The Pricing and Finace Sector

ON THE MOVE TOWARD DEVELOPMENT

Mr. Tang Viet Cuong director of Binh Thuan province's Department of Finance

Recently the socio-economic situation in Binh Thuan province has recorded encouraging achievements. Industrial production remains stab/e, aquaculture grows steadily, and commercial and tourism continues developing. Capital construction focuses on key construction works. Budget co/1ection and expenditure often exceed that of the previous year.

This promising result is attributed largely to the contribution of the provincial pricing and finance sector. The responsibility of the sector's employees is extremely high, with regard to their involvement in balancing the province's co/1ectlon and expenditure, as well as stabilizing market prices.

1. State budget collection and expenditure

1.1 State budget collection

Despite its low economic starting point, and its c/1matic and topographical difficulty, under the time/y guidance of the Party committees at various echelons, the tempo of the province's budget collection a/ways exceed that of the previous year. The average increase rate was 7.84 percent over the 1998-2002 period. State budget collection totaled VND 1,702,564 million during the same period. Annual budget collection reached VND 340,513 million on aver- age. State budget co/1ection recorded VND 371,7 billion in 2002, surpassing the set p/an of VND 360 billion.

Given the province's 15 sectors subjected to budget collection, from 1998 to 2002, Binh Thuan annually collected VND 610,055 million on average. Some sectors achieved continuous contribution to the provincial budget, including land use right certificate issuance, lotto, fees and charges. The amount collected from the agricultural sector was, however, declining. More and more households and organizations strive to justify their land use rights, creating preconditions for sustainable and long-term development. What's more, people's active involvement in all activities of social life has given rise to new kinds of payable fees. Agricultural production tends to shift to business and service activities, thus facilitating the province's economic restructuring. These above-mentioned things have brought about positive changes in the province's socio- economic life. Tax collection has creased steadily on a year-to-year basis and represented larger and larger share in the province's total budget collection. Of which non-state economic sector has contributed the biggest portion of 21.84 percent, which was equivalent to VND 37/,887 million over 1998-2002. This manifests the emergence of different forces in the market economy. State- owned enterprises (SOES) came next with VND 301,996 million, accounting for 17.74 percent of the province's budget collection. SOEs still remain their leading role in Binh Thuan. Collection from fees and charges amounted to VND 2/7,/54 million, representing 12.75 percent of the province's budget collection. These figures have proved partly the steady development of Binh Thuan's economy.

Second-stage tax reforms and State budget law implementation have promoted production and business, thus increasing the province's budget collection, of which collection from fees and charges represents 61.32 percent and financial collection 38.68 percent. However, the annual average rate of 7.84 percent of State budget collection was lower than the province's GDP annual growth rate of 11.85 percent. The reason was that much investment had been poured into high-value-construction works but it was slow to recover the invested money. In addition, many investors still enjoyed preferential treatments.

To fully tap the province's potential, the local authority has carried out policies on encouraging contribution from enterprises to State budget, imposing tax on fishery, on agricultural land use right, on attracting investment in industrial zones, on the price for land use right m residential areas, for land compensation in tourist resort and on money mobilization for transport road construction. They together help increase the collection from financial channel in the locality, which amounted to VND 658,546 million from 1998 to 2002, representing 38.68 percent of the province's total budget collection.

As a poor province, Binh Thuan's collection sources fail to balance its annual expenditures, especially those for development investment. Under a favourable policy by the Government, Binh Thuan is entitled to a subsidy collection source, which totalled VND 1413,909 million during 1998-2002 period, representing 46.35 percent of the province's budget collection.

1.2. Budget expenditures

From 1998 to 2002, the province's budget expenditure climbed up to VND 3,127,424 million. The province annually spent VND 625,485 million. In the same period, the province spent VND 1,004,811 million on development investment, accounting for 32.13 percent of its budget collection. Given its limited collection sources, the province has prioritized the allocation of budget for development investment, and infrastructure construction. Binh Thuan's urban network has been established and distributed reasonably. Due attention has been paid to the province's transport network. They testify to the “position" and "strength" of the province. Improved infrastructure has contributed to promoting business, production, and exchange of goods and people's livelihood as well. Consequently, more and more investment has been attracted to the province, and its internal strength brought into play.

Regular expenditures totaled VND 2.122 million, representing 67.87 percent of the province's budget expenditures over 1998-2002. Of which, 14.54 percent went to economic sector. Well aware of the leading role of education in socio-economic development strategy, he province allocated one third of its budget for the education sector, accounting for 22.43 percent of its budget expenditures.

On the move toward development

In general, the province’s budget expenditures have been spent in accordance with the set schedule, meeting the demand for salary of those on the State payroll, and capital construction. However, unexpected expenses remained large, in order to overcome the aftermaths of natural calamites, promote socio-economic development in mountain and remote areas, and for administrative cost.

Efforts have been made to ensure that the province’s expenses for human resources, economy, education-training, health care, and science-technology meet the demand for socio-economic development and social order and security in the locality. The province has also devised policies on these above-mentioned fields and on encouraging people to go to work at mountain and remote areas, disadvantaged areas and former resistance bases. It can be said that the pricing and finance sector is like the midwife of the socio-economic development strategy of Binh Thuan province.

Thanks to the network of commercial banks and people’s credit funds, difficulty in loans for production expansion has been settled, ensuring money-capital circulation and meeting the demand of people’s spending on consumption.

The province’s budget expenditures have been restructured in the direction of removing subsidy in budget expenditure, increasing the amount for development investment, education-training, scientific research, health care, eradicating hunger and alleviating poverty. These measures also aim at mobilizing sources from the people through the socialization of some socio-economic activities. As a result, the province’s budget expenditure for development investment has grown by VND 200,962 million annually, representing 27.72 percent of the province’s total budget expenditure. Regular expenses reach VND 424.494 million, accounting for 67.87 percent of the province’s budget expenditure.

2. Measures aimed at market stabilization

To stabilize and balance market’s price, the pricing and finance sector of Binh Thuan province continuously reviews documents on regulating list of goods and services under State management regarding price, including land, electricity, water, necessities, and goods with subsidized prices.  At the same time, it also plays the role of advisor to the provincial People’s Committee regarding the promulgation of policies on these above-mentioned fields. As such, the provincial People’s Committee issued Decision No. 27/QD-CTUBBT of 9 April 2002 on regulating price of land in the locality. The price of agricultural land and rural residential areas remains unchanged, meanwhile that of urban area increases by 20 percent. This facilitates the rate of compensation for site clearance.

The pricing and finance sector also appraises prices, including those in purchasing assets of State-owned enterprises and administrative agencies, those in site clearance compensation, thus saving the State budget. The sector also advises the provincial People’s Committee regarding the implementation of the ordinance on prices in accordance with the conditions of the locality.

Apart from stabilizing the market, the pricing and finance sector of Binh Thuan province consolidates, promotes and creates conditions for economic activities in the locality. As an agency to enforce the collection and expenditure activities and implement the ordinance on price, the sector is making every efforts to bring about changes, forming premises for Binh Thuan to firmly enter the 21st century./.

Lam Thanh