DIRECTIVE

ON THE ELABORATION OF THE 2003 SOCIO-ECONOMIC DEVELOPMENT PLAN AND STATE BUDGET ESTIMATES

In furtherance of the National Assembly’s Resolution on the 2002 State budget tasks and estimates, the Government has promulgated many mechanisms and policies and concentrated its efforts on directing the removal of difficulties in production and business activities, overcoming heavy drought consequences and burning social problems, accelerating the attainment of targets of the 2002 socio-economic development plan.

However, the national economy is facing many acute difficulties. With a view to successfully fulfilling the 2002 State budget tasks and estimates, the Prime Minister requests leaders of the ministries, central-level agencies, provinces and centrally-run cities to raise their sense of responsibility and direct the good implementation of the National Assembly’s resolutions as well as the 2002 socio-economic development solutions already mapped out in the Government’s resolutions, especially Resolution No.05/2002/NQ-CP of April 24, 2002 on a number of measures for implementation of the 2002 socio-economic plan.

The task of elaborating the 2003 socio-economic development plan and State budget estimates shall be carried out with the following principal requirements and contents:

I. PRINCIPAL CONTENTS OF THE 2003 PLAN

1. Major objectives and tasks of the 2003 socio-economic development plan:

The year 2003 is the third year of implementing the Resolutions of the IXth National Party Congress and the National Assembly’s Resolution No.55/2001/QH10 on the 2001-2005 five-year plan. This is the year of important significance for achievement of the targets already set forth in the 2001-2005 five-year plan.

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The 2003 socio-economic development plan should focus on the following major tasks:

1. Striving to attain a higher economic growth rate as compared to 2001 and 2002, creating conditions for the national economy to develop in a stable and sustainable manner at higher rates in the subsequent years.

- Further accelerating the restructuring of agriculture and rural economy along the direction of producing goods with quality and efficiency, associating production with domestic and international consumption markets; forming areas specializing in the production of commodity farm produce, developing husbandry and aquaculture, developing forestry in compatibility with potentials and advantages of each region. Increasing the value of agricultural production, forestry and fishery by over 4.5%; sharply reducing production costs so as to obtain the entire branch’s GDP value of around 3.3%.

Encouraging the application of the results of researches into new sciences and technologies, especially biotechnology and clean production technology, renewing processing technologies for a number of agricultural products, first of all, coffee, rubber, tea, cashew nuts, meat, milk, aquatic products... so as to increase productivity, ensure the products quality and raise their competitiveness. Encouraging the production and consumption of a number of agricultural products with competitive edge and substantial consumption markets. Strongly developing traditional crafts, craft villages and rural infrastructure so as to create more jobs and transfer agricultural labor to non-agricultural production sectors, thus developing the rural economy. Taking initiative in the control of natural calamities, coping with adverse weather changes.

- Developing industries with high speed, focusing on advantageous and highly competitive products, in both domestic and foreign markets. Maintaining the growth rate of industrial production value at 14%; striving to reduce the industrial production costs, especially in the processing industry, fully and efficiently using the domestic raw material sources so as to achieve the entire branch’s GDP value of over 10%.

Raising the competitiveness of industrial products, making in-depth investment and giving priority to investment in development of manufacturing industries, especially the hi-tech industries, export goods-producing industry and processing industry in service of agriculture and rural economy.

- Further boosting the restructuring, renovation, and raising the operation efficiency, of State enterprises under the Government’s program of action for implementation of the Resolution of the Party Central Committee’s third plenum. Speeding up the equitization of State enterprises where the State does not need to hold 100% of capital; merging, dissolving or declaring bankrupt those enterprises which operate inefficiently; at the same time, creating all conditions for the already equitized enterprises to operate with high efficiency. Further expanding the experimentation of State corporations and State enterprises operating after the model of "parent" company- "subsidiary" company, founding a number of State economic conglomerates in the fields of telecommunications, petroleum, electricity and construction.

- Diversifying, and raising the quality of, services such as tourism, finance, banking, auditing, legal consultancy, post, telecommunications and transport. Striving to increase the services� value by over 7% while reducing their intermediary costs with a view to achieving the service sector’s GDP value of around 6.6%. Formulating a mechanism to attract investment capital from people of different strata for development of services and tourism.

- Expanding the domestic markets, especially the rural and mountainous markets, creating a close linkage between different regions in the country.

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3. Further restructuring the State budget, prioritizing the development investment, implementing the policies on socialization, hunger elimination and poverty alleviation; increasing expenditures on education and training, sciences and technologies. Absolutely practicing thrift while raising the efficiency of the use of the State’s capital and properties.

Further strengthening financial and credit activities and making them healthy, improving the quality of the banking system’s service activities. Concentrating investment on projects with high socio-economic efficiency, which affect many economic branches and have high export percentages.

