Planning in the new public management model

Abstract model for MPPM the study purpose, the thesis raises several study objectives as followings: 1 1 Systematising the theoretical bases about the planning and the approaches to link

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UPPSALA UNIVERSITY (SWEDEN) &

UNIVERSITY OF ECONOMICS AND BUSINESS, VNUH MASTER PROGRAMME OF PUBLIC MANAGEMENT

Hoang Quang Tuan, Tran Thi Kim Phu &

Tran Hoang Hiep MPPM-Uppsala - Intake 1

PLANNING IN THE NEW PUBLIC

MANAGEMENT MODEL

Supervisor: Prof Dr SVEN-ERIK SVaRD

Local Supervisor: Dr HOANG THI THUY NGUYET

Abstract model for MPPM

Authors: Hoang Quang Tuan, Tran Thi Kim Phu, Iran Hoang Hiep

Supervisor: Pro./Dr Sven-Erik Svard; Dr Hoang Thi Thuy Nguyet

Date when the thesis is presented: May, 2011

The necessity: In Vietnam, planning is an important management tool for the State to

manage the socio-cconomy to achieve the State's objectives

In nature, the plan is a comprchcnvise math which contains many objectives within a scope of using some certain resources The phenomenon of resources disputes during the objective realisation process is often happened and the arrangement of priority among objectives is a very important base in the plan determination for each period Therefore how to link plans with resources and make the plans to become an efficient managament tool is always a difficult question for planners

The tendency of changing the traditional public administration apparatus into the New Public Management model presents a change in the management philosoph\ from

"governing" to "serving"; the State's role and functions arc accordingly changed from

"Row" into "Steer" towards an Economic - Efficient - Effective State This tendenc\ has also been formed in Vietnam

1 lowcver in practice, although it is considered as an important management tool for the State to manage the socio-economy the planning in Vietnam has exposed man> limits and not linked with resources and not really become a Government's efficient management tool

As the research proposal is bordered, the study group only anal> ses deeper on the point of: "Planning in the New Public Management Model needs to be linked with the State buduct resources" As the study group's opinion, although man> studies have acknowledue the planning's greatly important role, in order to realise that the planning is respected and reallv becomes a Government's efficient management tool, it must be ensured in term of resources for implementation while it can be seen that the most important resource within the GON emment's scope and control is the State budget

Aim/Purpose: the thesis's studv purj.ose is to develop a planning model in a tight linkage

uith the State buduet in Vietnam's instutional conditions and market econom> in order to make the planninu to become a Government's efikient management tool In order to achieve

Abstract model for MPPM

the study purpose, the thesis raises several study objectives as followings: (1) (1) Systematising the theoretical bases about the planning and the approaches to link planning with the State resource; (2) Selecting typical study case in the sector development planning

at MARD to analyse and assess the situation of linkage planning with the State resource; (3) Proposing the completed model of the sector planning at the macro management level towards the trend of linking with the State budgeting

Study's questions: In order to realise the purpose of this thesis a few questions will be

asked and answered The primary question which all other questions rest upon is:

How to link planning with the State budget resource?

There are a lot of different ways to answer this question This thesis will tr> to answer it by asking and answering two new questions, more specifically two of the main questions that

can be deduced from the proposals The two core questions are: (1) What conditions are

needed to link the planning with the State hudget?(2) Which causes have made the planning not link with the State budget?Thcsc questions are maybe the most central ones

to answer the primary question presented above and to achieve the thesis's objecti\cs

Method: (1) Analysing and synthcsise: analysing stypical studies to synlhesise and form

the thesis' theoretical framework This method is selected as:

- The trust in well-known, enthusiastic and experienced researchers who see the study

issue from different aspects and general they all base on the systhesis of practices to upgrade them into the philosophyies from which experiences are drawn and learnt and further applied into practice;

- Through many available studies, we can learn tnethods of scientific study and the approach to present a certain point of view

- When many studies see one issue in the satne tendency and if there is a conciousness with our group's thinking, this will provide a trust for us about our proposed study

(2) Comparison method: Comparing the theoiy framework with the real planning situation at MARD's in the period of 2001-2010 The method is chosen as:

- In our opinion, the theory should be linked with the pratices The practices are place

where test theoritical findings In the revert way, when studying practices, there will have futher fulfilled views in term of theory and revertly contribute into the theory Jramework

- The period of^ 2001-2010 was a transitional period from the central planning approach

in the centrally subsidied economy into the oriented planning one in the market economy with the socialist orientation

(3) Making of interviews and discussions with planning officers at MARD

It is surveys interviews and discussions to,find down new views, to test the self-thm^kin^

Abstract model for MPPM

wishes At the same time, through those it also strengthens out trust to continue the proposed study topic,

(4) Collecting the secondary data from Ministry of Planning and Investment, Ministry- of Finance and MARD's reports and summative reports publicised at the planning workshops/conferences

// is diversified data sources to help us think about the Vietnam's current planning situation,

the needed and satsifartory conditions to possibly link the planning with the State budget resource within the Vietnam's existing conditions as well as subjective and objective assessments from leaders and managers who have a role of affecting on the planning work

Results: (1) systematising the philosophy bases about the planning and approaches to

link with the State budget resouce

By analysing and synthesising available studies from both international and local, the theoretical bases on planning and approaches to link the planning with the State budget resource are systematised and formed the thesis's theorestical framework

(2) Analysing and assessing the real planning situation at MARD

Basing on the thesis's theoretical framework, we analysing and assessing the real planning situation at MARD on 3 aspects: (i) planning process: dO plan content: and (Hi) planning method

Finnally it can develop a lively and comprehensive picture about the existing situation of the linkage between the sector development planning and the State budget resource at MARD

(3) Proposing the completed model of the sector planning at the macro management level towards the trend of linking with the State budgeting

Bv analysing and assessing the real planning situation in the linkage with State budget at MARD as mentioned in the item 3 of thesis, and the comparisions with the theoretical framework have been developed in item 2 of the thesis, we have proposed the further complete the sector development planning at the macro management level towards the trend of linking with the State budget resource

The specific proposals include: (1) completion in term of instituions and apparatus to participate in the planning process; (2) development of models to further complete the planning work based on all 3 factors of(i) the planning process: (ii) the plan content and (Hi) the planning method including: the planning process model towards the trend oj linking with the State budget resource, the proposed model of relation among different types of plans, the State budger resource allocation and the approach to develop a monitoring arui evaluation framework of the plan implementation etc

Conclusions: In order to link the planning with the State budget resource, the plan must

be firstly strategic and results-focused: the plan preparation, implementation and

3

Abstract model for MPPM

monitoring and evaluation process must be open, transparent and mobilise related parties' participation; the plan implementation must be regularly monitored and evaluated through a results-based monitoring and evaluation system

The completion and renovation of the sector development plan in linkage with the resource is to renovate in term of the sector plan's techniques but first of all it should be

the renovation in the management thinking, legal institutions and the public sector's

management method to suit with the State role in the market economy Therefore, the planning renovation is required to link with the public reform process including the public finance managemen reform, decentralisation and develop the democratic in the execution management This is a fundamental foundation to complete the planning work inclduing the sector development plan On the contrary^ if the planning renovation is successful, it will general favorable conditions for efforts of reforming other fields in order to develop a sound, efficient and effective State administration foundation

Suggestions for future research: 4 factors needed to really make plans to become an

efficient management tool in the new public management model: plans (i) must be strategic, (ii) must be able to attract relevant parties' participation, (iii) must focus on results as well as make the prioritisation resources from the State resource in order to implement the priority solutions and (iv) must develop a results-based monitoring and evaluation system All the 4 above-cited factors must be tightK linked and not be indispenserable Each factor will be the tool to achieve the remaining 3 factors and the 4 factors are all tools to develop an efficient management one Therefore, if it is possible, the thesis will study deeper about the 3 remaining factors Beside that, for the further study factors, it shoud study deeper about the quantitative methods in order to calculate and link into a chain of objectives, activities, results and impacts within a plan

Contribution of the thesis: In the thesis's study process, it can access to various

available studies/researches, the time investment in term of analysis and synthesis to jorm the thesis's theoritical framework helps not only the group complete our study tasks but also change our awareness and thinking about an efficient and effective public administration Jbundotion Another important point, with the theoritical framework as developed by our group that can be applied to analyse different circumstances and aspects in the public sector towards the tendency of transitioning into a new public management model

Key words: New public management Planning, Resource, Results/Outcomes, Objective, Efficiency and Fffectiveness

