Development investment based on the local budget in Ha Nam province

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1 Introduction 1. Rationale Development investment from state budget plays a requisite role in the socioeconomic development of a country or a province in Vietnam. However, in recent years, development investment from state budgets in Vietnam has still been inefficient. This has been proved by various scientific researches on the efficiency of public sector, in which development investment from state budgets is considered as the key part. In fact, every research carried out has mentioned different aspects of development investment from state budgets. Development investment from local state budgets, recently, has contributed to the socio-economic development, restructuring the economics of localities pursuing industrialization and modernization, improving infrastructure and technology, promoting the construction of modern rural areas. Nevertheless, development investment from local state budget in some provinces or citiy in general and Ha Nam in particular has lately been controversial due to depending almost on state budgets; moreover, development investment from local state budget hardly prove its role in local socio-economic development strategy. Until now, there has been no PhD thesis in development investment from local state budget in Ha Nam Province. Vietnam has 63 provinces and cities, of which around 20 provinces and cities do not rely on central state budget. The other 40 provinces including Ha Nam have to receive remarkable contribution from central state budget annually (revenues are insufficient to cover expenditures). Ha Nam is a poor province whereas development investment from state budgets play a vital role. Every year, this province depends on central state budget funding sources, and 57 percent development investment are funded by local state budget in the period 2008 - 2013. Budgets for development investment have been inadequate to meet the demand of provinces, resulting in a wide range of investment projects being delayed or halting execution. The problem that needs solving is how to reduce the dependence of development investment from local state budget of Ha Nam on the state budget, raising the activeness of budgets invested in provinces. The fact is that planning and operating the development investment from local state budget has inappropriate method and content; the allocation of budgets among different industries and fields is unreasonable, for instance, focusing much on investing and developing infrastructure instead of labor or technology. Another measure is how to enhance the quality of making and operating plans, changing capital structure, improving the management, thus promoting development investment from local state budget in Ha Nam province. Under the circumstances above, the writer has chosen the topic “Development investment from local state budget in Ha Nam province” as the PhD thesis with an aim to clarify the mentioned problems. 2. Research objectives General objectives Based on researching the development investment from local state budget of a particular province as Ha Nam, the thesis works towards a goal of making 2 suggestions for improving the development investment from local state budget of Ha Nam as well as the provinces having the same status, in accordance with new conditions, along with the trend of budget arrangement towards localities in Vietnam. Specific objectives a, Establish the theoretical framework of development investment from local state budget; b, Analyze the current situation of development investment from local state budget in the period of 2008-2013, hence, assess the influences of development investment from local state budget in socio-economic development of Ha Nam province; c, Determine limitations and causes of development investment from local state budget of Ha Nam province; d, Illustrate opinions and orientations of development investment from local state budget of Ha Nam province until 2020; e, Make reccomandations for enhancing the development investment from local state budget of Ha Nam and other provinces with homologous status. 3. Research subjects and scopes Research subjects a) Local state budgets: the concepts and establishment of local state budgets; b) The development investment from local state budgets: the organic relationship between the development investment from local state budget and development investment in the area in general as well as examined the relation between the development investment from local state budget and the socio-economic development of a province. Research scope a, Place: Ha Nam province b, Sience: The thesis focuses on researching development and investment from local state budget in provinces. Local state budget includes: funds regulated from the state budget and funds accumulated by local state budget for investment. The thesis studies development investment from local state budget in Ha Nam province, both theoretically and practically, focusing on: content, impacts, factors affecting, then topropose solutions to increase development investment from local state budget in Ha Nam province. c.Time: +) Research on reality: development investment from local state budget in the period 2008-2013; +) Research for future: development investment from local state budget until 2020. 