Fiscal decentralization in general and decentralized management of capital construction investment in particular in order to improve the efficiency of capital investment budget not only
Trang 11
1 Urgency of the topic
Innovation in decentralization of management in general, and in capital construction investment
(capital construction) in particular, is a major policy of the Party and State Fiscal decentralization in general
and decentralized management of capital construction investment in particular in order to improve the
efficiency of capital investment budget not only help generate relatively independent financial resources for
each level of government to actively fulfill their functions and duties, but also serve as incentive for the local
government and population actively exploit its full potential for development Practical experience in
management decentralization in many countries and Vietnam showed that decentralization of management
between central and local budgets, between the city and county, district, town, in a certain extent helped
promote strong dynamism, creativity, autonomy and self-responsibility of governments at all levels in the
local budget management
Like capital cities of developing countries in the world, improving efficiency of capital construction
investment in Hanoi in situation of state budget limitation is a huge challenge to be addressed In recent
years, the city of Hanoi has achieved certain results in decentralization, especially promoting the initiative
and creativity of the government at all levels However, the process of innovation in decentralization of
capital construction investment overall has yet to meet the urgent demands of life and it reveals many
shortcomings
In the process of development of market economy, the socio - economic activities are increasingly
diverse and complex Central government is not in position to manage all operations in a centralized way in a
rigid format, and problems that arise in each local government The general trend in other countries is to
increase decentralization to local authorities in government administration as well as in finance and
investment from the state budget
As for the problem mentioned above, it is required that a systematic study of decentralized
management of capital construction investment should be in place, in order to overcome the inadequacies
and limitations in the management and administration of the economy Therefore, the choice of dissertation
topic: "Improvement of decentralized management of capital construction investment with state budget of
Hanoi capital city up to 2020" is urgent, which has practical value for Hanoi and the country The thesis
studies the theory of decentralized management of capital construction investment using state budget;
assesses the status of decentralized management of capital construction investment budget funded by Hanoi
city period 2007-2014, from there, find the gaps and causes to propose perspectives and solutions to
complete the work of decentralized investment in capital construction in the city of Hanoi up to 2020
2 Research Objectives
Systematize fundamental theory of decentralized management of capital construction investment
using the local state budget
Analyze and assess the status of decentralized management of capital construction investment in
Hanoi to date Analyze and show clearly the advantages and shortcomings, the causes in this work through
the use of econometric models and the test with SPSS statistical software, from which point out the issues to
be studied in decentralized management of capital construction investment using the city budget
Propose systematic set of solutions for decentralization of capital construction investment
management using Hanoi city budget in the new period and the conditions for ensuring effective
2
3 Object and scope of research
3.1 Research subjects
The thesis focuses on the study of decentralized management of capital construction investment budget funded by city of Hanoi Therefore, the object of study is the situation of decentralized management
of capital construction investment of Hanoi for the districts, wards and communes in the city With the expansion of Hanoi since 2007, Hanoi now has 30 districts and towns in the city
3.2 Research scope
The thesis focuses on the contents of the decentralized management of capital construction investment using state budget in the area of Hanoi Specifically, the decentralized research investment in capital construction budget funded within Hanoi; Data of the study will be collected, aggregated by the author in 8 years (from 2007 to the end of 2014) to synthesize, evaluate, compare and analyze
3.3 Research period
To assess the status of decentralized management of capital construction investment budget centrally funded by Hanoi city, the thesis analyzes the situation deeply decentralized management of capital construction investment period after Hanoi expansion in 2007 (merger of Hanoi city and Ha Tay province) until the end of 2014 On that basis, find out the limitations, causes and propose comprehensive solution for decentralized management of capital construction investment funded by Hanoi city until 2020
4 Research methodology
In scientific research, especially in the economic sector, approaches can be divided into two general categories: quantitative research and qualitative research To get an overall, objective view in all aspects, in the process of research, the author has used the following approach: integrated analysis method of secondary materials, investigation method, statistics method, quantitative research method, comparative method, historical method, expert method and forecasting method In addition, the thesis also uses research results published domestically and abroad related to the topic, thesis
5 Structure of the thesis
Besides the introduction, conclusion and appendices, the thesis consists of 4 chapters:
Chapter 1: Overview of the situation of research and research methods Chapter 2: Rationale and practice of decentralized management of capital construction investment using state budget
Chapter 3: Status of decentralized management of capital construction investment budget funded by the city of Hanoi
Chapter 4: Proposed solutions of decentralized management of capital construction investment budget funded by Hanoi city up to 2020
6 New contributions of the thesis
The thesis focuses on the research and provide commentary on the rationale on decentralized management of capital construction investment using State budget, namely:
- The thesis has shown the content of decentralized management of capital construction investment
in local budget, including: Decentralization in planning; Decentralization in planning capital construction investment; Decentralization in the work distribution and assignment of capital construction investment plans; Decentralization of investment preparation, approval, evaluation and project investment decisions; Decentralization in the settlement, monitoring, inspection, monitoring investment projects
Trang 23
management of capital construction investment, including the impact of legal documents to the decentralized