TABLE OF CONTENT

1 INTRODUCTION 3 1.1 The necessity ^

1.2 The thesis's purpose A

1.3 The thesis's key study questions 4

1.4 The study's sope and object 4

1.5 Theoretical frame of reference 5

2 THEORETICAL FRAMEWORK -''^^^^^^""^^

2.1 Several key concepts g

2.1.1 Plan and planning g

2.1.2 Recourses and the State budget resource 9

2.2 The planning in the New Pubic Management model 10

2.2.1 The NPM model and the State role 10

2.2.2 The development process of the Planning approaches and the formulation of the

planning in the NPM model 11

2.3 Results-based management - a key approach to link the planning with resource 13

2.4 The results-based management orientating for the new approach to link the planning

with the State budgeting 15

2.5 The model of medium-term expenditure framework to help changed and developing

economies to form initial ideas about the results-based budgeting 17

2.6 The theoretical framework on analysis of the linkage between the planning and the

State budget resource 19

3 THE SECTOR PLANNING SITUATION IN THE LINKAGE WITH THE STATE

BUDGET AT MARD IN PERIOD OF 2001-2010 20

3.1 The Process 20

3.1.1 The planning process at MARD scope 20

3.1.2 The planning process at the Department scope 21

3.1.3 The budget allocation process 21

3.2 The Method 23 3.3 The Content 25 3.4 The pilot MTEF model 28

3.5 The summarv of assessment 29

4 PROPOSALS, CONCLUSIONS AND SUGGESTIONS FOR FURTHER RESARCH 31

4.1 Proposals 31 4.1.1 View on the sector development planning completion 31

4.1.2 Proposals of the completed models of the sector planning at the macro management

level towards the trend of linking with the State budgeting 32

4.1.2.1 In term of the institutions -^2

4.1.2.2 In term of the apparatus organisation 33

4.1.2.3 In term of the development planning process, content and method in the linkage

with the State budget resource ^^

4.2 Conclusions

4.3 Suggestions

5 REFERRENCE DOCUMENTS ^2

1 INTRODUCTION

l.I The necessity

The management's comprehension includes planning, organisation, control, coordination and checking ' This is a concrete brief about the management's functions

to ensure activities to be well and efficiently implemented in which the planning function covering 'forecast and planning' is considered as the most principle and needed one in the management course of action

Many arguments about the planning role in the market economy has been taken place

in both theory and practice while many countries in the world still highly respect benefits of the planning tool for the socio-economic development and actively build up 'Development Plans' ^ The change from the bureaucratic administration model into the NPM model has presented a great shift in the management philosophy from 'Governing' to 'Serving', and a transfer of the State's role and functions from "Row" to

"Steer" ^ When the State management function is changed, this will certainly lead to the adjustments to the planning tools in the new public management model in order to ensure the NPM model's objectives: (i) be strategic and results-based; (ii) ensure the accountability, (iii) creating a democratic, open, transparent mechanism and (iv) to promote the soiety's participation In nature, plans are an optimal problem with many objectives within a scope of having certain resources A phenomenon of having conflicts for resources during the objective implementation is \er\ popular and the reallocation of priority orders among objectives is a ver> important base for the plan development to each period "* Therefore, how to make planning link with certain resources and become an efficient management tool is a posing problem for planners The overall public administration reform of Vietnam's cross-through objective in the period of 2001 and 2010 was to improve the State management etTiciency and effectiveness through the improvement of public service quality delivered to people, to enhace the seft-decision right and accountabilit\ for agencies, organisations and individuals within the public operation apparatus All the reformative contens proved

to be fit with the NPM model's requirements It therefore could say thai ihc tendancy

of transfering (he traditional apparatus of public administration into the NPM model has been formed in Viet Nam However, although planning in practice is considered as

an important tool for the Stale management in the socio-economic ground but the Viet Nam's planning has exposed many di.scripcncicx limits and still not become an efficient and effective managcmenl tool

' Fa\o\ }\cr\ (\^)A9) .Idmmislrcilion imhislrielle CI gcnerale

From the above-cited analyses, deeper studies about the planning in the NPM model is very nessessary Within a limited study framework, the study group has tried best to intensively analyse the focal point that 'the Planning in the NPM model must be linked with the the State budgeting As at the view of the study group, although the great role of planning has been acknowledged by many researches and studies, in order

to turn the planning to be respected and really become one of the Government's

efficient management tools, the planning must be ensured by resources for realisation which the most important resource within the Government's scope and control is 'the State budget', itself

1.2 The thesis's purpose

The thesis's purpose is to build a model of planning in the linkage with the State budget resource in the Viet Nam's institutional and market economy conditions

To achieve the purpose of research, the thesis posed the following objectives: (1) Systematising the theoretical bases about the planning and the approaches to link planning with the State resource; (2) Selecting typical study case in the sector development planning at MARD to analyse and assess the situation of linkage planning with the State resource; (3) Proposing the completed model of the sector planning at the macro management level towards the trend of linking with the Slate budgeting

1.3 The thesis's key study questions

In order to realise the purpose of this thesis a few questions will be asked and

answered The primary question which all other questions rest upon is:

n How to link planning with the State budget resource?

There are a lot of different ways to answer this question This thesis will try to answer

it by asking and answering two new questions, more specifically two of the main

questions that can be deduced from the proposals The t^\^o core questions are:

o What conditions are needed to link the planning with the State budget?

o Which causes have made the planning not link with the State budget?

These questions are maybe the most central ones to answer the primary question

presented above and to aehie\ e the thesis's objectives

1.4 The study's sope and object

With the status of a management tool, the planning can he applied at dilTcrciit levels such as: strategies long-range(5 years)'annual national socio-economic de\elopnicnt planning, long-range/annual sector field de\elopmenl planning, long-range annual

local socio-economic development planning compan> planning etc However, the

thesis's study scope is framed within the sector planning work and the stud\ object is the agriculture sector development planning model at MARD in the transitional period

4

of 2006-2010 to meet the reformative demands on the public sector towards the NPM

model

Within the study framework, the sector planning work at MARD is selected to be the

thesis's object with the following reasons: (1) the agriculture sector is a sector containing failure factors of markets and fields where require to have the resources

allocation by planning, many needed factors to create attractiveness to investors and

one more additional factor is that in Vietnam, the agriculture and rural population present above 70% of the whole country's population and labor; (2) MARD was one of

the active and pioneer ministries to renovate the medium-term financial framework (MTFF) and medium-term expenditure framework (MTEF) in the 3 years of 2006,

2007 and 2008 In addition, MARD has been supported by SDC through the project

"Monitoring and Evaluation for the Management of the Agriculture and Rural Development" to help further renovate the sector planning

1.4 The study's methodology

The study methods applied in the thesis are: (1) Analysing and synthcsise: analysing stypical studies to synthcsise and form the thesis' theoretical framework; (2) Comparing the theory framework with the real planning situation at MARD's in the period of 2001-2010; (3) Making of interviews and discussions with planning officers

at MARD and (4) Collecting the secondary data from Ministry of Planning and Investment, Ministry of Finance and MARD's reports and summative reports publicised at the planning workshops/conferences

1.5 Theoretical frame of reference

There has been available many studies about the planning in the public sector in different social, economic and institutional contexts, espcially the planning role in the

market economy Among them, it should typically mention about: (1) studies about concept, characteristics and role of the planning including: ' (2) studies about the development history of the management models within the public sector where planning have considered as one of the most important tools and have presented specialities to distinguish the public sector's plans from the private sector's ones such as.^ It has specifically mentioned about the "borrowing" the stretergic planning tool from the private sector to apply into the public sector in order to improve the creativeness, efficiency and effectiveness and the rcxolution process of the strategic

' Stephen Robbin (2008) Mana^cnwnt, Prentice - Hall International; Ackoff R (1970), ^ <^-^l^'^J';^^

ConLtc / v ; , John W.ley and S o n USA; Alexandre H R (2005), W^ Piannui, I ^;^;;^^^^

planning in the public sector through ^\ (3) studies about the conditions to successfully

apply the planning in the public sector: issues about the linkage between planning at lower levels with the strategic plans at higher level ^ strong commitments from

leaders ^; the linkage between the budget and strategic plan '^; activities' results-based

management , the need of the society's participation etc

The synthesises, studies and assessments of the planning in Viet Nam have been collected by Ministry of Planning and Investment through many papers '^ as developed

by the sector's first-ranked experts as well as leaders at the Government of Viet Nam