4. Contribution of the thesis Academic and theoretical contributions: - The thesis introduces a research framework including 5 steps. In each step, content is mentioned in various approaches (methodology, research tools, research content, and its results). - By analysing features of development investment based on the local state budget, the author help to clarify the content of development investment, criteria for assessing impacts of development investment on the local socio-economic development. New conclusions and findings from research results 3 - By applying the research framework, the thesis analyses the situation of the development investment from the local state budget in Ha Nam in the period 20082013 and gives some findings as follows: There are a number of reasons that make the development investment from the local state budget fail to stimulate the socioeconomic development in Ha Nam province, of which the major one is the inappropriateness in planning development investment from the local state budget. There are no focal points. The objectives are too general. The development investment capital is spreaded and covers so many sectors and industries. Therefore, the structure of development investment from local state budget in Ha Nam is irrelevant. The investment focuses mainly on infrastructure and forgets in some extent to other fields such as technology science; human resource. - The author uses the method of Ordinary Least Squares regression to estimate the demand for the development investment capital in Ha Nam in general and demand for development investment capital from the local state budget in particular in the planned year. Therefore, the thesis’s recommendation can help Ha Nam’s government to find out their solutions of mobilizing financial provincial budget for development investment by 2020. - Solutions in the thesis are to strengthen development investment from local state budget in Ha Nam, in which focusing on changing the structure of investment and structure of investment capital coming from the local state budget. In this thesis, the author make clear that there can be two options for increasing total capital for development investment coming from the local state budget. The author also proposes a solution to change the structure of development investment from the local state budget to help the province can make their investment more efficiently and effectively in the future. Structure of the thesis Besides the introduction, conclusion and list of references and appendices, the main content of the thesis is divided into four chapters: Chapter 1: Literature review Chapter 2: The theoretical framework for development investment from local state budgets. Chapter 3: Current situation of development investment from local state budget in Ha Nam province in the period of 2008-2013. Chapter 4: Views and recommendations to increase development investment from local state budget in Ha Nam province. CHAPTER 1: LITERATURE REVIEW 1.1. Literature review International studies: Generally, international studies have mentioned almost full of both theory and practice in analyzing and evaluating public investment, solutions to manage public investment effectively in some countries and territories. However, public investment in each country has its own characteristics due to 4 management mechanisms and certain conditions. Domestic researches Domestic researches related to the topic are collected by the author in many aspects: overview of the research, performance, and management of development investment from state budgets; and research on economic and investment of Ha Nam province. Overall, these studies have focused on performance of investment in general and investment from state budget in particular in the scope of a province (city) or investment performance in some industries, mobilization and the use of development investment funds in a province, the management of development investment from state budgets in a province or a city. On the other hand, there has not been any thesis going into development investment from local state budget in case of Ha Nam province. Moreover, some studies have only mentioned the performance of development investment from state budget, some just illustrate the management of state budgets of the whole country or in a particular province. This thesis focuses on development investment from local state budget in a province. Local state budget includes: funds regulated from the state budget and funds accumulated by local state budget for investment. Indeed, the thesis study development investment from local state budget in Ha Nam province, the limitation of which is that development investment from annual budgets depends on the regulation of the state budgets with the proportion of about 57% from local state budgets in the period 2008 - 2013; budgets have not met demand for development investment in the province, leading to a large number of investment projects being delayed or halted construction. The author goes through: content, impacts of development investment from local state budget on socio-economic development, management as a cause of development investment from local state budget being ineffective in local socio-economic development strategy, thus find solutions to increase development investment from local state budget in Ha Nam province. 1.2. Research framework and methodology 1.2.1. Research framework: It consists of 5 steps, each of which is divided into smaller contents with different prospects (research methodology, research tools, main study contents and results to be achieved) The research steps includes: a) Literature review of international and domestic research. b) The theoretical framework of the development investment from local state budget funds in Ha Nam province. c) Analysis of development investment from local state budget in case of Ha Nam province. d) International and domestic context, views, orientation and some solutions to enhancing development investment from local state budget funds in Ha Nam province. e) Recommendation to strengthen development investment from local state budget funds in Ha Nam province in the future. Research questions: the 5 research questions of this thesis are: +) What are the contents of development investment from local state budget? +) How does development investment from local state budget affect provincial socio- 5 economic development? +) Which factors affecting development investment from local state budget of Ha Nam province? +) What are the real situations of development investment from local state budget in Ha Nam province today? +) How can development investment from local state budget in Ha Nam province be strengthened? 