management of capital construction investment and the impact of the defined hierarchical state budget as
well as organizations operating mechanism of the apparatus of the State to manage the decentralization
process of the local budget for capital construction investment
The new proposals drawn from the research findings:
Based on the research results of decentralized management of construction investment using State
budget, the thesis has proposed a framework for decentralized management of the State budget, as well as
legal mechanism, documents on investment decentralization, which dominate investment decisions,
expenditure estimates and budget allocation, which strongly impacts the work of decentralization of
management of capital construction investment using State budget Transparency of local government also
has impact on the investment policy in the local region, affecting the work of decentralized management of
capital construction investment Especially in quantitative methods, the thesis shows an overview and details
of the effectiveness of the use of funds in capital construction investment decentralization of the district level
and the city level in Hanoi
The thesis proposes 07 groups of solutions as follows: (1) Improving the legal framework for
decentralized management of capital construction investment in the overall state budget decentralization; (2)
Solution for decentralization in planning; (3) Decentralization in planning of capital construction investment
from Hanoi city budget; (4) Decentralization in the allocation and assignment of capital planning, capital
construction investment; (5) Decentralization of preparation, approval and evaluation of investment
decisions of capital construction projects; (6) Decentralization in the settlement, monitoring of investment
projects and construction projects (7) Solutions for consolidation of the project management committees as
well as training and retraining of staff for management of capital construction investment of the city
CHAPTER 1 OVERVIEW OF RESEARCH SITUATION AND METHODOLOGY
1.1 Overview of the study
In recent years, there have been a number of domestic and foreign researches on decentralization of
state management (state management) in the field of investment and public investment in Vietnam
However, so far no study has evaluated in a comprehensive manner and provided complete solutions for
decentralized management of capital construction investment from the budget of the city of Hanoi
Therefore, for readers to understand the work related to the thesis topic, the author has documented,
compared and highlighted the important content of each work at home and abroad on decentralization: in the
developing countries, in Vietnam, public investment management and policy mechanisms in investment
decentralization At the same time, the author also provided in-depth analysis of research projects related to
the content of the thesis, which are studied in depth for decentralization: preparation of investment,
construction investment planning, infrastructure services, capital construction investment management, and
effectiveness of decentralization of investment
In general, the work of decentralized management of capital construction investment using state
budget in Vietnam is currently one of the array of important research areas the authorities are very
concerned Although some research starting point is to consider situation of decentralized state management
4
to aspects of total decentralization of particular sector (planning, plans, joint investment, organizational structure ), others studied budget decentralization or decentralized state management in public investment
in Vietnam Although decentralization and decentralization of state management of investment have been much studied by authors to different angles and ranges, but no work has referred to the complete decentralization of investment management capital construction using state budget in Hanoi, in view of the entire synthesis process of decentralization of investment management (from decentralized investment in capital construction plan to monitoring and evaluating implementation process and subsequent decentralization capital construction investment, during and post-project at 03 government authority levels: city, district and town, ward and commune) Thus, this thesis is made to overcome the above-mentioned gaps and provide complete system solutions for decentralized management of capital construction investment from the municipal budget by 2020 in order to improve people's quality of life as well such as socio-economic development of the capital city of Hanoi
1.2 Research framework and research methods
1.2.1 Research framework:
Based on the knowledge and professional experience, the author sets out the questions on management, research and research framework These questions will be tested, evaluated in the process of implementing the study as follows:
Management questions:
- What is decentralized management of capital construction investment?
- How to make decentralized management of capital construction investment using state budget of Hanoi city up to 2020 highly efficient?
Research question:
- Why decentralize? What to decentralization for?
- What are impacts of decentralization of management of capital construction investment on socio-economic development in districts and towns of the city of Hanoi?
- Should the decentralization of management of capital construction investment be continued? Why?
Research Framework: Thesis has proposed a research framework including 04 chapters, each
chapter is divided into the contents mentioned on various aspects such as research methods, research content, results and main objectives to be achieved
- The method of data collection, synthesis and analysis of secondary data: collect, use the data of previous surveys or research projects that have been published in the media, choose and use results of the surveys related to the research topic
- Method of survey:
Survey scale: Conducted mostly through direct staff engaged in management of decentralized capital construction investment of 30 districts and towns in the city of Hanoi Total 400 questionnaires were issued, collected 300 votes, accounting for 75%, including 50 invalid votes collected and removed prior to data entry
Content of the survey form: Through detailed table of 20 questions from the allocation of project funds to all stages of the project implementation process, warranty, repair, settlement, and 27 questionnaires about the issues and problems, which decentralized management units for capital construction investment encountered Author gives the assessment using Likert scale After each question are the author questions,
Trang 35
assessment results through meta-analysis of secondary data and results obtained from quantitative research
method
Figure 1.1: The process of collecting and processing survey data
Source: Authors (2015)
1.2.2 Synthetic methods and statistical analysis
This method is used with Descriptive Statistics through SPSS software for statistical points, is