All the studies seem to acknowledge that the concentrated planning well presented the focal role and efficient use of resources in the war time, however when the countr\ is

in peace, this model seems to be no longer suitable as it can not promote the

creativeness and activeness at the local level and also not ensure the efficient operation, limit the society's development and participation, especially bureaucratize

the Government's apparatus The above-mentioned collection also mentions about

challenges and demands on renovations in the Viet Nam's planning in order to satisfy the transitional process from the ordered to market economy The key tendencies in the

planning renovation process will be: (1) strategic, (2) linked with resources (3)

participatory and (4) concentrate on the social objectives

Although, there are many differences, the general charactersitic of the mentioned studies about the planning can be seen as: (1) Planning is a management tool to help organisations forecast and orientate the future and acti\el\ propose solutions and assumptions about market, social, economic and political environment as well as other affected factors in order to achieve the objectives in future as expected, (2) the strategic planning is understood as a movement process where continuously happens while always adjusted to adapt with the organisation's internal and external changes to ensure the organisation's stability and development towards the objectives set, (3) the development process of the planning approaches is linked with the

above-management science development oi which the 'long-range' planning approach is

suitable with the bureaucratic adminstration model while the NPM model requires to apply the strategic planning tools The strategic planning application process is a learning and non-slop perfection process by various and specific planning approaches

' AckofT, R (1970), A Concept of Corporate Planning John Wiley and Sons, USA; Steiner G (1979), Strategic

Planning-H'hat Every Manager Mu.st Know: Bryson J (1995), Strategic Planning for Public and Nonprofit

Organizations: A Guide to Strengthening and Sustaining Organizational Achievement; Marx T (1990), Strategic Planning in Public AJfairs, Long Range Planning

** Stephen Robbin (2008), Management, Prentice - Mall Inteniaiional,

*' Minl/bcrg 11,(1994), The Rise and ball o/Strategic Planning

'*' Mint/berg 11.(1994), The Ri.^e and Fall o/Strategic Planning

" Vin/ant D & Vin/ant J (1996) Strategy and Organizational Capacity

'^ Mclntyrc-Mills (2003), Participatory Planning: Drawing on C West Churchman S thinking when making

Public policy

'' Ministr> of iManning and investment (2008), Discussions about the I ietnum planning works m the renovation

period

(4) a biggest difference about the planning between the private sector and the public one is the difference of the stakeholders' objectives to participate in the planning preparation, objects beared with the planning's affects and the planning's scope and affecting range and (5) Acknowledgement of the strategic planning's great benefit in improving the management efficiency is to achieve the objective set, make savings of resources, attract participations, enhance the accountability, strengthen commitments

to pursue the objectives and then improve the mutual understanding and trust beUveen the Government and people

When it is mentioned about the planning in linkage with resources in the public sector, most of the studies concentrate on the State budget According to S Salvatore & T Daniel , the State budget is a mirror to reflect the financial situation of the socio-economic development selections and the biggest limit of the traditional budgeting is is not linked with the Government's basic development objectives and the public service dcliver's results In order to well implement the State role, besides inany other factors, through the planning tools and policies, the State needs: (i) reasonably select and prepare enough resources in the economy (ii) quickly and efficiently allocate resources This is

a sharp demonstration in studies about the necessity of linking the budget allocation with the strategic plan The State budget's allocation approach in the traditional administration was inainly implemented towards the inputs-based management trend concentrated on the financial obey and no link between the State's basic development objectives and the public service delivery's results

In order to effectively and efficiently improve the budget ultilisation, many OECD countries have studied and synthesized about the budget process to link the resource allocation with the planning The key principles have been provided: (1) fiscal discipline (expenditure in financial resources): (2) strategically prioritising expenditure for programs/projects (creating a linkage airiong policy formulation, planning and budgeting) (3) based on the activity efficiency (related to the activity results of all resources) and (4) increasing the self-control of the budget using agencies

The planning approach of the medium-term expenditure tramework has proposed towards the trend of linking policies, plans and budget within a medium-term framework (a normal period of 3 years and rolling), allocating public resources for strategic priorities, simultancouslx ensuring the general fiscal principle - Viet Nam implemented in pilot this approach in 2006, 2007 and 2008 at 6 ministries and 2 provinces '^\

2 THEORETICAL FRAMEWORK

2.1 Several key concepts

2.1.1 Plan and planning

In some document, "Plan" terminology is understood by two meanings: activities to

prepare plan (refered herewith to be "Planning") and plan is the first step's specific result in the process of planning activities (steps for the plan preparation) The plan presents objectives, results as well as challenges and solutions to well implement activities in future "Planning'' term within the thesis's study scope is seen as the first meaning In general, the planning is hold by many scholars as (1) including the identification of purpose or objectives of the organisation's activities; developing an overall strategy to achieve these objectives; building up a system of specific plans to interweave and coordinate activities , (2) a continuous process of pointing out the needed objectives to be achieved in future; selecting and deciding various approaches

in efficiently mobilising and ultilising the existing resources towards the objective realisation in future , (3) a process of collecting the action decision in luture and

using the needed tools to achieve the objectives set ^ and (4) a process of

supplementing for the information database to serve for decision-making (presenting the future impacts from current chains implementation acti\itics and impacts on the

current activities to achieve various objectives in future) ^

At different angles, all the above authors have the same view: Planning is a process of future fomiulation, forecast chains of intentional interventions by subjects in objects in

order to archieve organisation's objectives and implement those chains of

interventions; the planning process includes three steps (1) working out a plan, with a specific task of identifying objectives and criterias for future and poiting out the system of solutions to obtain the such objectives; (2) implementing plan, coverings process of organisation and coordination of acti\ities among participations, utilisations

of policies and solutions in order to best exploit, dc\elopc mobilise and use available resources to obtain the plan^s objectives and (3) mornitoring inspecting, evaluating and reporting the plan implementation

Regarding to the Vietnam's legal definition "The development plan is to

systematically identify activities to lead the socio-economic development following the objectives and criteria set in a certain period A plan will include criteria, methods, mechanisms and policies to ituplcmcnt the objectives set in the plan period'' " In the

overall point of view, the national economy will have different plan t>pcs such as the

" Ngo Thang L(?i (2009), Development planning manual - Publisher: L 'niversify of National Economics

'" Stephen Robbin, (2008), Manaizement Prentice - Hal! Inlernaiional p 187

'" Alexandre I- R (2005) Why planning vs \farkets A An Oxymoron: A.sking The Right Question, p.3

^ l-lsevier (l'>71) i entures m Policy Scienes p 106

^' Janlsch C (l^>69) Perspectives of planning, p 29

" Govcmnicnt of Vi?t Nam, Decree No NO :0()6 ND-CP

8

socio-economic development plan at the national level as prepared on the basic of the national socio-economic development strategy within a period of 10 years, the sector/field and region development planning and the country's long-term development

programs; the sector development plan: by following the orientations from the

development plan and strategy at the national level, the sector development plan will

be developed by each sector based on the sector's own development potentials, simultaneously to some extends, the sector plan will estimate the sector's development resources, calculate the objective targets towards the highest efficient trend and maximize use the development resources

In the view of the economic management, some Viet Nam researchers release that the

planning concept need to be understood with the meaning of covering all the Staters

intentional interventions in national economy in order to achieve the objective set

Under this view of point, the planning nature completely depends on the State role in the socio-economic base The differences of State's methodical and level interventions

in the economy in each country is are not not only from models or theories applied or followed but also from specialties of that country's economy Therefore, in order to identify the study issues as well as propose solutions/recommendations, it should carefully consider the specialties of the transitional economy and the State role in that transitional process

2.1.2 Recourses and the State budget resource

It is understood in a very general way that resources are all available sources such as natural resource, labor force, amiy force or physical materials as provided and accumulated by people ^^ that a nation can mobilise them to meet the development demands of the country's politics, economics and society Resources can be classified

by different criteria however it possibly covers 3 main traditional resources of: (1) human resource includes labor, intellectual strength, scientific and technological power, management talents; (2) material resource covers land, natural resources, materials, goods and capability of producing the social products and (3) financial resource is the whole process of providing finance, financial resource allocation, capital ultilisation and circulation presented in form of value

In Vietnam, Planning is one of the important tools o[ macro-economic management of

