Debate on whether renovation and upgrading projects are "regular" or "investment" expenditures

Need to explain the law to ensure implementation

On the morning of November 6, raising questions at the National Assembly session, delegate Tran Chi Cuong (Da Nang delegation) said that the State Budget Law and specialized legal provisions have provisions on the use of regular State budget expenditures to purchase equipment for the operation of the apparatus.

However, the Law on Public Investment contains provisions on the nature of public investment projects, leading to the understanding that all new construction, renovation, upgrading, expansion, asset procurement, repair, and upgrade projects must use public investment capital, leading to overlap with the provisions of the State Budget Law and other specialized legal provisions on the use of regular expenditures for the procurement, repair, and upgrading of public assets.

“This issue has been raised by many National Assembly deputies in previous sessions and has not been mentioned in the Government’s report. Therefore, we request the Minister of Finance to clarify solutions to resolve it,” delegate Cuong questioned.

Focus - Debate on whether renovation and upgrading projects are — Delegate Tran Chi Cuong, Da Nang delegation (Photo: Quochoi.vn).

In response, Minister of Finance Ho Duc Phoc said that the problem needs to have the law explained by the National Assembly Standing Committee so that ministries, branches and localities can implement it accurately and confidently. There are still problems in implementation due to a lack of full understanding and agreement on regular expenditure and investment expenditure.

Mr. Phoc said that Decree 73 of the Government for information technology system, the implementation instructions of Decree 73 are still stuck, whether the investment part must establish an investment project or be included in medium-term public investment or not. The Ministry of Finance has submitted to the National Assembly Standing Committee on this issue.

In response to the view that regulations on inappropriate norms cause waste in public investment, the Minister of Finance stated that construction norms for traffic works and architectural works are being strictly controlled and have been tested in practice over decades and many projects.

He said that there are no wasteful bid packages, but many norms are still low compared to actual costs. For example, the highest norm for labor is only 300,000 VND, but outside, it has to be hired for 500,000 VND/day.

“We do not think that waste in public investment is due to the standards but lies in the implementation process such as reducing volume, quality or taking too long to implement, wasting money not putting it into production or use, lacking capital, or waiting for procedures,” said Mr. Phoc.

Adding to this content, Minister of Planning and Investment Nguyen Chi Dung said, The problem here is not necessarily due to the Law on Public Investment, but rather the Law on State Budget.

According to Mr. Dung, the repair and upgrading of public asset projects is currently being implemented normally, without any problems, only new construction projects must follow the procedures according to the Law on Public Investment. "Currently, the Government is submitting to the National Assembly that projects under 15 billion VND will be implemented under regular expenditures," Mr. Dung said.

Regarding savings in public investment, the Minister of Planning and Investment expressed his agreement with the Minister of Finance. Accordingly, regarding the issue of public investment, there are many reasons leading to losses, possibly from the project selection stage. "Something that needs to be done first is not done, and something that doesn't need to be done is done," said Mr. Dung.

In addition, it is possible that the scale of the project is not clearly and completely defined from the beginning, the investment preparation work, if the survey is good, the implementation process will be faster, without increasing costs. There are many reasons from the design, design survey, implementation organization stages, causing the project to be prolonged, reducing the efficiency of saving in public investment.

In addition, the scale of the project is built, done at a low level, then expanded and upgraded, so it costs a lot of additional money. For example, many highways are currently built with 2 lanes, now expanding them is very expensive.

P must be resolved to ensure economic development.

After the responses of the two Ministers, National Assembly Chairman Vuong Dinh Hue added more about the boundary between regular expenditure and investment expenditure.

The National Assembly Chairman said that according to the Government's submission, the National Assembly agencies affirmed and responded to the Government that, in practice, there is no legal document or case that stipulates that the level of regular expenditure and investment expenditure is based on the value of the amount of money.

"Over 15 billion VND is not public investment, while under 15 billion VND is regular expenditure. We spend hundreds of billions on salaries and education and training. This is the nature of the expenditure, not based on the value of the expenditure," said the National Assembly Chairman.

The National Assembly Chairman said that the agencies of the National Assembly said that there were no problems in the Law on Public Investment, and requested the Government to review whether there were any problems in the Law on Budget, and the results after reviewing and concluding that there were no problems. Therefore, the National Assembly removed the resolution on the special resolution on regular expenditure and investment expenditure from the program.

"If the Government and ministries see the responsibility of the National Assembly Standing Committees to explain the law, they must make a proposal, and only the National Assembly Standing Committee can explain. The National Assembly Standing Committee cannot explain what is clear, and the content no one requested to explain," the National Assembly Chairman stated.

The Chairman added: “This issue has been debated a lot. At the National Assembly forum, I remember the Minister of Finance said “from now on, this issue will not be raised again”. Today, the Minister said it again. Because we have returned this document to the Government three times. Whether it is related to the State Budget Law or not in this review, the Ministry of Finance has not said that there is any issue that needs to be reviewed”.

After the National Assembly Chairman's speech, Finance Minister Ho Duc Phoc said he had carefully studied the Law on Public Investment and the Law on Budget.

Accordingly, the 2014 Public Investment Law "ties" all activities into public investment, for example, repairing, upgrading, expanding, all public assets regardless of the value of the money invested, of course, when implementing those assets, they must clearly be regulated by the Public Investment Law.

Second, the Law on Public Investment stipulates that investment expenditures cannot be spent if they are not included in the annual medium-term public investment plan.

Third, the annual medium-term public investment plan must be consistent with the medium-term public investment plan. If it is not included in the medium-term public investment plan, it is a violation and that "ties up" the planning costs, the investment preparation costs, and issues such as interest rate support, which are also included in the Law on Public Investment.

This has led to the situation where the State owes 2,200 billion VND to commercial banks but has not yet allocated funds to support policy banks. Or in many places, houses are broken but there is no funding to repair them. "For example, the Vietnamese Embassy in Germany lacks a fence, but the Law on Public Investment does not provide for a medium-term arrangement, so the fence cannot be built, that is the truth," said the Minister of Finance.

Mr. Phuc suggested that this issue must be resolved to ensure economic development, to avoid obstacles for officials, and to avoid mistakes when following instructions.

He also explained that at a meeting, he said "I didn't raise this issue anymore because I had already presented it three times, I was too tired so I didn't say anything more, not because I agreed" .

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