assessed by each content of each stage of decentralization of capital investment using state budget, such as
average points, lowest points (min), highest points (max) Statistical results help assess best and worst
managed instances, as basis for solutions to strengthen decentralization of management of capital
construction investment using the local government budget
1.2.3 Building model for study
Budget management model: The first model is based on the view that the state budget is the only and
unified source and unity, without acknowledging existence of the local independent; The second model is
START
Researching the Literature review and
Methodology
Creating the research content
Designing the questionaire Investigation in districts, towns, etc
Putting the data on the RSQ Form questionaires in the database by the designed tool
Collecting and analysing the data by Visual
Basic Macro tool in MS Excel 2013
Running the SPSS software and exporting the report of actual statistics
Checking the consonance between the methodology and the actual result
Conclusions and recommendations
END
6
unified state budget system
Model for evaluation of effectiveness of use through DEA envelope analysis: Model is founded by three scientists, Charnel, Cooper, Rhodes in 1978 (called CCR) According to CCR models, to estimate the
TE (technical efficiency), a set of linear equations is established and resolved for each DMU (Decision making unit) Specifically, to estimate TE for DMU, envelope analysis model sets data input with fixed scale
in order to create the equivalent form of the problem as follows:
We have: Min θ, λθ
With conditions -yi + Yλ ≥ 0 (1)
θ xi – Xλ ≥ 0, λ≥ 0,
Whereas: θ = Value of effectiveness of DMU being assessed,
i = 1 to N (number of DMU),
Y = volume of products created by DMU number i,
X = input volume used by DMU number i,
λ = duality variables
Here θ is a scalar and vector λ is an N x 1 level constants This format includes less binding than the form of particles (K + M <N + 1) Three values of θ obtained will be the efficiency point of the i-th DMU It will satisfy θ≤ 1, with a value of 1 only one point on the boundary and therefore an effective technical DMU However, in order to verify the above results, the author adds other models used by the three scientists Banker, Cooper Charnes developed in 1984 (referred to as BCC) BCC model refers to a number of other assumptions and building envelope analysis model assuming production efficiency changing of scale VRS (Variable Return to Scale) BCC model overcomes the drawbacks of model CCR in defining norms for subjects, whose the manufacturing process is heavily influenced by the size of the study BCC model is oriented to assess the effectiveness of DMUo (o = 1, , n) by solving linear programming (envelope form) as follows:
(BCCo) with conditions θBxo - Xλ≥ 0
Y λ≥ y0
Where θB is a non-linear λ = 1 (2)
λ≥0,
Banker, Charnes and Cooper (1984) has announced the model (2) which sets production capacity of
PB defined by:
PB = {(x, y) | ≥ Xλ x, y ≤ Yλ, eλ = 1, λ≥ 0},
Here X = (x j) ∈ Rm xn and Y = (yj) ∈ Rs datasets xn is given, λ∈ Rn and f is the row vector with all elements equal to 1 The model differs BCC from CCR model added only in the condition that we write is
eλ = 1, where e is a row vector with all elements equal 1 and λ is the column vector with all non-negative element Along with λj≥ 0 conditions, with all j, this condition imposes a convex condition for allowable ways for the combination of observations for n DMU
In addition, some methods are also useed by the author: expert method, comparative method, historical method, forecasting method, scientific inheritance method, systematic approach and research results and published at home and abroad related to the topic and thesis
Trang 47
RATIONALE AND PRACTICE OF DECENTRALZATION OF MANAGEMENT
OF CAPITAL CONSTRUTION INVESTMENT USING STATE BUDGET
2.1 Investment in capital construction using state budget
2.1.1 The concept of investment and infrastructure investment
Investment is the process of using coordinated resources within a defined period of time to achieve
results, or a set of objectives defined in certain of socio - economic conditions
Capital construction investment in the national economy is part of the investment and development,
is the entire costs to achieve the purpose of investment, including costs for survey, design, construction,
procurement, installation of equipment, facilities and other expenses recorded in the total budget estimate
2.1.2 The role of capital construction investment
Capital construction investment has impact on growth and economic development, creating material
and technical base of the economy, on the scientific and technological development of the country, economic
stability, creating jobs for people
2.1.3 Source of funding for capital construction investment using state budget
Source of funding for capital construction investment is one that is used for project investment
activities, which include the cost of survey, design and construction, procurement and installation of
equipment, facilities and other costs included in the total budget estimate
2.2 Essence of decentralization of capital construction investment using state budget
2.2.1 Essence of decentralization, authorization or deconcentration in economic decentralization
"Decentralization" in state management is a process, whereas superior state government allocates
part of their management duties, authorities to competent subordinates
“Deconcentration” is a form of separation of powers and responsibilities for representative decision
units of central government in the region This mode is the lowest form in the form of administrative
decentralization
"Devolution" is the highest form of administrative decentralization With this method, all the powers
of decision-making, funding and management of central government are assigned to independent subordinate
local government bodies
"Delegation" is entrusting by superior state government to subordinate authorities for specific tasks
under its jurisdiction, but the responsible person is the delegating person (at a higher level), but not executing
person (at a lower level)
Figure 2.1: Forms of decentralization
Source: Thai et al (2007)
Decentralization
Fiscal decentralizatio Administrative
decentralization
Economic decentralization
Deconcentration Delegation Devolution
8
budget
2.2.2.1 Concept: Decentralization of the management of capital construction investment using state
budget is the process where State government at higher levels assign part of management authorities to their subordinates so as ensure centralized and unified direction, as well as encourage democracy and autonomy of subordinates in carrying out management of capital construction investment using state budget
2.2.2.2 Objective: To assess decentralization of management of capital construction investment in
accordance with decentralized management functions in each specific tasks such as planning, scheduling, allocation, delivery planning and implementation of capital construction investment projects to improve the efficiency of state management in the field of capital construction investment, thereby enhancing the efficiency of capital investment, decentralized management of capital construction investment using state budget