(he State to achieve sustainable growth and ensure the goal-oriented economic development Currentl) the State has comprehensi\ e planned all aspects of

socio-socio-economic development, but on the other hand, the State only controled and

directly allocated a portion of social resources in which, mainly is State budget to implement these plans With regard to the resources in the private sector State can only indirectly impact on the allocation lU'resources through public policies and

investment decisions The question is how the State can effectively use State budget to

encourage and lead all other resources to achieve aims outlined by the State 77?^/ why,

the thesis 5 study object and scope only mentions about the State budget resource (the State 5 expenditures and receipts are regulated by the State's authorised agencies and implemented within one year in order to ensure the implementation of the State 's functions and responsibilities ^^J,

1.2 The planning in the New Pubic Management model

2.2 L The NPM model and the State role

Although there are doubts and arguments about the NPM model's advantage, within the thesis's scope, only the NPM model's advantages pointed out by many researches against the bureaucracy adminstration model will be discussed That it is the NPM model's efficient requirements is to achieve objectives and make savings from available resources From this basic, it will have creative applications in practices to improve the public sector's management quality

Ihe NPM model contains the following central theories: focusing on the management but not on the policies; concentrating on assessing the operation result and effienciency in stead of obeying the orders and procedures: turning and di\iding the civil servant into related agencies based on the principle of "payments made by consumers"; applying mechanisms similar to those of markets and contracting with external resources to encourage the competitiveness; reducing the cost price; and a maner of management, besides the popular factor, stressing on the output, outcome, objectives, impacts, limited-time contracts, encouragement methods by cash and the freedom in the management work

The State role in the NPM model, according to David Osborne and Ted Gaebler: I) steer, not row (or as Mario Cuomo put it, "it is not government's obligation to pro\ ide services, but to see that they're provided"), the Government should concentrates its physical and spiritual resources to de\elop strategies, long-range planning, planning and market-oriented goverment; 2) empower communities to soI\ e their own problems rather than simply deliver services; 3) encourage compctiticMi rather than monopolies: 4) be driven by missions, rather than rules; 5) be results-oriented by funding outcomes rather ihan inputs: 6) meet the needs of the customer, not the bureaucracy: 7)

concentrate on earning money rather than spending it: 8) in\cst in pre\enting problems rather than curing crises; ^)) decentralize authorit\: and 10) sol\e problems by

inllucncina market forces rather than creating public programs ^

^* World Rank (2000) What is MTEF.'

' ' World Bank (2000) What is MTEF?

-" David Osborne & led (Jaebler (1992), Reinventing Government

10

In general, the NPM model requires the State to have a more serious attitude in

efficiently using the rare resources and bear that people must be best and efficiently

served The efficient Government is a Government who has a strategic visions to

fiexibly adapt with changes from the organisation's inside and outside environment, is responsible for accountability, creates a democratic, open and transparent machenism, and attract the entire society's particpation

2.2.2 The development process of the Planning approaches and the formulation of the planning in the NPM model

The researchers point out that, the development history of the management models and the change in the State role and responsibilifies has formed planning methods with different contents and approaches as below:

The central planning is linked with the ordered economy (central economy) in which

the State role and responsibilities are directly to manage the socio-economic activities

The central planning was appeared and firstly found in the Old Soviet Union It later

became a general approach to apply for every countr> within the socialism system The central planning presents the three fundamental characteristics: (i) The Government directly manages economic activities, (ii) the plan is obeyed and (iii) the

plan's main method is the subsidy and contribution mechanism ^ With such

characteristics, the central plan has an advantage of consistently use the available resources towards the country's general objective implementation It is therefore especially suitable with the economy in the war period However, this approach exposed so many shortages that many countries were bound to withdraw from this ordered economy model to turn in the market economy or the joint economy

The orientated planning: is linked with the market economy and mixed econom\ The

orientated planning was bom after the second world war in the developed capitalism countries It was used by the State as a tool to interfere into the market economy to recover and limit the markets' defects It was much referred to in the \ears between the 60's - a beginning period to strengthen and enlarge the Slate of nu^dern welfare and the State kept the role of operation orientated and attracted the society's contributions '

At the beginning, the most popular planning method is the 'long-range' planning with the general characteristics that plan provides forecasts about the future with assumptions of stable markets and socio-economic-political environment and then U is the development planning method in which it is thought b> leaders at the upper level that results of the coming year must be higher than the current year's one On this basic, discussions would take place and the plan's targets are set higher for the lower levels to follow The planning in this period concentrated on identifying specific

objectives and turning them into the budget plan or action programs The orientated planning is suitable with the traditional administration model's nature in which

planners intend to follow a content to make decisions and actions though conditions

around are changeable or future forecasts are no longer correct

The strategic planning: is linked with the New Public Management model The State

is focusing on the strategic development responsibilities, orientating and idemifying objectives and having results-based management It has appeared since the years of 80's and 90's when the world economy was facing with strong, continuous and quick changes caused by the world integration and competitiveness, consequently the "long-

term" planning is no longer suitable Management officers in the public sector start to

find out the ways to apply various flexible and sharp management tools from the private sector in order to enhance the creativeness, efficiency and effectiveness in the management The strategic planning application from the private sector into the public sector have experienced with many specific application methods The first method is the corporate strategic planning ' However, the method is in nature still in the traditional administration model's range Therefore, the corporate strategic planning, itself does not make contributions to the policy formulation, the corporate strategic plan seems to be purely an administrative management tool for the fund policy implementation process which is often decided by politicians and still faces with difficulties to fiexibly adapt with the increasingly fierce environment of international competitiveness, diversified social values and uncerlainness in the socio-politic environment Then, it has seen that the strategic planning method as de\eloped by J Bryson ^^ was proposed to efficiently address challenges on the resource rareness in the uncertain environment Ihis method focused on analysing the organisation's environment in order to make strategic forecasts about the organisation and answer the three following questions: what should the organisation do why does the organisation

do that and how does the organisation do? However, this inethod was not satisfactorily interested in the socio-economic de\elopment issues and the plan implementation aspects In order to address these limits, in the 90's a strategic planning method as built up by H Ansoff'\ H Mint/berg '"* upgrades the strategic planning method into the strategic management with a large approach in account of the organisation's inner factors Ihe strategic management concentrates on identifying the organisation's immediate and long-term ohjeclives, maintaining a relationship between the organisation with the surrounding environment to both create conditions for the organisation to realise the objectives set and fit with the i)rganisation's capacity and

" Ackoff, R (1970), A Concept of Corporate Planning John Wiley and Sons, USA; Steiner G (1979), Strategic

Planning-What Every Manager Must Know

' ' Bryson J (199S) Strategic Planning for Public and Nonprofit Organizations: A Guide to Strengthening and

Sustaining (hganizational Achievement

" AnsoO HI (1984) Implanting Strategic Management, Prentice - Hall l:ngles\vood ClifTs, N.J;

^* Minl/berg H (1994), The Rise and Fail o/Strategic Planning

enable the organisation to flexibly adapt with the surrounding environment's changing requirements However, up to now, the strategic planning methods still concentrate mainly on planning for a public organisation but not provide conditions to interwea\ e the socio-economic development into the planning work It has waited until by early

2000 when the participatory strategic planning methods have appeared These methods encourage the communities' participation in the planning ^^ the above-cited issue is addressed

Big difference about the Strategic planning between in the private sector and in the public sector has been pointed out by researches that: (1) the public sector's objective

is to best deliver the public services to the society without targeting about interests and competitive costs, (2) planners in the public sector seem to work in a less strategic self-control environment than that for the private sector's colleagues, (3) law-makers and government leaders hold a great powder and control in most decisions on resources Due to the control from many political decisions, the public sector's planning work seem to have less strategic selections and more difficult to adapt with changes than the one of the private sector and(4) the public sector has to mention about various public issues with many interwoven benefits As a result, the prioritisation in the public sector's strategic planning seems to be an exchange and compromise among benefits'^'

It can be seen that at whatever scope or forms, a plan will contain the following key contents of objectives, solutions and implementation method, lor the development plans, inost of solutions require to have resources and the most needed resource is the financial resource If there is a lack of resources, solutions perhaps lose their feasibility right at the elaboration process and leading to the failure of the built-up plan Therefore, the planning's comprehension includes the development plan and resource plan as well as a linkage between the two plans which has become a ke\ principle in the planning theory

2.3 Results-based management - a key approach to link the planning with

resource

fhe results-based management is a focal change from the input and activities-based into results-based in the management process, fhis is also the strategic planning's nature in the NPM model In the results-based management approach, the most important issue is how to assess the implementation lc\cl of plans, policies and to turn these assessments into results to be bases for resource allocation In order to have bases for analysis and assessnicnt, a logic model about the plan's result chains is dcNcloped fhe result chains is synthesised from \arious results achieved in a specific

time framework and linked with among one another by logic causality (Figure 1)

