MEIHO UNIVERSITY Graduate Institute of Business and Management MASTERS THESIS Factors affecting Effective Supervision of Payment of State-funded Projects at the State Treasury of Binh Thuan Province, Vietnam In partial fulfillment of the requirements for the degree of Masters of Business Administration Advisor: Dr. Ching-Wen Mo Co-advisor: Dr. Ta Xuan Te Graduate Student: Tran Xuan Lanh December, 2010 ACKNOWLEDGMENTS I want to say thank to the Board of Rectors of Ho Chi Minh City University of Industry, Vietnam and Board of Rectors of Meiho University, Taiwan for giving me opportunity of participating this MBA program. Much thanks to Associate Prof. Le Van Tan - Vice Rector, Associate Prof. Nguyen Minh Tuan - Dean of Department of Business Administration, Associate Prof. Vo Phuoc Tan - Dean of Postgraduate Department, Ho Chi Minh City University of Industry, for encouragement, convenience and advice given me during the time of study. Special thanks to Dr. Ching – Wen Mo, Graduate Institute of Business and Management, Meiho University, and Dr. Ta Xuan Te, Ho Chi Minh City University of Industry, for valuable instruction and advice given me during the whole period of time of conducting this research. Sincererily thank to professors, lecturers and staff of Postgraduate Department and Department of Business Administration, the EMBA2 classmates at Ho Chi Minh City University of Industry for supports given me during the past two years. I’ve learned a lot of new knowledge and kills. A deeply thank to President of Meiho University, Prof. Shan-Da Liu and Dr. Ron-Chuen Yeh, Chair of Graduate Institute of Business and Management, as well as respectful professors, administrative clerks, and Taiwanese EMBA students at Meiho University for useful guidance, warmly greetings and friendly cares given us when we were in Taiwan. Such behaviour and emotion were very impressive and certainly not easy to forget. The great thanks to other closed people as my family members, my colleagues and friends at the State Treasure of Binh Thuan province and other State Treasures for great helps as providing information, convenient conditions, reference materials, advice and suggestions during the time I was conducting the research; especiall for those sincere encouragement. Thank you very much! I Factors affecting Effective Supervision of Payment of State-funded Projects at the State Treasury of Binh Thuan Province, Vietnam ABSTRACT Construction investment is a critical operation involving with many different industries. Its speed of development heavily influenced the pace of social–economic development. However, the supervision of capital construction investment in Vietnam, generally speaking, and the supervision of capital construction investment in Binh Thuan province, specifically speaking, seems to be ineffective with some definite disadvantages. As consequently, a necessary solution for improving this performance has been called for to make the supervision become more effective. This study aims to identify factors that could affect the effectiveness of supervision of payment of state-funded capital construction investment at the State Treasury of Binh Thuan province in Vietnam (STBT). A questionnaire survey was conducted to collect data from people who are knowledgeable and experienced in activities concerning treasury field. The analyzed statistics from 68 questionnaires showed that the factors of Plan and Mechanism of Payment, Human Resource and Information Technology, have significant effects on the effectiveness of supervision of payment of state-funded capital construction investment at STBT. The other factors such as Mechanism/Policy, Managerial state agencies/consultor/tenders, Payment Mechanism, and Management of utilisation, have a little bit of influence on the effectiveness of supervision. Keywords: Government Budget, Construction Investment, Supervision of Payment of State-Funded Capital Construction Investment, Owner of Project, Binh Thuan Province, Vietnam. II Factors affecting Effective Supervision of Payment of State-funded Projects at the State Treasury of Binh Thuan Province, Vietnam Contents ACKNOWLEDGMENTS .VII Chapter1 Introduction .3 Research Scope and Limitations.4 Definition of Terms . 3 Chapter 2 Literature Review.1 Task of Supervision of Payment of State-funded Capital Construction Investment at State Treasury .2 Organization and Performance of Supervision of Payment of State-funded Capital Construction Investment at State Treasury.3 Organization of STBT .4 Some Unsolved Problems Concerning Supervision of Payment of State-funded Capital Construction Investment at STBT . 