1.2.2. Research methodology: to achieve the objectives of the thesis, the author used these main methods: statistical analysis, ordinary least squares (OLS) forecast regression, comparative method, expert interviews, methods of analysis, synthesis, diagrams, charts, graphs. Methods were used synthetically to take advantages and resist any limitation in each method, hence, gain reliability in the results of research to achieve the objectives. CHAPTER 2 THEORETICAL FRAMEWORK FOR DEVELOPMENT INVESTMENT FROM LOCAL STATE BUDGET 2.1. Development investment 2.1.1. The concept of development investment There are different concepts of investment, and development investment, but in short, “development investment is a fundamental component of investment, spending current funds to conduct activities aiming at increasing or creating physical assets and intellectual property, increasing production capacity, creating jobs and for development goals”. 2.1.2. Characteristics of development investment The author clarifies the characteristics of development investment as follows: a, Require large funds and stagnated throughout the investment process; b, The results of development investment activities that are construction works usually take effect at the place of investment implementation; c, Development investment is durable due to the fact that time for investment implementation and operating time of investment results generally undergo many years; d, Development investment activity is highly risky. 2.2. Local state budget 2.2.1. The concept of local state budget According to the State Budget Law, local state budget is part of state budgets, with revenue and expenditure being regulated by Law, decided by People’s Council and local authorities, and approved by the government if they are consistent with State budget law and other laws related to budget revenues and expenditures. The state budget includes central and local state budgets. Development investment funds belongs to local state budget managed by the local authority, which is the whole development investment funds of three levels of local state budget implementation, 6 including provincial budgets, district budgets and the budgets of communes and townships. 2.2.2. Sources of local state budget: a, Development investment funds divided by economic components include: development investment funds of the State sector, the non-state economic sector and the foreign investment sector. Among which, the development investment funds of the State economic sector includes state budgets for development investment of state’s credit and of state-owned enterprises. The thesis only studies development investment funds from the local state budget mobilized for provincial development investment locally called development investment from local state budgets. b, Development investment funds from local state budget includes: +) development investment funds from central budgets (both investment funds of central budget regulated directly to the local and ODA projects managed by the local) regulated to the province. +) development investment funds from local state budget accumulated to invest by the local themselves. 2.3. Development investment from local state budget 2.3.1 The concepts and objectives of development investment from local state budget: Through researching development investment from local state budget, the author has introduced the concept of development investment from local state budget, which is the activities invested by resources managed and used (as assigned) by the local authorities to maintain and enhance the capacity of the local economy through increasing the value of local physical and non-physical assets in order to achieve the objective of local socio-economic development. To understand clearly the concept, the author also explained what development investment from local state budget resources are; how to raise development investment from local state budget for the purpose of creating, upgrading, and expanding asset value; and clarify development investment from local state budget is an investment activity of local authorities from local state budgets. Objectives of development investment from local state budget: is for sustainable development, interests of nation, communities, localities and investors. Development investment from local state budget is development investment activity funded by state budget to achieve the goal of the local socio-economic development: development investment for infrastructure, addressing employment problem, eradicating hunger and alleviating poverty, developing culture-health-education, security and defense, protecting the environment and improving the living standard of citizens, promoting investment from other sources on local areas (individual and foreign countries). 2.3.2. Characteristics of development investment from local state budget The author clarified the characteristics of development investment from local state budget through the following primary traits: a) Development investment expenditures from local state budget are big, but often have the volatility, depending on the balance of local state budgets; b, Development investment from local state budget is the use of state budget to conduct development investment activities; c) Development investment from local state budget managed by the State is mainly 7 invested in infrastructure and socio-economic projects, which are unable to recover capital; d) Investing in infrastructure and socioeconomic accounted for the majority of local state budget; e) Development investment from local state budget predominantly aims to ensure the local socio-economic development. 