4. Increasing the social investment quickly, basically improving the accumulation and consumption rates, mobilizing more than 35% of GDP for development investment, whereby the State budget expenditure for development investment shall not be lower than 25% of total expenditures of the State budget. Providing State budget support for investment in difficulty-hit, deep-lying and remote areas.

Adjusting the investment structure along the direction of creating favorable conditions for economic restructuring so as to raise the efficiency and competitiveness of the national economy. Not returning to the subsidy mechanism.

5. Continuing the renovation, and creating basic changes in the development, of education and training, developing the vocational training system, raising the quality of human resources with rational structure; further implementing the program on junior secondary education universalization. Promoting scientific and technological activities, quickly applying modern and advanced technologies as well as research results to production; intensifying the work of environmental protection and improvement.

6. Effectively settling burning social problems, fruitfully implementing the national target programs, especially the program on hunger elimination, poverty alleviation and employment. Expanding the people’s participation in, contribution to, and supervision of, projects on building infrastructure for poor communes and poor regions. Further concentrating investment on socio-economic development of the 6 northern mountainous provinces meeting with difficulties, the socio-economic development program for the Central Highlands and the socio-economic development program for the Mekong River delta.

7. Boosting the administrative reform in the fields of institution, organizational apparatus, building of the contingent of public servants and public financial reform. Raising the efficiency and transparency of the State policies. Expeditiously finalizing the project on wage reform for early implementation.

8. Consolidating defense and security, combining them with socio-economic development, further promoting the suppression of criminal activities, ensuring order and discipline in socio-economic activities.

2. The tasks of drafting the 2003 State budget

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The tasks of making the 2003 State budget estimates include:

1. Estimating the State budget revenues on the basis of properly and fully calculating the revenues prescribed by law, analyzing and forecasting factors on economic growth, market, prices...; implementing all provisions on production and business promotion, increasing exports and expanding markets; implementing the commitments of regional and international economic integration process; taking measures to intensify the management of value added tax (VAT) collection and reimbursement, preventing the under-collection and loss of the State budget money and combating smuggling and trade frauds.

Estimating the State budget revenues with the desirable mobilization level of around 20-21% of GDP, of which the tax and fee collections shall represent 18-19%. Striving to increase the revenues of the ministries, central-level agencies and localities by over 12% on average as compared to the 2002�s figure.

2. Allocating the State budget expenditure estimates for development investment, to ensure enough capital for the national key projects, with priority given to projects under Program 135 and the project on planting 5 million hectares of forests; arranging investment capital for socio-economic development in northern mountainous provinces, the Central Highlands and the Mekong River delta; arranging enough capital for investment preparation and reciprocal capital for ODA projects; providing support for the production of important products and the processing of agricultural products for export; developing plant varieties and animal breeds; restructuring agricultural economy; developing rural communication and infrastructure of aquaculture, craft villages and tourism.

The drafting of State budget expenditures should focus on the performance of the tasks of socio-economic development, hunger elimination and poverty alleviation; ensuring resources for implementation of the Resolutions of the third plenum of the Party Central Committee (IXth Congress) on restructuring, renewing, developing and raising the efficiency of, State enterprises; and the Resolution of the fifth plenum of the Party Central Committee (IXth Congress) on renewing, developing, and raising the efficiency of, the collective economy; renewing mechanisms and policies, encouraging and creating conditions for development of the private economy; speeding up agricultural and rural industrialization and modernization; ensuring security and defense; implementing the Party’s and State’s nationality policy.

Increasing the reserves in order to take initiative in coping with natural calamities and floods and handling unexpected tasks.

Conducting the wage reform with a view to creating a motive force for accelerating the development and administrative reform. This is an important task, which requires concentrated efforts in few years to come, while a number of tasks must be rearranged so as to concentrate resources on the implementation thereof according to the principle that the ministries, central-level agencies, localities and budget-using units shall take initiative in arranging sources of increased revenues, practicing thrift, combating wastefulness and using the budget allocations for task performance.

Non-business units subject to the Government’s Decree No.10/2002/ND-CP of January 16, 2002 on financial regime applicable to non-business units with revenues should manage and efficiently use their budgets and revenue sources according to regulations, ensuring the development of the assigned tasks and funding sources for performance of the assigned important tasks; based on the assigned 2002 budget estimates, the funding levels should be basically maintained in 2003 and may be increased in a certain percentage (%), depending on branches and fields. Studying the amendment and/or supplementation of relevant mechanisms and policies to comply with the Government’s Decree No.10/2002/ND-CP of January 16, 2002.

Studying the expansion of the experimental assignment of package payroll and administrative management funding to the State administrative agencies according to the Prime Minister’s Decision No.192/2001/QD-TTg of December 17, 2001.

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The State budget deficit shall be kept at a level of not more than 5% against GDP, suitable to the capability of mobilizing loans from inside the country and soft loans from overseas to make up for such deficit.