2.2.3 Content of decentralization of management of capital construction investment using state budget
Content of decentralization can be presented in 2 ways:
The first way is to assess the nature of economic decentralization in the administrative perspective, fiscal, market or political hierarchy, namely: decentralization act is the transfer of responsibility for planning, managing and allocating resources from higher to lower levels, whereas fiscal decentralization is the central component of any decentralization measures; Market decentralization is a form of state transferring some functions from the public sector to the private sector; Political decentralization is to create a favorable environment for all people in the process of policy making
The second way is to assess decentralization of management of capital construction investment under the decentralized management functions by specific tasks such as planning, investment in capital construction planning, allocation and assignment of capital construction investment plan, implementation of investment projects and construction in the settlement, monitoring, inspection and supervision of capital construction projects In this thesis, the author mainly uses the second way because it suites the essence of decentralization of management of capital construction investment
Chart 2.2: Content and functions in decentralization of capital construction investment
Source: Authors (2015)
Planning Administrative
Budget decentralization
(Fiscal decentralization)
Local level (Cities)
Designing program
Allocating program
Implementing
Market decentralization
(Economic decentralization)
District
Political decentralization
Settlement, monitoring and inspection Town
Trang 59
construction investment using state budget
The most common criteria for division of investment management is to ensure the effective
management of the investment activities, shown in three basic elements as time, quality and cost; particularly
fast, timely and quality assurance at the request and with the lowest cost Specifically:
- Ensure the fastest decision
- Ensure unity in the decision-making and responsibility for the work
- Decision making units must be qualified with the most efficient in related activities within the
framework of general rules and policies
2.3 Factors affecting decentralization of management of capital construction investment at
local government levels
2.3.1 General provisions relating to the decentralization process
In decentralized state management of public investment: Definition of powers and responsibilities of
agencies, organizations and individuals competent in public investment activities
In fiscal decentralization: Each level of authority for budget expenditure is responsible for ensuring
that budget; budget assigned by one level should not be used by the other level tasks, except in special cases
In case a superior state management agencies authorize subordinates a task, they should allocate fund to
subordinates to perform that task
In the decentralization of management of capital construction investment: State minimizing direct
intervention into the investment decision, direction and implementation of investment projects delegated to
lower levels Higher level authorities delegate more to local authorities, whereas specific provisions for
capital construction investment projects using or not using state budget are set forth
In appraising construction investment projects: Provincial governments organize the evaluation of
projects funded by budget under their decision Other projects are appraised by the competent parties that
have decision power to make the investments
2.3.2 Provisions on decentralization of state budget
Those levels of government that have decision authority on estimate state budget revenue,
expenditure, and local budget allocations shall also be responsible for approval of budget, decision on
policies and measures to implement the budget, adjustment of budget estimates in case of necessity;
monitoring the implementation of the budget as approved by the People's Council; and determining the
classification of revenue sources and spending tasks for each budget level in the local government
2.3.3 Organizational structure and operation mechanism of the state management
State power is concentrated in the central level However, to exercise that power, the central state set
out territorial division into administrative units, establishing local government authority for each
administrative units Each level of government is authorized to decide on policies, measures and
socio-economic plans in accordance with specific provisions
2.4 The experience of decentralization of management of capital construction investment at
home and abroad
From the experience of the major cities in the country (Da Nang, Ho Chi Minh City) and of some
countries successful in implementing decentralization, such as Indonesia, Romania, Sweden, the North
American countries have been analyzed, drawn lessons for city of Hanoi in the decentralization process in
general, and decentralization of management of capital construction investment, in particular:
10
capital construction investment in particular are a common trend nowadays
Second, strict coherence between planning (in investment and development) and budgeting will
contribute to ensuring good implementation of the planned investment
Third, the budget allocation between levels should be tied closely to the tasks of each level Fourth, transferring the role of infrastructure development to the private sector is, and has been
successfully applied in many countries
Fifth, the role of social organizations, communities become increasingly important for the
management of capital construction investment
Sixth, decentralization of investment should be coupled with the right to take responsibility for
investment decisions; the culture of resignation should be reinforced - those who don't perform tasks assigned should resign
CHAPTER 3 STATUS OF DECENTRALIZATION OF MANAGEMENT IN CAPITAL CONSTRUCTION
INVESTMENT USING STATE BUDGET IN HANOI CITY
3.1 Overview of impact of socio-economic development on the decentralization of management
of investment
3.1.1 Overview of the capital city of Hanoi
Hanoi capital with the central geographic location of the Red River Delta, as the leader in economic development in the North, with large population and high population density of the country Hanoi is also the concentration of the diplomatic missions, international organizations and large the headquarters of the central government agencies That's a huge impact, both positive and negative to the management of construction investment in general and hierarchical management of capital construction investment in particular
3.1.2 The impact of socio-economic development on decentralization of management of capital construction investment in the period 2007-2014
Economy: The role of economic development of capital city has increasing contribution to the national