2.3.3. State management of development investment from local state budget 2.3.3.1. The objective of management of development investment from local state budget From the consultation of professional scholars, the author found that, on a macro perspective, managing development investment from local state budget is to meet the following main objectives: a) Achieving objectives of socio-economic development strategy in each period of each region and of the country. b) Mobilizing maximum and using effectively capital investment, human resources and material resources of industry, local and society. c) Adhering to the provisions of law and economic - technical requirements in investment. 2.3.3.2. Process of development investment from local state budget The author agreed with other scholars on the process of development investment from local state budget in a province; however, the following steps are complemented: +) Identify investment needs. +) Establish and appraise plans for development investment from local state budgets. +) Layout allocation plan for development investment from local state budgets. +) Invest. +) Test, monitor, and evaluate. 2.3.4. Contents of development investment from local state budget in a province According to investment objects, development investment from local state budget in a province includes: a) Development investment from local state budget in infrastructure – socioeconomic (system of economic – technical infrastructure and system of social infrastructure; b) Development investment for supporting activities of state enterprises, economic institutions in fields that are essential for the economy requiring state participation; c) Investing in purchasing public properties from local state budgets; d) Development investment of science and technology by using local state budgets; e) Development investment of human resources from local state budgets; f) Development investment from other local state budgets. Each content above is divided into smaller details in order to form a basis for analyzing the structure of development investment from local state budget in Ha Nam province, following investment content in chapter 3. 2.3.5. Effects of development investment from local state budget. After consulting scholars, the author has completed and proposed a set of indicators assessing the impact of development investment from local state budget on local socio-economic development through the following groups: +) the effect of development investment from local state budget on the development of local infrastructure – socio-economic namely economic–technical infrastructure (transportation, hydraulics, centre business districts, industrial zones) and social infrastructure (education and medicine); +) the effect of development investment from local state budget limits the increasing level of environmental pollution; +) development investment from local state budget promotes other investing – 8 developing budgets; +) development investment from local state budget has an influence on the development of local technology; +) development investment from local state budget improves the quality of life for inhabitants; +) development investment from local state budget reduce poverty; +) development investment from local state budget with the construction of modern rural area. 2.4. Factors affecting provincial development investment from local state budget 2.4.1. The objective factors: a) Natural conditions; b) Economics; c) Political, cultural, social; d) Policies; e) Opening market trends and international integration. 2.4.2. The subjective factor: +) Capacity of local authority’s management and administration; +) Capacity of investors; +) Strategy of local socio-economic development; +) Elements of projecting, plans of development investment from local state budgets; +) Organizational model of management apparatus in development investment from local state budgets. 2.5. Experience of development investment from the state budget in general and local state budget in particular: Studying two represented Asian nations like South Korea and Taiwan, and two localities of Vietnam being Da Nang city and Phu Tho province, the author draw the lessons on state management of development investment from the state budget in general and local state budget in particular 2.5.3. Lessons for Ha Nam province: a) Drawing up investment plans, appraising investment projects, and monitoring tightly the development investment from state budgets play an important part in utilizing state budgets in the most effective way; b) Countries and localities pay attention to development investment from state budgets with a view to attracting other investing budgets. They also take notice of training and developing human resources for the public sector, stimulating technology (innovate new technology and products), and supporting venture capital, especially supporting state budgets in this field; c) Countries such as Taiwan and South Korea also decentralize investment from state budget in the same way as in Vietnam, but they respect the decision of the central government; at the same time, they encourage local governments to find ways for additional development investment budgets in infrastructure; d) The success or failure of state management in development investment from the state budget in general and local state budget in particular depend heavily on thought, vision, leadership and moral qualities of the central governments and local authorities; e) Nations such as Taiwan, South Korea and Da Nang focus on development investment from the state budget in key industries and key areas for the local as well as national development. 9 CHAPTER 3: THE CURRENT SITUATION OF DEVELOPMENT INVESTMENT FROM LOCAL STATE BUDGET IN HANAM PROVINCE IN DURING 2008 – 2013. 3.1. Factors affecting development investment from the local state budget in Ha Nam province 3.1.1. The effects of Ha Nam’s natural conditions and resources on the development investment from the local stage budget + The favourable geographic position, and diversity in its land resources; + Diversified mineral resources, favourable climate, soil, and abundant human resources, the developed infrastructure and socio-economic system are positive conditions in developing modern industries, advanced agriculture which is various both in farming, forestry and aquaculture. 