regulations regarding timely execution and accountability for advance payments.
The Ministry of Finance has initiated a comprehensive deployment of the TABMIS system nationwide to streamline the control of construction investment expenditures This integration focuses on unifying the investment payment control process with the capital payment control process for basic construction By merging these processes, the Ministry aims to create a cohesive system that clearly delineates the documentation requirements at each stage Additionally, it seeks to enhance control conditions throughout the commitment and payment control phases, emphasizing transparency and efficiency.
The State Treasury of Vinh Phuc plays a crucial role in managing infrastructure spending by ensuring that all expenditures from the state bank are legally sound and properly documented This involves a thorough review process that checks the completeness, legality, and validity of all related documents, as well as a detailed comparison for each specific case.
The human factor is crucial in all control activities, especially in the quality control of investment capital payments Enhancing the professional qualifications of payment control staff is essential To accomplish this, effective strategies must be implemented to attract talented individuals to the State Treasury system.
The State Treasury must enhance the professional qualifications of its officers to align with established competence and ethical standards Additionally, ongoing training and updates on new information are essential for civil servants to effectively meet the evolving demands of the country's industrialization and modernization efforts.
The coordination among agencies within the investment and construction management system is consistently maintained, ensuring that all projects are supported by comprehensive implementation documents and legal procedures These documents are submitted to the State Treasury to facilitate the advance payment of capital as required Projects utilizing public investment capital adhere to democratic regulations governing the control of investment payments, which includes publicly listing the processes for managing both investment and non-business capital Additionally, the regulations surrounding the source of investment capital from the State Treasury and financial agencies are clearly defined, providing a solid foundation for investors.
Vinh Phuc province is enhancing its decentralization efforts to ensure effective control and payment for public investment projects The State Treasury is focused on implementing appropriate payment measures to assess accountability, with oversight from both the provincial and district treasuries This decentralization allows for investment decisions to be authorized by People's Committees at various levels, complemented by rigorous reviews and on-site inspections As a result, Vinh Phuc province is establishing a standardized and efficient process for public investment management.
The management and control of state budget investment expenditures in Vinh Phuc strictly follow the State Budget Law and relevant guidelines, ensuring compliance with standards and regulations, particularly in areas such as compensation, site clearance, payment for completed work, and procurement of public property The processes for creating, approving, and allocating estimates have become more organized, with the Finance agency taking the lead in estimation and settlement This initiative enhances departmental responsibility in capital usage for construction investment, ultimately improving the efficiency of state budget capital utilization.
Vinh Phuc State Treasury actively collaborates with local authorities to assist People's Committees in overcoming challenges related to control and payment processes, thereby accelerating the disbursement of capital construction investment Additionally, the Treasury has rejected numerous expenditure items due to non-compliance with invoicing and voucher regulations, inadequate payment records, and expenditures exceeding budget estimates, thereby promoting thriftiness, reducing waste, and combating corruption.