economy: In 2014 alone, accounting for only 7.7% of the population but Hanoi has contributed over 10% of GDP nationwide, 19% of budget revenues and 23% of the social capital of the country The economy of the capital city deserves the leading position and is the driving force of economic development in the North and the increasingly important role for the country's economy In 2014, GDP growth was 8.8% in Hanoi (the country is 6%), reaching $ 3,333/person, more than 2.77 times that in 2007 ($ 1,200/person) Capital city people's lives are constantly being improved and enhanced Thus, the average income of the population has also increased correspondingly
Social: In recent years, Hanoi is always interested in improving the quality of life for the city's
residents in all fields of social life and increasingly influential economic position, financing in both domestic and international Education and training has always been focused on investment, quality is maintained Continuous improvement and upgrading of health facilities, community health quality and people's health care increases The management of urban construction order was taken care of Rural infrastructure was paid attention in building new rural areas, that achieve important initial results, the welfare of rural areas clearly improved
Trang 6
11
(Unit: billion VND)
Government budget’s revenues Government budget’s expenditure Total raised capital
Figure 3.1 General data collection of Government budget’s indicators in the period of 2007-2014
Source: Data from Hanoi Statistical Yearbook (2014)
3.3 Situation of decentralization of management of capital construction investment using the
state budget in the period 2007-2014 in Hanoi
3.3.1 Overview of the situation capital construction investment in Hanoi
In the post-merger phase with Hanoi Ha Tay, Hanoi has made strong economic development, with
right socio-economic development orientation, with increase in services, industry and decrease in agriculture
Stable political situation, security and defense are reinforced and strengthened Foreign affairs and
development cooperation, international economic integration is extended Business investment plans were
more concerned and decentralization of management of capital construction investment is one of the main
factors boosted this development process Thanks to the socio-economic development, GDP/capita has
increased, state budget revenues also increased significantly and revenues allowed to remain in the local
government from central budget also increased It is an important condition to Hanoi promote decentralized
management of capital construction investment management However, there are still exist some issues in
Hanoi, that need improvement in good timing in order to overcome, such as efficiency remains low in capital
construction investment, construction investment was criticized for being scattered, wasted or lost
In the period 2007-2014, state budget accounted for 11.2% and 19.4% of the total investment budget
of Hanoi, the loans accounted for between 8% - 11.1%, the equity capital of SOE investment accounted for
between 5% and 7%, and capital mobilized from other sources accounted for between 0.5% and 3.5% Over
recent period, decentralized sources of capital construction investment increased steadily, being 715 billion
in 2007 to 2,510 billion in 2014, up more than 3 times higher than in 2007, and became an important
resource, that significantly alter the technical infrastructure of the capital city
Unit: Billion VND
Year
Index 2007 2008 2009 2010 2011 2012 2013 2014
1 Total capital
construction investment
of the city
6780 10.151 14.308 21.468 23.758 22.142 19.691 18.698
2 Total capital
construction investment
of districts, towns
715 1.321 1.845 2.362 2.570 3.194 2.693 2.510 Table 3.1 Decentralized investment in capital construction using state budget in Hanoi
Source: Compiled from data of the Department of Planning and Investment in Hanoi (2007-2014)
12
using state budget in Hanoi
The management of capital construction investment in general, and hierarchical management of capital construction investment in particular, is executed based on the legal documents issued by the State government However, one of the factors negatively affecting the efficiency of capital construction investment over time is the legal system on investment, that is incomplete and did not meet the practical requirements
The analysis of shortcomings of a number of laws and regulations related to the decentralized management of capital construction investment of the city above shows: In Vietnam, there is no uniform legal documents to stipulate the whole process of capital construction investment as the legal basis for the implementation and management of investment using state budget Currently, there are too many regulations related to investment activities contained in the legal documents, so there are gaps or overlap, thus making it difficult for reference and enforcement
3.3.3 Decentralization of management of capital construction investment using state budget in Hanoi
In the period 2007-2014, capital construction investment increased on average by 17%/year;
investment rate, especially the proportion of public investment is declining However, the decentralization of investment funds allocated for the construction of the districts, towns basically tends to increase gradually to
a total amount of 17.217 billion accounted for 10.5% - 16.2% of the total capital construction of the entire city, is illustrated by the chart 3.2
Unit: billion VND
Decentralization of investment funds allocated for the construction of the districts, towns Total capital construction of the entire city
Chart 3.2: Scale of decentralisation of capital construction investment from city and capital construction investment divide to districts, towns, communes (2007-2014)
Nguồn: Source: Compiled from data of the Department of Planning and Investment in Hanoi
On the decentralization of management in the planning: Upon approval of general planning, Hanoi
have expeditiously deployed large volume of plans Parallel to that, a number of detailed planning, urban design, planning and management regulation architecture has been deployed to serve urban management On the announcement and handover plan, the red line boundary after the approval, the agencies in charge of publicly announcing and handing over to the agencies and organizations concerned accordingly
Trang 713
Decentralization in planning have created a combination, integration and ease of documents of agreement on
the location and parameters of the project planning by the Department of Urban Planning and Architecture
However, there still exist some restrictions, that need to be addressed
On decentralization in planning capital construction investment: As a rule, the planning process
underwent a clear change, that has less top-down nature than before Hanoi is also moving towards
compliance with the principles in the spirit of the process of decentralization and public administration
reform Allocation of responsibilities for capital construction expenditures of each budget level is specified