Figure 1: The logic model of ^result chains^ in the strategic planning

Programs/projects Resources implemented as in

Specific objectives Goal

Economical Outputs in comparison with irtputs

(efflciencv)

Effectiveness

> ^ im

Results against the long-term objectives

d direct obiectives (sometimes for input/

(effectiveness)

Source: Updated from

Inputs are different kinds of resources mobilised in the plan cycle In order to measure

the activity results, the resources used in practice are paid attention to while the estimated resources are not interested in Input manamgement is to control and check

whether input purchases follow mechanisms and policies regulated or not Activities

can be understood as specific solutions to implement the plans short-term objectives Management by process or by activities will concentrate on controling issues of work

implementation process, procedures, plan implementation process etc Outputs are

products and services delivered/completed in the reporting cycle The outpu management will pay attention to the existence of direct products to be timely

committed and meet the expected quality Outcomes are events, movements or

changes in the conditions, behaviours and attitutes to present improvement in the plan's objective achievement This outcome management will be interested in the plan^s specific objectives in relation to whether real improvements about the socio-econommic development can be achieved or not whether "customers of the pulic

services are satisfied with services as provided by outputs or not Impacts are

long-term results thanks to the above outcome achievement

The results/outcomes-based management is the change from the focus on inputs/activities to implement the plan into result levels (output, outcome and impact) that the plan aims to achieve However, it is noted that the results-based management does not completely reject the inputs/activities control to turn into the output and result control but it only reduce the focus on inputs/activities in order to create an open and flexible environemnt for agencies to implement plan So these agencies can find down

" VQ Cuong, (2007) Renovations in the planning in the integration process

their best plan implementation At the same time, the management agencies at the higher levels will concentrate on the monioring and evaluation of the plan implementation in order to answer the question: whether the plan can achieve its expected results or not - an issue is often ignored by the input management approach

In the results chain model, the efficiency focuses on the comparison between outputs and resources used while the effectiveness aims at comparing between output and the plan's goal and specific objective achievement

Application of the results-based management approach has a great meaning, especially

in the improvement of the accountability: by help planning agencies focus on the plan's long-term and medium-term objectives and attract many stakeholders' participation The requirement of improving the accountability about results achieved forces planners to highly pay attention to the available resources and the negotiation about resources will become a content to link responsibilities as assigned in the plan within the discussion process In order to ensure the built plan to meet the results-based management's requirements, it requires to ensure the following conditions: (1) plan must be strategic, clearly make hierarchies among objective levels and prove the causality among these levels, (2) the plan implementation solutions/activities must be

in detail and specific to certify their contribution to the plan's output as well as to possibly estimate the implementation cost for each solution/aclivity (3) an indicator system should be developed to measure the achievement of different result levels to monitor and evaluate the plan implementation, then based on thai to improve the accountability of every parties, (4) functions and responsibilities of each level in the planning must be clearly identified: the upper planning levels are only interested in the outcome indicators, the development of activities/solutions and monitoring and evaluation indicators for the activity/solution implementation process will be assigned

to each relevant plan implementation agency *'

// can say that, the results-based managetnent has a great use in improving the

efficiency and effectiveness in the public sector management This method requires the planning to be strategic (results-focused) and especially it is the key approach to link plan with resources

2.4 The results-based management orientating for the new approach to link the planning with the wState budgeting

In term t)f principles, 3 key principles of a good public expenditure management system are developed by S Pradhan and I: Campos **", specifically: (i) respecting the overall fiscal discipline (or fixing a concrete budget limit lor the agencies who are

allocated with the State budget), (ii) efficiently allocating the financial resource by the strategic priority objectives within the available resource and (iii) improving the efficiency of public goods/services delivery (using the resources allocated in the most economical way)

The results-based budget plan management also requires focusing on the efficiency and effectiveness of the budget expenditures and the budgeting is considered as a vital

issue of a good public expenditure management ^K The results-based budgeting process includes the following steps: (1) developing the medium-term socioe-conomic

development plan/strategy in order to provide key orientations, results and

expectations needed to be achieved from the Government's activities, create a general framework to implement the State's policies at agencies/organisations In general, the medium-term socio-economic development plan/Strategy contents concentrate on the inacro economic targets such as the whole country's and/or local's economic growth; development of sectors and regions: infiation issues, unemployment etc (2) based on the medium-term socio-economic development plan/strategy, policy-formulators must

specify into the annual socio-economic development plans, to identify the strategic

objectives to suit with each year's movements in practice The annual socio-economic

development plans present prorities in the socio-economc development, are bases to form policies and make decisions on the budget expenditures in the discussion to

prepare the annual budget estimate, (3) developing monitoring and evaluation

indicators for the State policy results in order to measure and assess the strategic

objective implementation in the State's macro economic development policies, (4)

developing a macro financial framework and budget ceiling limit allocated to identify

the country's financial source satisfaction capacity in each period for realising the selected objectives and strategies within the overall budget provision capacity framework When the budget ceiling is identified for ministries, sectors and locals, an issue of" combining between the budget for regular expenditure and budget for investment expenditure must tightly ensure towards the long-term eJficiency of the budget ultilisation The results-based budgeting plan is developed from the lowest budget used agencies - herewith called as ^'base agencies", then will be synthesised upwards by ministry, sector and local In the result-based budgeting management machenism, the budget estimate can be considered as an elahi^ration of an economic contract between two parties of the State and budget used agency who will commit to provide outputs as determined while the State commits to "bu\" such outputs with the total payment value identified (the budget amount will be allocated for agency The results-based budgeting at the base agencies will experience the following steps of: identifving the agency's strategy and objectives, expected output results and indicators

to measure the output results, (5) based on the strategic bases of the

*' Ministry of Planning and investment (2008), Discussions about the \ ietnam planning works in the renovation

period

16

national/seetor/local's socio-economic development objectives and based on agencies' functions and responsibilites, the agencies' operation objectives and strategy will be determined in order to correctly select priority orders, then to choose the prioritised objectives and (6) In the results-based budgeting management mechanism, an

important issue is to identify agencies's output results, measurement indicators to

evaluate output results as developed by the agencies

Therefore, the agencies' results-based budget plan has become a set of documents to describe the agencies' operation objectives in the budget cycle, the expected output results are specifically presented in term of quality and quantity, agencies' cost and completion period At this step, the agencies' budget estimates are also developed in accordance with the operation strategy to achieve the output as committed So the agencies' operation plan is tightly linked with the operation budget The selection of agencies' priority objectives in the case that the total cost demand on activities is still

in the budget ceiling allocated, proves the budget estimate process at agencies can ensure the two important principles in the public expenditure management Besides that, agencies have engines to most economically use the budget ceiling allocated as the more economical in producing the committed outputs, the more resource saving the agencies have to implement newly proposed outputs Ihen, the third principle of the operation efficiency will be also respected

It can be seen now that the results-based budgeting is a new budgeting approach to suit with principles of a good public expenditure management as well as to ensure a tight linkage between the development plan and the budget plan through every stages of the budget estimate process from the macro level to the base agency level It will sa\ in another way that the results-based budgeting is an important to link the plan with the State budget resources The allocation criteria of the investment and dcxelopment fund source is divided by 5 groups of population; qualification: de\elopment: area and administration agencies at the district level: and supplementary criteria The above-mentioned criteria does not refiect about one more important factor of programs/projects' investment efficiency There still remain un-transparcnt criteria by the objects' thinking and orders,

2.5 The model of medium-term expenditure framework to help changed and developing economies to form initial ideas about the results-based budgeting Ihe Medium-Term l:xpenditurc 1 ramcuork ( M l l ' f ) is a tranparenl budget estimate and planning process in which the (iovcrnment and the ccntrarsector officers will design the public resource allocation level for the plan policy's prioritised strategic objcclixcs while sitll ensure the o\erall fiscal principle This process has two main

rategic priorites by those targets ^^ Obviously, through this definition, the MTEF ecome an efficient linkage tool among the plans/policies' priority objectives withe

le medium-term bubget resource allocation process The MTEF development and ITEF are the initial steps towards the activities-based budgeting After many nplementation years with various results, the ''MTEF" method has presented its reeminence and necessity The successful level of the "MTEF", according experts' ssessments, depends on the model selection and implementation method in which the ^aders' willingness play a decisive role

