VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL *************** NGUYEN HONG CUONG MANAGING PUBLIC SPENDING IN INFRASTRUCTURE CONSTRUCTION FOR THE VINH PHUC STATE TREASURY - ASSESSMENT AND IMPLICATIONS MASTER THESIS HA NOI - 2022 VIETNAM NATIONAL UNIVERSITY, HANOI INTERNATIONAL SCHOOL *************** NGUYEN HONG CUONG MANAGING PUBLIC SPENDING IN INFRASTRUCTURE CONSTRUCTION FOR THE VINH PHUC STATE TREASURY - ASSESSMENT AND IMPLICATIONS QUẢN LÝ CHI XÂY DỰNG CƠ BẢN BẰNG NGÂN SÁCH TẠI KHO BẠC NHÀ NƯỚC VĨNH PHÚC - ĐÁNH GIÁ HIỆU QUẢ VÀ HÀM Ý VỀ QUẢN LÝ Major: Financial Management Code: 8340202.01QTD MASTER THESIS Supervisor: Dr. Nguyen Phu Hung HA NOI - 2022 ACKNOWLEDGEMENTS I am thankfully to the supports from Dr. Nguyen Phu Hung for his invaluable supervision which was much important to my thesis work. I am also like to thank other Professors of the master program, my classmates, and colleagues who support and encourage me to the completion of this thesis.
Nguyen Hong Cuong i ABSTRACT This thesis is to study of the performance of public spending on public infrastructure projects in Vinh Phuc province. First, the thesis studies current status of public spending and their results, then identifies problems and issues that need to be addressed. The thesis studies lessons from other developed countries and apply these lessons to the case of Vinh Phuc public spending. In order to produce best research performance, the thesis develops an analytical framework based on literature review.
In order to get data for the analysis, author build an online survey to get the assessments and comments from peoples having knowledge and information about public infrastructure spending in Vinh Phuc province. The thesis also utilizes PESTEL framework to analyze the overall context that necessitate public spending. The thesis found a number of positive findings. The laws in public investments and spending have not been aligned with each other.
Second, the disbursement plan in many cases are not aligned with the capital demands. Third, the implementation of public infrastructure projects is limited, making project duration lengthen for years. Fourth, the ratio of actual disbursement to planned disbursement are low. The thesis gives 4 core recommendations to address the issues.
First, in order to make it more efficient, the spending must be in plan. Second, all projects must comply to laws and regulations. Third, all must comply to standards regulated by the Government. Fourth, disburse money to contractors in-time as required by the Ministry of Finance.
ii TABLE OF CONTENTS ACKNOWLEDGEMENTS. i TABLE OF CONTENTS. iii LIST OF FIGURES. vi LIST OF TABLES.
viii CHAPTER 1: INTRODUCTION OF DISSERTATION. Necessity of the research. Objectives of Study. Scope of study.
Structure of the thesis. 2 CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK .1 Public finance and budgeting. Evaluation criteria for public expenditure management:. Challenges of public spending and budgeting.
Role of budgeting for spending. Managing public finances and budgeting. Factors affecting public spending performance. Studies in Vietnam on controlling capital expenditure for infrastructure spending from the state budget.
Overview about Capital of Infrastructure Spending from the State Treasury. Concepts and definition. Characteristics of Infrastructure investment capital from the State Budget. Classification of Capital for Infrastructure Spending from the State Budget.
The role of investment in infrastructure from the state budget. Controlling capital spending for infrastructure spending from the state budget through the State Treasury. The concept of controlling capital spending for infrastructure spending. The contents of controlling infrastructure spending by capital from state budget disbursed by state treasury.
Control and types of control. Rules for control disbursement for infrastructure spending from the state bank. Contents and processes of controlling infrastructure capital disbursement. Content and process of controlling capital infrastructure spending from the state budget through the state treasury.
Factors affecting the control of capital infrastructure spending from the state budget. 20 CHAPTER 3: METHODOLOGIES AND DATA. Stages of the research. 26 CHAPTER 4: ANALYSIS RESULTS.
Overall Context of public budgeting and finance in Vietnam. Economic aspect of the public finance. Weakness and threats. Social context of the public finance.
Context of the VPST. Overview of Vinh Phuc province. Overview of Vinh Phuc State Treasury. Missions and authority.
Criteria to evaluate the performance of public spending. Performance of budgeting planning in Vietnam in general and in Vinh Phuc in particular. Budget and Expenditure during the last 3 years. The Strength of budgeting planning.
The Weaknesses of public investment in Vietnam in general and in Vinh Phuc in particular. Causes of weakness. Survey results of the Assessment of VST’s spending control and monitoring. Assessment from State Treasury staff.
Assessment from Clients applying and receiving capital for infrastructure construction. Summary of findings. 47 CHAPTER 5: IMPLICATIONS OF FINDINGS AND CONCLUSIONS .1 Implications of findings. Direction and Recommendations for the complete solution to control the cost of infrastructure spending from the state budget through the Vinh Phuc state treasury.
Renovating the model of controlling construction investment spending under the "one-stop service " mechanism. Completing the process of controlling capital expenditure for infrastructure spending through Vinh Phuc State Treasury. Completing the process of transferring payment documents. Improve the control of advanced spending and advanced payment of spending from the State Budget.