15 Chapter 3 Research Methodology.5 Validity and Reliability of Research Instrument .6 Methods of Analysis . 25 Chapter 4 Research Results and Analysis.2 Hypothesis Testing – Linear Regression Method.1 Testing of hypothesis 1.2 Testing of hypothesis 2.3 Testing of hypothesis 3.4 Testing of hypothesis 4.5 Testing of hypothesis 5.6 Testing of hypothesis 6.3 Analysis of Effects of Influencing Factors on Efficiency of Supervision of Capital Investment Payment. 32 Chapter 5 Conclusions, Recommendations and Implications.1 Mechanism and policy about capital investment payment.2 Organization of state agencies, consulting bodies and tenders.3 Plan and mechanism concerning capital investment payment.4 Management of utilisation.5 Staff whose duties are managing capital investment payment.6 Information technology concerning supervision of capital investment payment . 37 Attachment 1 – English Questionnaire . 40 Attachment 2 – Vietnamese Questionnaire. 45 IV Tables Table 2-1 State-funded Capital Construction Investment Allocation STBT, 2005-2009. 13 Table 2-2 STBT Payment of State-funded Capital Construction Investment, 2005-2009 . 14 Table 2-3 Result of Inspection of Payment of State-funded Capital Construction Investment to STBT, 2005 - 2009 . 15 Table 3-1 Summary of Sources for Questionnaire Development . 22 Table 3-2 Values of Cronbach’s Alpha Calculated to the Questionnaire. 25 Table 4-1 Analysis on Variable of Gender . 26 Table 4-2 Analysis on Variable of Working Position. 26 Table 4-3 Analysis on Variable of Age, Time and Number of Staff. 26 Table 4-4 Model Summary of Hypothesis 1: Mechanism/Policy and Effectiveness of Supervision . 27 Table 4-5 Testing Hypothesis 1: Mechanism/Policy and Effectiveness of Supervision . 27 Table 4-6 Model Summary of Hypothesis 2: Managerial State Agencies/Consultor/Tenders and Effectiveness of Supervision. 28 Table 4-7 Testing Hypothesis 2: Managerial State Agencies/Consultor/Tenders and Effectiveness of Supervision. 28 Table 4-8 Model Summary of Hypothesis 3: Plan/Mechanism of Payment and Effectiveness of Supervision . 29 Table 4-9 Testing Hypothesis 3: Plan/Mechanism of Payment and Effectiveness of Supervision . 29 Table 4-10 Model Summary of Hypothesis 4: Management of Utilisation and Effectiveness of Supervision . 30 Table 4-11 Testing Hypothesis 4: Management of Utilisation and Effectiveness of Supervision . 30 Table 4-12 Model Summary of Hypothesis 5: Human Resource and Effectiveness of Supervision . 30 Table 4-13 Testing Hypothesis 5: Human Resource and Effectiveness of Supervision. 31 Table 4-14 Model Summary of Hypothesis 6: Information Technology and Effectiveness of Supervision . 31 Table 4-15 Testing Hypothesis 6: Information Technology and Effectiveness of Supervision . 31 V Table 4-16 Model Summary of Mechanism/Policy, Managerial State Agencies/Consultor/Tenders, Plan/Mechanism of Payment, Management of Utilisation, Human Resource, Information Technology and Effectiveness of Supervision . 32 Table 4-17 ANOVA: Mechanism/Policy, Managerial State Agencies/Consultor/Tenders, Plan/Mechanism of Payment, Management of Utilisation, Human Resource, Information Technology and Effectiveness of Supervision. 33 VI Figures Figure 2-1 Organization of Supervision of Payment of State-funded Capital Construction Investment at State Treasury.10 Figure 2-2 Procedure of Supervision of Payment of Capital Construction Investment .11 Figure 2-3 Organization of STBT.12 Figure 3-1 Research Framework.19 Figure 3-2 Research Flow Chart .21 VII Factors affecting Effective Supervision of Payment of State-funded Capital Construction Investment at the State Treasury of Binh Thuan Province, Vietnam Chapter1 Introduction This chapter includes four sections: (1) research motivation, (2) research purpose and objectives, (3) research scope and limitation, and (4) definition of some terms.1 Research Motivation Binh Thuan province is located on the southeastern coast and in the Southern Key Economic Zone (SKEZ) of Vietnam (the term SKEZ refers to the eight localities including Ho Chi Minh City, Binh Duong, Dong Nai, Ba Ria-Vung Tau, Binh Phuoc, Tay Ninh, Long An and Tien Giang provinces). The province shares its border with Ninh Thuan province and Lam Dong province to the north, Dong Nai province to the west, Ba Ria - Vung Tau province to the south-west, East Sea to the east and south- east with the costal is over 192 km long. Its natural area is 7,992 km2 and its population is 1,171,675 (2009). Such census is ranked as average to the whole country. There are 10 administrative