1 his research, S Schiavo-Campo sysnthesises and classifies different models of MTEF" into the 2 main model types: (1) the overall forecast model of''MTEF" and 2) the detail ''MTEF" for the expenditure program It is noted that in the two inodels, equirements about a reliable analysis content and macro economic forecast is a ceded condition The overall forecast model of MTEF is simply understood to orecast the expenditure structure from the top down way at the overall level for great ectors, fields and ministries without exceeding the total receipt sources forecasted synthesised from bottom up way by each tarriffs and other receipt sources) in ceordance with the macro economic variables forecasted Although it is not the

esource allocation method by the plan's priorities, the overall forecast model of

ATEF still provides a certain orientation about the existing resources in future that

.ectors can allocate theinself and it is also a signal for the private sector to make its lecision This model should be soon implemented in ever\' countries in a soonest period to initially control the Govermenl's expenditure

The detail model of MTEF by the expenditure program will deeply forecast in details tor the coming years by activities or fields and programs of each ministry/sector The specialities of this model is to distinguish between the basic expenditures and the new expenditures and combine into a discussion process from bottom-up and top-down This model is a base towards the results-based budgeting

The experiences have proved that the successful implementation of the "forecast

M riT'" is the initial step towards the budgeting model by expenditure program, then the results-based budgeting Only when after the good forecast and definition about the expenditure program, should it be linked among objectives with output result targets and the monitoring and evaluation mcthiul Many countries ha\c beem ambitious to implement output budgeting right at the begining period, results are always shown to

be failed Ihe leaders' willingness and demands on comprehensively improving the capacity, especially demand on the macro economic forecast and analysis component will be decisive conditions to ensure the success of the MTEF application

In comparison with the results-based budgeting process, the MTEF process has many similar points However, its biggest limit against the results-based budgeting is not

'^ World liank (2000) What is MTFF?

18

able to link the expenditure allocation with indicators to measure results Therefore, the MTEF is considered as an important preparation step towards the results-based budgeting Within the context of transitioning economy as Vi?t Nam at present,

conditions about institutions, organisation and techniques etc have not enable to turn

into the results-based budgeting, the MTEF implementation is a prudent and feasible step

2.6, The theoretical framework on analysis of the linkage between the planning and the State budget resource

The development planning in linkage with the financial capacity will be analysed at

the three following aspects: (ij the planning process, (ii) contents of the plan, and (iii)

the methods of planning

In order to possibly create a real linkage between the development planning and the State budgeting, it must ensure the four following conditions: (i) the planning must be strategic, (ii) the planning process must be able to attract relevant parties' participation, (iii) it should make priorities for resources from the State resource in order to implement the priority solutions and (iv) it should build a results-based monitoring and evaluation system

However, in order to answer the question whether sectors can be able to satisfy these requirements or not, it depends on the four enough conditions: (i) leaders' thinking and commitment to purse renovations, (ii) a favorable institutional environment, (iii) an open, transparent and reliable mechanism of information coordination and sharing among one another and (iv) a qualified, enthusiastic and high responsible (for work) officer workforce and a deserved mechanism applied in accordance with the work results The integrated theory framework to analyse the planning in linkage with the budget resources are briefed as below (Figure 2):

The sector development planning

in linkage with the Slate Budget resources

PROCESS+CONTENT+METHODS

3 THE SECTOR PLANNING SITUATION IN THE LINKAGE WITH THE STATE BUDGET AT MARD IN PERIOD OF 2001-2010

The linkage level betwen the sector development plan and resources will be analysed

in accordance with the referrence critera as presented in the theory framework as presented at the item 2.6

3.1 The Process

3 L L The planning process at MARD scope

Annually, after the Prime Minister's instruction and guide from MPI on preparing the socio-economic development plan are issued, MARD minister will sign to issue a MARD's instruction on the agriculture and rural development sector plan preparation for the coming year in which clearly states about the purpose, requirements, contents and steps of preparing the agriculture and rural development plan

Based on the MARD's guides, in accordance with the functions and fields assigned, agencies will identify their own objectives, tasks and implementation solutions; simultaneously develop a list of investment projects as approved by MARD and allocate their investment plan, fhe provincial DARDs arc responsible for preparing the agriculture sector development plan at the provincial level and submit their plans to MARD - specifically Department of Planning to synthcsise

Departments which have professional management functions in relation to many other agencies, they are required to super\ase the fields allocated with the State budget and responsible for preparing the related subsector/field (specific profession) plans

Based on the plans as developed by different provincial DARDs and other agencies and specific subsector/field plans as prepared by the professional Departments, the

Departmcnl oi^ Planning will prepare the sector plan draft and send it to related

Departments, related agencies for comments before it is completed and submitted to MARD leaders Ihc sector plan draft, after revisions in accordance with the MARD leaders' coomcnts, will become the agriculture sector development plan and be sent to relevant to relevant ministries and sectors tor comments

Ihc Department o\^ Planning is rcpsonsiblc for collecting comments from the

ministries/sector in order to report to MARD Minister for comments and final completion, fhe scactor plan, after revisions and completion as the above-cited process, will be submitcd to MARD Minister for appro\al fhis approved sector-wide plan will be submitted to the Ciovcmmcnt office, MPI and MOF in early August of

m cry year

20

3 L2 The planning process at the Department scope

Each department within MARD will prepare their own annual plan based on the sector and MARD's objectives and targets, departments' functions and the budget estimate allocated for the departments within the year

After reeiept of MARD's guide on the plan preparafion, head of the planning division will send the guide and report sample for beneath agencies and provincial DARDs and other related agencies All the above agencies will prepare their own plan and send to MARD departments to synthcsise into the MARD Departments' annual plan and the final plans are sent to the Department of Planning on early July of every year

3.1.3 The budget allocation process

In early November, the National Congress will have meetings to authorise the budget, then Minister of Planning and Investment, and Ministry of Finance will infonn the budget allocated to all ministries and provinces The decision on assigning the development plan targets is considered as a concretely confidential document Based

on the fund targets allocated for MARD, Department of Planning and Department of Finance in coordination with agencies to allocate for MARD\s consideration and approval and submit to Ministry of Planning and Investment, and Ministry of Finance

There are no choices to take account for the other financial sources besides the State budget, threfore in order to sucessfully implement, there requires contrutions in term

of work-force and resources from every socio-economic parties For example, the State administration agencies are allowed to keep a part from the cost and fee recicpt source to compensate for the expenditure, the rcmaing part will be contruted to the State budget Even though, this part is still not satsificd the demand and the State budget's full principle The keeping percentrage determination is not consistent leading

to the cases that some administration agencies can not have enough resource to compesatc for the expenditure but they have still to spend for other responsibilities This situation causes uncquality among agencies

According to the State budget law, MOF and MPI are jointly managing the annual

budget expenditure The general framework of financial plan and regular budget

estimate is prepared by MOF while MPI is responsible for preparing the public investment and budget investment program including the expenditure for investment and development and sponsorship projects (as indicated at the Conditions 21 22 under the budget law, version 2002) This application leads to a weak coordination between the investment and development expenditure and the regular one even results

in a serious imbalance between these two expenditures

I he existing State budget system includes: the Central budget and local budget The interweaving regulation of the State budget system is in principle to ensure the consistency and compliance of different budget levels However, due lo this interweaving characteristic, the budget process becomes complicated and the budget plan preparation and the bugget final account period is longer while the period allowed for each lc\cl to complete their assingmcnts is \cr\ limited especially each Icxcl's responsibilites is not clearly determined Ihc lower lc\cls' sclf-acti\cncss and self-

2010 Besides that, the Government also issue the allocation principles, criteria and norms of the investment and development fund from the State budget in the period from 2007 - 2010 for ministries, sectors and local as indicated at the Decision No 60/2010/QD-TTg from the Prime Minister dated on 30 September 2010 In short, the investment fund is orginated from the State budget while the regular expenditure is allocated in accordance with the cost norm system identified The combination between these two fund sources initially helps the ministry, sector, local to identify a part of the total resource as allocated from the State budget for their activities and enables to better link between the plan and the State budget resource

However, the State budget allocation norms are not accounted for factors of price slippage, mechenism and policy changes etc These norms are no longer practical as they are much lower than the pracfical requirements, especially the economic development conditions of various local are also different, therefore there is a big gap between the local where have economic potential and the local where are in difficult conditions

The databases serving for the plan and budget forecast is not fulfiled objective, consequently there is not enough information for prioritisation in planning The relationship in information sharing and coordination among MARD agencies as well local one in the plan preparation process is presented in discussions, preparation and allocation of the budget estimate; data is provided for the planning and financial agencies to developed the subsector development plans, then based on those, it will oritentate a suitable financial budget allocation However, in practice, this relationship has been proved to be undisciplined and contained many discripencies