Reform budgetary documents, forms, and other accounting documents for controlling and monitoring public spending. Integrate the process of controlling infrastructure spending spending at the State Treasury to unify the process and focus on focal points. Completing the scope and content of controlling infrastructure spending from the state budget through the Vinh Phuc State Treasury. Organizing the controlling operations.
Improve the qualification and ethic of staff who control and monitor the public spending. Applying ICT to improve the performance. Direction of development. Limitations of thesis.
64 v LIST OF FIGURES Figure 2-1: Process of controlling payment of infrastructure spending through State Treasury. 18 Figure 3-1: Stages of thesis research. 22 Figure 5-1: Proposed reformed processes to complete the process of transferring payment documents. 52 vi LIST OF TABLES Table 3-1: The questions of Survey.
24 Table 4-1: Payments of project management costs for public infrastructure construction projects from Vinh Phuc State Treasury (2018-2020). 39 Table 4-2: Report of budget disbursement for public infrastructure in 2018. 39 Table 4-3: Report on financial disbursement for public infrastructure in 2019. 40 Table 4-4: Report on financial disbursement for public infrastructure in 2020.
41 Table 4-5: Assessment from staffs on Capital Investment Control mechanism/ apparatus. 44 Table 4-6: Assessment from staffs on Investment Capital Control Tools. 44 Table 4-7: Assessment from staffs on the Procedures for Control of Construction Investment Capital. 45 Table 4-8: Assessment from clients of VST on Capital Investment Control mechanism/ apparatus.
46 Table 4-9: Assessment from clients of VST on Investment Capital Control Tools. 46 Table 4-10: Assessment from clients of the VST on the Procedures for Control Of Construction Investment Capital. 47 Table 5-1: IT-Supported Process Innovation in the Public Sector. 62 vii ABBREVIATIONS Key Meaning KPI Key Performance Indicators VPST Vinh Phuc State Treasury VPG Vinh Phuc Government SBV State Bank of Vietnam ST State Treasury viii CHAPTER 1: INTRODUCTION OF DISSERTATION 1.
Necessity of the research Public financial management (PFM) is about facilitating the efficient use of resources of public institutions. PFM advocates for a higher level of transparency in the system to ensure the existence and operation of the State apparatus and to prevent corruption and waste in the management and use of State resources. PFM also holds officials accountable for their decisions regarding long-term economic success. PFM is also associated with the need for reform and transformation of public sector management in Vietnam in order to renew and reorganize the apparatus of the political system to be compact, effective and efficient in line with the development of the country.
the country's socio-economic development, the process of international economic integration, the society's requirements for essential services; at the same time, gradually reduce the overlap in functions and tasks between ministries, branches and localities, the cumbersome organizational apparatus of the political system, and the weaknesses in qualifications and responsibilities in the political system. perform the duties of officials and responsibilities of the head of the organization in the management and administration of the unit's operations as well as in the management and use of financial resources assigned by the State (Vietnam National Assembly, 2021). This thesis is in the field of Public Finance. In which, the state budget plays a leading role in public finance; The state budget is an important economic tool for the Government to maintain macroeconomic stability and ensure great balances in finance and state budget.
The state budget is made to maintain the regular operation of agencies and units in the political system and to spend on infrastructure development investment. In which, spending on development investment is important for the socio-economic development of the country and of each locality, so every year, the Government, including Vinh Phuc province, spends a very large part of the total revenue. budget to invest in infrastructure development. Although, the Government has paid attention to allocating resources for infrastructure development, the implementation of the budget policy has revealed a number of problems, including planning, budget allocation, payment control, etc.
in many cases is still inefficient and wastes state budget. It is necessary to have a mechanism to regulate and manage public expenditure to ensure the savings, effectiveness and efficiency of the state budget. However, the spending needs are very large and growing, while the budget input is very limited (eg from taxes, fees, other sources) and the management and control mechanism is complicated. Therefore, it is 1 necessary to reform administrative procedures in the management, allocation and control of payment of capital from the state budget.
This is the reason why I chose the topic "Public Expenditure Management in Infrastructure Construction of the State Treasury of Vinh Phuc Province - Evaluation and Implications" for my thesis. Objectives of Study This study is to study the current status of the public spending of the Vinh Phuc province, identify issues and problems, then propose solutions to improve the performance 1. Study questions The thesis will answer the following questions: - What are the current issues and challenges facing the Vinh Phuc state treasury? - What are the current mechanism of the infrastructure spending, its issues and challenges? - What are the criteria that affect infrastructure spending performance? - What are the criteria for evaluating the implementation of infrastructure spending? - What are the solutions and measures to improve the performance of infrastructure spending control? 1. Scope of study The thesis will study the data during the period 2018 - 2020 1.
Structure of the thesis The structure of thesis includes 5 chapters - Chapter 1: Introduction of Dissertation - Chapter 2: Literature review and theoretical framework - Chapter 3: Methodologies and Data - Chapter 4: Analysis and Results - Chapter 5: Implications of finding and Conclusions 2 CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Public finance and budgeting 2. Public finance: Public finance is the sum total of all revenue and expenditure activities using money conducted by the state. Public finance reflects the system of economic relations arising in the process of creating and using public funds. The purpose is to serve the performance of state functions.
At the same time meet the needs and common interests of the whole society. State budget plays a key role in Public Finance. State budget means all revenues and expenditures of the State that are estimated and realized within a certain period of time decided by a competent state agency to ensure the performance of the functions and tasks of the State budget." (State Budget Law No.