for each level (cities, districts, communes), the details of each sectors have created favorable conditions for
the units in the building investment and development plans, formulation, appraisal and approval of the
investment policy, investment projects, identifying investment projects as decentralized investment
management and budget management However, construction work of medium and long term plans,
including a focus on the 5 year plan has not been paid adequate attention; in the process of planning,
participation and consultation between the agencies (horizontally) ramain very weak
Regarding management of allocation and assignment of capital construction investment plans:
Competence in decentralized allocation of capital construction investment, the provincial People's Council is
assigned discretion for subsequent decentralization to correspond the characteristics of each local
government Hanoi city implements decentralization under tasks of spending budget, ie tasks of the
municipal level, the task of district and commune level On the allocation of responsibilities for construction
investment expenditures from the budget, Hanoi has issued construction process and communicate the
economic development plans to authorities of 3 levels People Commitees at all levels are responsible for
their planning based on the decision of allocation of the annual plans of the city
However, the district level has not been authorized decentralization of expenditure on capital
construction, there for they do not actively engage in exploiting sources from their own areas and remain
dependent on the sources from the city; districts are trying to find many ways to source funding, create more
works, thus resulting in stretching capital investment and extending time; some projects use to 2 to 3 funds,
which caused many difficulties and complexities in the process of monitoring and adjusting the allocation
plan
Unit: billion VND
Table 3.2: Summary of decentralisation of capital construction investment in districts, towns,
communes (2007-2013)
Source: Compiled from data of the Department of Planning and Investment in Hanoi
No Sectors 2007 Year Year 2008 Year 2009 Year 2010 2011 Year Year 2012 2013 Year
Period
2007-2013
Total
(Districts, towns) 715 1,321 1,845 2,362 2,570 3,194 2,693 14,699
Old Ha Tay’s towns 38 454 646 965 1,100 1,198 1,158 5,558
14
construction projects: The comprehensive decentralization in capital construction investment projects has
created favorable conditions for ministries, branches to proactively execute projects The percentage of projects submitted of decentralized projects for the district increased year after year, which showed the initiative and active implementation of the investment plan has been significantly improved thanks to decentralization of the investment The rate of restricted bidding has fell down, the number and the total investment projects subject to district approval, appraisal and investment decisions have increased significantly
Investment projects address urgent issues of the local goverments timely However, the situation of decentralization in the management of investment and construction in Hanoi is not tied to income and expenditure budgets of each level, there are also hindrends from the state administrative bodies, corruption that reduces the effective management of investment capital In addition, the situation in procurement fraud
is becoming more sophisticated, the preparation of important investment projects last longer, the quality of evaluation and approval of design and estimate is limited
Decentralization of the settlement, the investment project supervision: Under the new budget procudures, the position and role of the People's Councils at all levels, particularly at provincial level was raised significantly, giving Hanoi city authorities greater power in the estimate and allocation of their budgets, to tap the potential of the area, which contributes to the socio-economic development The oversight
of investment has contributed to improvement of the mechanism and policies on investment and capital construction, thus make these provisions more in line with actual requirements for management in our country
However, there is duplication of regulations on the functions, tasks, lack of clear, well-defined rights and responsibilities between levels of the budget authorities; some capital construction projects in the operation has been damaged, degraded or can not put into use; settlement has been slow and inaccurate; monitoring mechanisms of capital construction investment remains weak and inadequate
3.3.4 Results and effectiveness of use of funds assigned from the state budget for capital construction investment of Hanoi
The thesis focuses on analyzing and evaluating the effectiveness of investment in capital construction with decentralized sources from 29 districts and towns of the city of Hanoi in the period from
2007 to 2013 For optimum results, the thesis uses CCR model, then collated by the BBC model
Table 3.3: Results of evaluation of efficiency of decentralization of capital investment (CCR)
Source: Results of using DEAsolve software (CCR model)
CCR model results (1978) showed that the average percentage of districts, towns using decentralized capital investment reached 81.3% efficiency, of which, there are 12 units (04 counties and 08 districts) reached effective use of capital construction investment (up to 100%); 06 units reached high efficiency,
Trang 815
decentralization are ineffective (from 29% -49%), illustrated by the chart 3.3
Chart 3.3 Effectiveness of use of decentralized investment capital (CCR)
Source: Source: Data thesis research
According to the researchers, besides the advantages of model CCR (1978), the use of DEA in the
study still face restrictions The biggest drawback of DEA is that it only allows researchers to compare the
effectiveness of the production units in the same template/master studies This means that the effectiveness
of a unit can not be compared with the efficiency of the units in the sample/other overall Therefore, to obtain
more accurate and objective results, research students will use a different model to test, reference to the
results of model CCR (1978), which is the model BCC (1984) BBC model results show that the average
efficiency of decentalization of capital investment by districts and towns is up to 95.2%, while the unit that
achieved the highest efficiency is 100% and lowest is 29.8%, illustrated by the chart 3.4
Chart 3.4 Effectiveness of use of decentralized capital investment (BBC)
Source: Research data of the thesis
Chart 3.4 Effectiveness of use of decentralized investment capital (BBC)
Source: Source: Data thesis research
Based on the analysis results from DEASolve software with CCR model, the BBC showed that the
majority of districts, towns used decentralized capital construction investment effectively in the past time
(25/29 units ), only 04 units used decentralized funds ineffectively
16
investment through descriptive statistics After primary data collection at agencies in capital construction investment management at all levels in the city of Hanoi, data were cleaned and analyzed with support of SPSS 18.0 software, the results show that (table 3.4):