The planning and budgeting is often ordered from the upper to lower levels The provincial DARDs and sub-department at the local levels' self-control right is limited The planning and budgeting expenditures proves to be obeyed It means that the lower levels under the provincial level often consider the targets assigned by the upper level

as a task forced to be completed With such planning method, it can not mention about the plan strategics as each level can not be self-control and active in fomiulating activities by result chains in accordance with their local conditions and contexts

The current monitoring and evaluation is implemented in accordance with the Decree

N0.99/2OO6/ND-CP dated on 15 December 2006 on checking strategies, policies, plans and planning implementation Ihc Decree No 113/2009/ND-CP dated on 15

December 2009 is on the invcstnicnt monitoring and c\ aluation The violations found

in the checking, monitoring and evaluation process is processed by the Decree No 53/2007/ND-CP regulating on the administration violation fine in the in\cstmcnt and plan fields However, the contents of these documents arc strongl) qualitative and difficult to specificall} identify \iolations to process when it still lacks of a scientific

24

plan management process, a specific monitoring and evaluation indicator set and seems to be infeasible in the practical management

The reporting mechanism and table sample system have not consistenly built up yet There are many reporting requirements from the upper levels while the requirements are urgent (not providing enough time) and serve for variou purposes Therefore officers at agencies must spend a lot time to synthcsise and prepare reports although most of the reports are overlapped in term of their contents

3.3 The Content

The two main types of plan including the 5 year and annual plan are often prepared by MARD Contents of these plans are presented as follows: (i) Assessment of the previous 5 year plan implementation; (ii) Key objectives, forecast and orientation of the agriculture and rural development in the next planning cycle; (iii) Main solutions, and (iv) Appendices

The linkage among the strategy, overall plan, the 5 year plan and annual plan is not tight The development plan is not stable for the whole sector There is no assessment

of the plan implementation efficiency and etTcctiveness It lacks a comparison between the results achieved and the fund sources invested in order to analyse the output efficiency against the cost, the contribution level of each output types to the sector's general development results Due to the double management characteristic of the Viet Nam administration system, the sector management agencies at the local level have to both obey the management by terriority (from the Provincial People's Committee at the same level) and the steering in term of profession from the sector management agencies at the higher level (Ministry level) Ihcrcfore it requires to clarify the relationship between the socio-economic development plan and the sector development plan in order to determine the management function by the terriority and

by sector on the local territory

The weakness and causality analysis is considered to be very important for the strategic planning process but it is less mentioned and does not have enough information for analysis

Bases for the plan preparation often reh- on resources such as land, geographic

conditions, and labor workforce Other factors of suppl\ and demand, international

markets, and consumers' interests are not highly paid attention Ihc lack of a medium budget plan in linkage with the 5 year plan cycle is a great discrepancy as the annual

budget plan docs not have enough bases for commitment of meeting the estimated

resource demand as presented in the 5 year socio-economic development plan Ihc

resources (inputs), outputs, results and impacts, therefore it does not enable to assess the implementation of policies' efficiency and effectiveness as indicated in the plan Consequently, it reduces the linkage between the resources and the plan objectives

As the log-frame approach is not applied in the planning, it is very difficult to monitor and evaluate the plan implementation and also difficult to compare the results achieved with the objectives set in the plan On the other hand, the 5 year 2006-2010 log-frame

is a log-frame revised from the standard log-frame Therefore, it is quite difficult to assess whether this log-frame could refiect the 5 year 2006-2010 plan's contents such

as the objectives and activities or not ?

Resources for the plan implementation still mainly depend on the State budget resource It proves that the market economy thinking has not kept a position in the planning preparation The plan does not present any logic relationship among the development objectives/targets and the forecast the resource provision capacity from every economic sectors The parties' participation in the resource provision capacity forecast is not available, consequently, the scientific bases of this balance sheet become less ever reliable

In the allocation table of the annual investment budget as approved by the National Congress, the budget provided is a half of the proposed budget, but the sector's development targets and plan implementation methods set in the sector development plan draft (as prepared in July and August) are not correspondingly adjusted In the general practices, revisions on the socio-economic development plan draft (b\ the provinces) from the submission to the approval period, only the evaluation data on the reporting year and data related to budgets will be revised while the plan year's targets and especially the plan implementation solutions are concretely not changed This shows that there is no real linkage between the sector development plan and the investment plan for development 1 hcrcfore, in practice, the investment fund plan is less interested than the sector dc\ elopmcnt plan

For the Slate budget source, the MPI and MOF's guides on the annual estimate development, the ceiling budgets are not idnetified so the estimate has not linked with the budget resource The budget reeiept estimate mainly relies on the prc\ ious acurrent year in multiplying with a certain increase percentage Therefore, it lacks of bases and not suitable with the practical receipt capacity On the other hand, when the budget ceilings are not assigned and the cases of the plan fund advancement tor the plan year from this year to the next year, but the advancement fund is not withdrawn

consequently the fiscal principle implementation is not tight c\cn in some cases, the

budget resource forecasts is no longer in cfTcctivencss

26

Table 1 An example about 2010 investment fund plan for the fisheries subsector:

2010 plan (revised)

161,870 3/2010-12/2010

2011 fund advancement

139,400 6/2010

2011 fund

advancement (revised)

132,400 9/2010-12/2010

2010 fund disbursement

161.14 31/12/2010

Advanced fund disbursed

125.900 31/12/2010

(Source : Ministry of Agriculture and Rural Development)

Through the above table, it can be seen that the fund demand registered is 608 bil VND while the fund rpovided is about 167 bil VND (an equivalence with 28% of the demand)-it means that the investment list contains a high demand but not a high portion in the investment list is approved, resulting in a "request-approvar* machenism However, the fund is disbursed to be 161.67 bil VND (gaining 97%)-expenditures from other sources or expenditures lasted into the coming years The distance between the pilot medium-term ceiling of 83 bil VND represents for 13.8% against the fund demand and equals wtith 50% against the actual fund provided It is interpreted that the forecast is weak and not practical

Debt in the agriculture and rural development's capital construction arisen includes debt in plans (MARD is provided with advanced fund from MOF to implement urgent works and/or push up progress to complete and put into opreation while the ad\ anced fund is not deducted from the coming year's advanced fund) and debt out of plans (debts to pay for implementation contractors who construct works)

Table 2 An example of the 2007 agriculture and rural development sector's debt

130

130

Forecast of the

2010 debt arisen and payment

130

130

t lacks of criteria for prioritising the resources Firstly, it originates from the case vhere there is no strategic priority in the plan objectives It leads to the situation that

he projects are approved by sensibility and/or lack of transparencies

"he annual regular expenditure plan The Department of Finance is responsible for

stimating the regular expenditure in which a part of the expenditure fund is used for

he purposes of the investment work's repair and maintenance However, although the nvestment and development plans includes a list of investment projects, the nature of und estimated for these projects are only investment cost The operation and naintenance cost are not included It can realise that the investment fund estimate is lOt comprehensive and the cost for investment should be separated from the regular xpenditures

\djustments of the State budget estimate: In the plan year, the State budget estimate

riust be adjusted for 3-4 times Many supplements and adjustments of the State budget stimate in the year probably limit the activeness in the agencies* budget regulation, [le openness, transparency and accountability on the budget It increasingly weakens

he un-tight relationship between the sector development and the budget plan

i.4 The pilot MTEF model

•lARD is one of the 6 pilot ministries to prepare the medium-term expenditure plan in

;006, 2007 and 2008 The contents, process and legislation of the MTI:F is annually

;uidcd by MOF through the issue of a circular

Vith the meditum-term strategic vision, the budget estimate in accordance with the nedium-term expenditure framework (MTEF) is developed by the 3 year rolling )rinciple with the basic of having forecasts about the expenditure structure and level The first year of the MTEF is seen as a year without changes in policies and as base to )reparc the budget estimate for the 3 coming years

several discrepancies in the pilot KfTEF are shown as below:

- fhe Icsgislativcness of the pilot M1 EF is not high

- MOF MIM is late in assigning the ceilings of the regular expenditure and nvestment expenditure to MARD therctbre it has happened the case the the official Man of the new year is assigned, then the ceiling budgets are re-assigned accordingly