3. On the local budget estimates:

Localities shall make the 2003 budget estimates on the following principle:

The proportions of divided revenue sources, the additional allocations (if any) from the central budget to the local budgets, already assigned by the Prime Minister in 2002, and the localities� 2003 revenue estimates, shall serve as basis for the drafting of the 2003 local budget balances and expenditures; the additional allocations from the central budget to local budgets is expected to increase by 2-3% as compared to 2002.

Arrangement of the 2003 budget expenditure estimates:

- To arrange funding for implementation of resolutions of the third and fifth plenums of the Party Central Committee (IX^th Congress) in localities.

- To give priority to arrangement of funding for performance of the tasks of infrastructure construction, investment in canal solidification and rural traffic routes; infrastructure construction for craft villages and tourism; development of plant varieties and animal breeds; restructuring of agricultural economy; trade promotion, expansion and probe of export markets; attaching importance to the performance of the tasks of hunger elimination, poverty alleviation, job creation, settlement of social vices and support for ethnic minority people...

- Localities shall take initiative in calculating regular sources of revenue increase and expenditure decrease in order to reserve funding for wage reform.

- To reserve local budgets according to the provisions of the State budget legislation.

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On the basis of evaluating the implementation of the reinvestment mechanism in the past years (from the collection of agricultural land use tax, land rentals and land use levies...), to determine the level of targeted additional allocation from the central budget to local budgets and maintain this level for a few years; at the same time, to estimate funding for targeted additional allocation from the central budget to local budgets for performance of the tasks of national target programs, project on planting five million hectares of forests, program 135...

In 2003, to apply the mechanism on over-collection rewards according to the provisions of the State Budget Law, which shall later be specified by the Prime Minister.

II. PLAN ELABORATION TEMPO AND ASSIGNMENT OF RESPONSIBILITIES

1. On elaboration tempo:

- In the first half of July 2002, the Ministry of Planning and Investment and the Finance Ministry shall provide guidance on the 2003 plan framework and State budget estimates for the ministries, branches and localities for use as basis to elaborate their own plans.

- Before August 15, 2002, the ministries, branches, corporations 91 and People�s Committees of the provinces and centrally-run cities shall report the 2003 socio-economic development plans and State budget estimates to the Ministry of Planning and Investment and the Finance Ministry for their sum-up and submission to the Government.

- The Ministry of Planning and Investment and the Finance Ministry shall organize working sessions with the ministries, branches and localities to promptly sum up the plans and submit them to the competent agencies; and at the same time, map out the plan norm and budget allocation for submission to the National Assembly Standing Committee.

2. On assignment of responsibilities

1. The Ministry of Planning and Investment:

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- To provide guidance on elaboration and summing up of the 2003 socio-economic development plan.

- To assume the prime responsibility and coordinate with the Finance Ministry in drafting the development investment plan and allocating capital construction investment capital; and with the Finance Ministry, the other ministries and central-level agencies in managing the national target programs, designing plans and allocating capital to programs and projects.

2. The Finance Ministry:

- To guide the ministries, the central-level agencies and localities in appraising the situation on implementation of the 2002 State budget estimates; to make the general budget estimates and notify the inspection numbers on the 2003 State budget revenue and expenditure estimates to the ministries, the central-level agencies and localities.

- To assume the prime responsibility and coordinate with the Ministry of Planning and Investment and the concerned agencies in making and summing up the 2003 State budget estimates; to work with the ministries, central-level agencies and localities on the budget estimates.

- Based on the Government’s Decree on financial regime applicable to non-business units with revenues, to assume the prime responsibility and coordinate with the ministries and localities in guiding and organizing the elaboration of the 2003 State budget estimates by non-business units implementing the new financial mechanism and a number of administrative units applying the mode of self-financing (covering wages).

3. The ministries, State bodies and corporations 91: To coordinate with the Ministry of Planning and Investment and the Finance Ministry in elaborating the socio-economic development tasks and making budget estimates in the fields under their management. The ministries and central-level agencies managing the national target programs and project on planting five million hectares of forests shall coordinate with the Ministry of Planning and Investment and the Finance Ministry in working with the concerned ministries, central-level agencies and localities on the 2003 tasks and expenditure estimates for the said programs and project in the fields under their management.

The ministries and State bodies shall, based on their functions and calculation of exploitable sources, set forth socio-economic criteria, suggest solutions, new mechanisms and/or regimes or propose amendments and/or supplements to the current regimes and policies for use as basis for plan elaboration and budget drafting, and notify them to the Ministry of Planning and Investment, the Finance Ministry as well as the relevant ministries and agencies before the budget-drafting time.

4. The People’s Committees of the provinces and centrally-run cities shall guide, organize and direct the provincial/municipal Planning and Investment Services and Finance-Pricing Services to closely coordinate with other services, departments and branches in elaborating the socio-economic development plans and State budget estimates to be submitted to the competent authorities for decision.

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FOR THE PRIME MINISTER
DEPUTY PRIME MINISTER




Nguyen Tan Dung