The planning of constractions has always been done
Frequency Percent Valid
Percent
Cumulative Percent
Valid
implementing of contracts have been done legally
Frequency Percent Valid Percent Cumulative
Percent
Valid
Percent
Valid
Table 3.4: Frequency Analysis
Source: Result of using SPSS software
Trang 917
significantly enhanced, leading to to better progress and quality of works
Second, the investment policy of decentralization now in Hanoi is relatively complete, no more
problems, appropriate and consistent with the real practice
Third, although the quality of the planning work is guaranteed, but the interviewee reflected that the
city needs to continue to further improve in the near future to meet the requirements of development in the
direction of building a modern capital city
Fourth, public investment planning and capital allocation is increasingly innovated and taken seriously
at all levels in accordance with current regulations Results evaluated at 3.6 / 5 points
Fifth, work assignment, appraisal and approval of projects, Hanoi have been implemented relatively
well
Friday, synthesis results, decentralized implementation of capital construction investment projects according
to current regulations as well as the evaluation and allocation norms and criteria for investment in capital
construction funds decentralized from the city budget for county , districts and towns are still rated as low
Seventh, the lower level authorities request that the city make greater decentralization to lower levels
for supervistion of investment
Finally, survey respondents also frankly reflected that the authorities with decentralization power do
not pay attention to allocation of sufficient funds for capital construction investment and to the quality of
works put into use remains low
In summary, results from analysis from DEASolve software using CCR model, the BBC and the
results analyzed through descriptive statistical analysis from SPSS shows that the majority of the districts
and towns in the city of Hanoi use decentalized capital for construction investment with good results While
DEASolve software with CCR model, the BBC pointed out the details of each district, town that use
decentralized capital construction investment effectively or not? The rate of pass/fail? Namely how much?,
How effective or ineffective, the statistical analysis from SPSS software described again shows an overview
of the efficiency of use of assigned capital in different areas of management or in the process of
implementing a specific hierarchical assignment Although according to the overview or details, 2 results are
very similar This is an important basis to provide critical solutions, feasible to complete decentralization of
use of capital construction investment in Hanoi city budget in the near future
3.3 General assessment of the decentralization of management of capital construction
investment using state budget of Hanoi, period 2007-2014
3.3.1 Advantages:
First, decentralized management of capital construction investment capital use municipal budget has
enhanced the quality of life of people and contribute to promoting economic and social development,
especially in the districts and towns communes in Hanoi
Second, the decentralized management of capital construction investment initiative created for the
DP in the socio-economic development, to create conditions to improve the management of grassroots
cadres, reduce management burden for the State management agencies at the city level
Third, the mechanism of decentralization of capital construction investment has encouraged districts,
towns strive to increase revenue to invest resources for development expenditure
18
responsibility of the local budget authorization, enhancing the role, responsibility and real rights of elected bodies (People's Council at all levels) through the implementation the function of monitoring investments
Fifth, the support of the City through the decentralization plan investment in infrastructure and
support for the local government to create conditions for the completion of numerous missions, meaningful projects for local economic development
Sixth, from the results of decentralized management of capital construction investment, the quality of
life of the people has been increased significantly, and the responsibility of people on community supervision and responsibility to protect the public investment projects in the area were also raised
3.3.2 Disadvantages:
First, the development and promulgation of policies on decentralization of investment in recent
years in Hanoi remain fluctuated, incomplete and inconsistent
Second, there is no specialized legal documents, specifically provides for the decentralization of
investment management
Third, decentralized management of capital construction investment now almost mean handing over
all rights to the districts and towns, while the inspection, testing, monitoring remain as administrative formality
Fourth, decentralized form of investment is not really diverse (still mostly transfer of all rights to the
local governments) and decentralization is incommensurate, not matching the capacity (financial and human)
at local government levels
Fifth, fiscal discipline in the implementation of decentralized management of capital construction
investment is not really strict
Sixth, the work of designing and approval of projects has not generally focused on the feasibility of
resources, often beyond the capacity of the state budget of Hanoi
3.3.3 The cause of disadvantages:
First, the system of legal documents on construction investment and decentralized management of
capital construction investment are incomplete and does not comply with international standards
Secondly, the longer the delay in approving the general plan, many local government and branches
have no planning, or no high-quality planning, not correspond to reality and feasibility, not matching the strategic objectives and planning, lacking interest in the long-term factors, harm the environment, society, especially in the formulation, evaluation of planning
Thirdly, in the process of investment planning, there is not adequte participation and consultation of
the goverments in the region; consultations with and between the ministries and branches (both vertically and horizontally) to ensure inter geographical coherence, strengthening linkages and cooperation between the local governments
Fourthly, the determination of criteria and norms for allocation and assignment of decentralized
planning and investment from the city budget to the district level lack investigation, review and amendment accordingly with the task of actual annual expenditure
Fifth, the quality of preparation of investment is not high, many projects had to adjust the estimates
and the total investment many times due to unrealistic preparation of investment Sixth, the work of community supervision is very limited, the settlement and distribution of capital construction plans,
Trang 1019
for people's supervision, which leads to low quality and work progress