localities in which include one town, one city: 127 communes, wards and villages (Statistical Yearbook of Binh Thuan, 2009). The State Treasury of Binh Thuan province (STBT) was formed on Apr 1, 1990. With nearly 20 years in operation, it had participated and contributed a lot to the development of the province, at financial aspect. The successful development of STBT has consolidated its important role in state financial management. As evaluated by the State Treasury of Vietnam, STBT had achieved some outstanding performance such as quick collecting of taxes, duties and monies, proper disbursement of payments to the to government’s budget, performing social policy, ensuring the national security, raising great capital for investment for development, providing accurate accouting 1 information and profiles concerning state expenditure and payment to the authorized central and local agencies (Kho bạc Nhà nước Việt Nam, 2010). Construction investment plays an important role in building infrastructure and public services that provides technical facilities for society. It is considered as a critical factor that heavily influences the economic mechanism and promotes growth of national economy. Its speed of development heavily influenced the pace of social– economic development (Tran Thanh Đam, 2009). In recent years, together with the implementation of economic reform, construction investment was also paid much attention by Vietnam government and Vietnam Communist Party. Annually, a large portion of budget is allocated for construction investment besides ones allocated for national security, socio-economic management, etc., Therefore, an efficient utilization of all sources of construction investment are always called for a much attention. The higher effectively the supervision of payment performed, the higher effectively the utilization of investment capital obtained. The development process of the State Treasury includes the improvement and consolidation of professional functions assigned by government. The Decree No. 145/1999/ND-CP dated September 20, 1999 stated that the State Treasury not only controlled government final consumption expenditure but also government construction investment expenditure since January 1st, 2000. This assigned function is also confirmed in Vietnam State Budget Laws promulgated in 2002 (Article 56 – Chapter V). A series of regulations about procedures of capital investment management and payment were supplemented and amended to fit the actual circumstances for better performance. However, the objectives had been not achieved as expected due to some corresponding instruction/guidance documents were not updated in time. As a result, in order to achieve the objective of economical and efficient utilization of sources of capital investment, studies on this issue is really necessary to both the State Treasury, generally speaking, and people whose works involved, specifically speaking.2 Research Purpose This study majorly aims to identify factors that affect the effectiveness of supervision of payment of state-funded capital construction investment at STBT in Vietnam. The minor aim is to propose some solutions of enhancing that effectiveness of supervision of payment of state-funded capital construction investment at STBT. 2 Research objectives of the study are: 1. Identify factors that could affect the effectiveness of supervision of payment of state-funded capital construction investment at STBT in Vietnam. Identify level of influence of factors that affect the effectiveness of supervision of payment of state-funded capital construction investment at STBT in Vietnam. Propose some solutions of enhancing the effectiveness of supervision of payment of state-funded capital construction investment at STBT. Research questions of the study are: 1. What are factors that could affect the effectiveness of supervision of payment of state-funded capital construction investment at STBT in Vietnam? 2. What level of influence of factors that affect the effectiveness of supervision of payment of state-funded capital construction investment at STBT in Vietnam? 3. What solutions proposed for enhancing the effectiveness of supervision of payment of state-funded capital construction investment at STBT? 1.3 Research Scope and Limitations Although there are many fields of operation to a state treasury and over 60 state treasuries located in different provinces and cities, the study focused on the construction investment and the supervision of payment of state-funded capital construction investment at STBT in Vietnam.