\ s a result, the ultilisation value of the medium-term cxpcndirc plan is not efficient in

he first \car within (he c\clc

- Ihc budget ceiling structure for the regular expenditure and investment :xpcnditurc with the existing budget ceiling assingcd for the agriculture sector at ucsent is not satified the budget expenditure demands at MARD as well as other uovinccs, espcciall) the regular expenditure ceiling at the provincial lc\cl is much nore lower than the demand in practice:

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3.5 The summary of assessment

Discussions about the discrepancies in the linkage between the plan with the budget resource at the workshop on the sector plan work at MARD, some comments were that

Flow 1: it is impossible to take the investment fund source for the sector development from the State budget source

The investment fund source for production development and investment in the Agriculture comes from various sources and through many fund channels: State budget (includes the Goverment budget and ODA) through the MARD, State budget source through other related ministries, the central budget source through local; fund from the local budget source and the sector development and investment fund from enterprises and production households With such diversified fund sources and fund channels, MARD is able to precisely know data on the budget fund sources through MARD

(As indicated in the Report No 8143/BKH-KTNN on the investment in agriculture, rural and farmers)

Flow 2: there is no linkage between resources and objectives

MARD is responsible for prepare the annual plan, fhe objectives and solutions are identified for the whole sector while the budget ceiling and fund allocation to implement activities of investment and regular expenditure are a part of MARD's budget This is a substantial difTcrcnce between MARD's annual sector plan and the ones of other countries' Ministry of Agriculture

(Interview extracts provided by the expert group from Institute of Agriculture and Rural Development Policies and Strategies)

Summary on the basic limits when cross-checking with the theor> framework is mentioned in the item 2 is presented in the following Table 3

4 PROPOSALS, CONCLUSIONS AND SUGGESTIONS FOR FURTHER RESARCH

4.1 Proposals

4.LL View on the sector development planning completion

fhe planning renovation is a continuous process of both implementing in pilot and gradually complete the planning It should link renovations in the whole system with the ones for each component and each subsector within the whole sector

The planning renovation can be implemented right at the current institutional conditions and continutes to complete and adapt the planning renovation with the development stages of the aministrative, economic and political system It is also a remarkable break-through of the administration reform to which the sector development plan will become a tool to clearly and transparently coordinate and regulate responisbilites among parties, link the parties's responsibilites with results and strengthen the civil society's supervision on the State agencies' operation The linkage between the development plan and the resource plan is originated from the demand on changing from the traditional public administration model into the new public management one

The MTEF model provides an important methodology in identifying the strategic objectives The MTEF is a tool to link the plan's prioritised objectives with the budget resource allocation process in a medium-term period The MTEF development is the very first reformative step towards the results-based budgeting to fit with the administration reform route in Viet Nam

From the above view, by analysing and assessing the real planning situation in the linkage with State budget at MARD as mentioned in the item 3, and the comparisions with the theoretical framework have been developed in item 2 the proposals of further complete the sector development planning at the macro management level towards the trend of linking with the State budget resource have been given in the next item

Table 4 Summary of the relation between proposals and

the theoretical frameworks Theory Framework in

the item 2

Proposals (models, solutions)

/ THE NECESSARY CONDITIONS

socio-+ the level of objectives among: strategy, long-range planning, medium-term planning, annual planning and programes

- Scientific approach in resource allocation in accordance with the priority plan objectives and solutions:

+ linking the plan objectives with the public expenditure + the financial resource allocation criteria

- Orders to prioritise the State budget source when the capacity can not meet the demand

- Strengthening the participation and discussion among sectors, levels, enterprise communities and associations when preparing plan through the proposal on the planning process renovation

- Constructing the plan targets on the basic of balancing the strategic objectives and resources ensured through the proposal

- Review and approxe the law on decentralising in the plan management

- Developing regulations and consistent templates for the infomiation provision and sharing through the proposal

- Identity' critical capabilities including forecasting, annalysis, estimation and prioritization for training and recruiting staff

to participate in the planning apparatus

- Develop criteria for recuitment evaluation and inovative treatment regime for civil ser\ant

The proposal ofinodcls and solution system shall be detailed in item 4.1.2 below:

4.1.2 Proposals of the completed models of the sector planning at the macro management level towards the trend of linking with the State budgeting

4.1.2.1 In ferni of fhe institutions

In order to strengthen the aeeountability and transparency in the public budget

ultilisation of some authorised agencies, it should urgent renovate the law on linance the law on olTicials and civil servants; review and appro\e the law on people right of

32

information provision, the law on the society organisation etc in the administrative, economic and political reform route in the period of 2011-2020 This is an important bases to take supports from every parties and put higher presssure on the political leaders in the comitment of making changes and creating real development for the State management agencies

4.1.2.2 In term of the apparatus organisation

- In consideration and adjustment of the MPI, and MOF's functions, responsibilities and organisation structure in order to have only one focal management model and link the public expendures with the country's general development orientation This model will generate a favorable implementation of the MTEF in Viet Nam:

+ better linkage between the plan objectives in accordance with the country's general development orientation with the public expenditure

+ better connection between the macro economic analysis and forecast, and the fiscal, plan and budget decision analysis and forecast

- It should organise a ministry model of multiple sectors/fields with the consistent State management on the sectors/fields in order to reduce number of the focal management points The fundamental function of the ministries and agencies at the ministry level is to manage at the macro level, stregnthen the policy fonnulation and law, planning and plan development function, and implement the inspection and supervision; but it should make further decentralisation to local levels It will help reduce the focal points of the sector plan development and the strategic objective identification will be clearer and contribute to remove the partial and overlap in the plan and policy development as well as the resource allocation This is suitable with the rcouce prioritisation principle as requested by the medium-term expenditure framework model

- Identify critical capabilities including forecasting, annalysis, estimation and prioritization for training and recruiting staff to participate in the planning apparatus

- Develop criteria for recuitment, evaluation and inovative treatment regime for civil ser\ ant

4.1.2.3 In term of the development planning process, content and tnethod in the

linkage with the State budget resource

a) Process

The time for the budget estimate development is required to be reasonably allocated and evenly spread through every nionth within the \ car and to have clear regulations to force relevant agencies to obey in the whole process from the preparation to development and to the decision-making on the budget plan

b) The Content

MARD is responsible for the sector-wide plan preparation The development objectives set in the plan will be the sector-wide objectives The implementation methods to achieve the sector plan objectives will the one for every entity in the whole sector including the Government sector (ministries, provincial departments), enterprises, households and international sector etc MARD is also responsible for the annual plan in which the objective and implementation methods are identified for

the whole sector Resources to implement the sector development plans are also

identified to be total social resource but the budget ceiling and fund allocation for the investment activities implementation and regular expenditure are MARD's budget allocated

The content of the socio-economic development plan should present the plan to generally regulate every socio-economic activity on the local territory This plan not only aims at assigning responsibilities and managing the sector activities but also addresses the inter-sector issues on the local territory Every sector at the local will prepare their own sector development plan lo implement the sector plan responsibilities as assigned by the local's socio-economic development plan, simultaneously follow the instructions in term of profession and techniques from the sector development plan at the upper level (ministry level) Based on the ceiling budget as allocated from the two sources of the local budget and central budget to support lor the local by the sectors' programs Each sector will identify- action programs and specifically prioritised projects Flowever the budget is often given to develop plans for the major projects as identified and assigned by the socio-economic development plan to the sectors Besides that, these agencies must implement the management responsibilities with the budget source as annually provided from the local budget source

The content of the 5 year development plan should present the goal/objectives,

strategic prority, action programs and kcN' projects as dc\elopcd from the strategic vision

fhe content of t/7c^ annual plan should present the specific action plan, concentrating

on regulating the 5 year plan's action programs and major projects with the principle of depending on the annual resource balance capacity So it can be seen that the regular administration function and the project/program nuinagcmcnt one are clearly distinguished (having the resource allocation priority principle for the regular activities first before reviewing on the action programs or major projects - that is similar to the priori!)' principle in the medium-term expenditure framework model)

Ihc relationship between the annual socio-economic dc\clopmcnt and ihc annual

Figure 4.2 Proposal of lingking among development plannings The local 5 year socio-

The local annual year socio - economic

development planning

Assess the planning implementation

in the reporting

Forecast the planning yearns opportunities and challenges

^ Identify annual objectives for

I action programs and prioritised

I objective

k

Planning responsibilities for sector

Sector dev planning prepared by

a responsible provincial DARD

the previous

planning

Implementation

Forecast 5 year planning*^

of reporting year

impiemenianun

I of reporting J

• ^'''^ i"

Forecast the g planning yearns