Seventh, the project management units are not efficient, there are too many management units under
the People Committee or other agencies
In summary, restrictions and limitation cause were specifically assessed by the author in each
content, one can state that the administrative discipline, the "heart" in the work executed by the managers,
owners of investment is important because if they are accountable and responsibile, and have no personal
interest, it will limit a lot of losses and fraud in investment as well as ensuring the quality of works and
investment efficiency
CHAPTER 4 SOME SOLUTIONS FOR IMPROVEMENET OF DECENTRALZATION OF MANAGEMENT OF
CAPITAL CONSTRUCTION INVESTMENT USING STATE BUDGET IN HANOI UP TO 2020
4.1 Context, trends, perspectives and orientation of continuing decentralization of
management of capital construction investment
4.1.1 Context, trends and perspectives on decentralization of management of capital construction
investment using state budget in Hanoi
Over the past years, the decentralization of management of capital construction investment has made
significant changes, however, the degree of decentralization of Vietnam is still low Therefore, decentralized
management of capital construction investment is a right trend right, that expands wider and deeper in the
investment management activities of each country
However, to what extent the authorization to each sector depends on the specific conditions of each
local government and specific field of decentralization Therefore, to determine the extent of decentralization
of investment suitable for local governments in Hanoi, three elements should be taken into account: capacity
in decentralization of capital construction investment of Hanoi local government authorities; ensurance that
all levels of government have sufficient resources to provide basic public services to its residents, and level
of poverty and inequalities between urban and rural districts, towns
Along with taking into account the specific factors mentioned above in the decentralized
management of capital construction investment, the process of decentralization of capital construction
investment in the coming period must also comply with the basic principles of decentralized management:
clear distribution of responsibilities for each budge level in terms of provision of public services at their
level, corresponding to the required quantity and quality of public services; financial resources associated
with the management responsibility of capital construction investment; responsibilities associated with
expenditure authority of local government with their powers to control and manage revenues and its
spending; management capacity of the government to ensure the implementing effective decentralization of
management tasks of capital construction investment; enhance accountability on the management of
government investment in capital construction to the people in the area
4.1.2 Orientation to strengthen decentralization of management of capital construction
investment using state budget in Hanoi
Based on specific elements and principles to strengthen decentralized management of capital
construction investment mentioned above, according to the author, the decentralization oriented investment
manager for local government in Hanoi capital construction in the coming period should focus on the
20
aims to build a system of decentralized management of capital construction investment from the city budget more comprehensive and independent of the municipal government; local government should be given higher autonomy in decision-making and management of decentralized funds allocated for capital construction investment projects in the area management level, expansion of the local budget autonomy in spending decisions, allocation and layout capital construction investment projects; increased autonomy to the district on nurturing revenues; innovation in process of allocating and assigning plans, settlement and monitoring of capital projects using construction investment decentralized budget; provide greater authority
to local governments; enhance transparency and accountability in decentralized management of capital construction investment at the local government level
4.2 Solutions to improve decentralization of management of capital construction investment using state budget in Hanoi
4.2.1 Completing the legal framework for decentralization of management of capital construction investment in the overall state budget decentralization:
Need to review, amend and promulgate legal documents related to investment and capital construction investment decentralization to ensure consistency, integrity according to international standards
in the management of capital construction investment activities; Need to improve the legal framework on decentralization and decentralization in the management of capital construction investment; Need to continue building programs, investment in capital construction plan medium and long term to ensure investment program associated with spending plan medium and long term, to ensure the continuity of the project and the balance between demand for investment and available resources
4.2.2 Completing the decentralization of planning management:
Improving the system of legal documents on construction planning, urban planning, construction investment management; In the state management of capital construction investment projects from the city budget to ensure compliance with the objectives of the strategy and planning of socio-economic conditions
of the city; Ensuring the compatibility of operational decentralization of investment management with strategic objectives and planning to help develop socio - economic development healthily, in right direction,
so that the economy develops in orderly, systematic, efficient and sustainable manner
In the formulation and evaluation of planning, the city needs to review and request the departments, districts to have roadmap, priority order and schedule and specific time to complete the work to ensure hight quality of the formulation and appraisal of planning; Principle of concretazation of general planning: Hanoi requires specific synthesis report to be submitted o ministries concerned, to exchange, discuss and agree on a solution; Improve the capacity, quality of staffs, who work on planning and promulgating policies to development planning to ensure alignment with the urgent tasks of the ministries and departments
4.2.3 Strengthening decentralization of planning in capital construction investment using state budget of Hanoi:
The immediate solution is to improve the quality of budget planning in the local government; in the process of planning in general and decentralization of capital construction investment in particular, it is necesssary to to create the conditions for each level of government to be proactive in planning their level, to avoid being dependent on the higher levels
The long-term solution is to terminate the intervention of the superior autorities in the establishment
and allocation of investment plans of lower level government, to strengthen the role and authority of the