3.1.2. Ha Nam’s economic potentials The major industries in Ha Nam include producing cement and other construction materials, textile, and handicraft (making bamboo products,… sung): + Ha Nam has a lot of potentials to develop agriculture, both farming and raising; + Ha Nam also has remarkable potentials in developing eco-tourism, mental tourism and heritage tourism; + The development rate of the province during the period 20082013 was about 11.7%. 3.2. An overview of the development investment in Ha Nam province 2008-2013 3.2.1. Development investment in Ha Nam province according to management levels and investment portfolio: During 2008 -2013, the total investment capital in Ha Nam reached 62.237,01 billion VND, increasing 11,7% annually. According to the management level, the percentage of development investment project managed by the local authorities was increasing. On the average, there were 72 projects managed by the local authorities. According to the portfolio, investment in basic construction accounted for the major part (72%) during this period. 3.2.2. Development investment in Ha Nam according to the economic sectors during 2008-2013 The development investment capital were allocated for 20 economic sectors, and hundreds kinds of products, with a great portion flowing into production, infrastructure and socio-economic development. A number of economic sectors were prioritized, including processing, manufacturing (43%), freighting (26%), agriculture, forestry, aquaculture (7.3%). Other sectors accounted for 23.7%. 3.3. The current situation of development investment from the local state budget in Ha Nam province during 2008-2013 3.3.1. The development investment from the local state budget in Ha Nam province during 2008-2013 3.3.1.1 The scope of and increases in the development investment capital from the local state budget in Ha Nam province during 2008-2013 10 Table 3.2: The scope and proportion of development investment capital from the local State Budget in the period 2008-2013 of Ha Nam. Unit: Millions VND, %, current price calculations Or. 1 2 3 Targets Unit 2008 2009 2010 2011 2012 2013 Average stage (2008– 2013) Million Total development investment capital 757.843 849.592 1.080.844 1.305.036 1.774.914 1.348.780 1.186.168 VND from local state budget The total development investment capital in Million 7.476.100 7.558.600 8.975.600 11.550.500 13.010.500 13.666.200 10.372.833 in the province VND Proportion of investment development capital 10,14 11,24 12,04 11,30 13,64 9,87 11,38 % from local state budget/the total development investment capital in the province Source: [25,105] and author's calculations The scope and proportion of development investment capital from local state budget in the period 2008-2013 were unstable. The proportion of investment development capital from the local state budget accounted for 11.4% of the total development investment of the province. (Table 3.2) The increasing rate of the development investment capital from the local state budget was unstable. The average increasing rate in the period was rather low (4%). 3.3.1.2. Development investment from the local state budget according to the investment capital resources in Ha Nam province during 2008-2013 Table 3.4. Development investment from the local state budget according to the investment capital resources in Ha Nam province during 2008-2013 Unit: Million VND, %, current price calculations. Or. Targets 2008 2009 Development investment from Billion VND 1 the local state budget 757.843 849.592 1.080.844 1.305.036 Development investment capital Billion from the funds allocated from VND 2 central state budget 466.490 508.700 592.450 642.650 894.680 894.680 Development investment Billion capital from the self- VND 3 accumulated local state budget 291.350 340.890 488.390 662.390 880.230 454.100 38 40 45 51 50 34 The proportion of the development investment capital from the selfaccumulated local state budget/The total development investment capital from the 4 local state budget Unit % 2010 2011 2012 2013 1.774.914 1.348.780 Source: [94,95,105] and author's calculations 11 Development investment capital from the self-accumulated local state budget accounted for 43% of the total development investment capital from the local state budget, fluctuating. The proportion of the development investment capital from the funds allocated from Central State budget over the total development investment capital from the local state budget was 57% on the average. 3.3.1.3. Development investment from the local state budget based on the investment portfolio in the period 2008-2013. (Table 3.5) a) Development investment from the local state budget in infrastructure and the socio-economy accounted for the largest portion (78.74%) in the total development investment capital from the local state budget. Development investment from the local state budget in the technical-economic infrastructure occupied 57.04%, in social infrastructure 21.71%; b) Development investment from the local state budget in other sectors occupied only 10.68% of the total; c) Development investment from the local state budget in science-technology occupied 5.5% of the total and fluctuated; d) Development investment from the local state budget in human resource development fluctuated, accounting for 4.61% of the total; e) Development investment from the local state budget in programs supporting enterprises and economic organizations that requires the state participation accounted for 0.47% of the total. 3.3.2. The reality in management of development investment from the local state budget in Ha Nam province 3.3.2.1. The process of development investment from the local state budget is discussed in detailed as follows: a) Identifying the investment needs; b) The current situation in making, verifying plans for development investment from local state budget; c) Planning, allocating the development investment capital from the local state budget; d) Implementing investment; e) Examining, supervising and evaluating 3.4. Evaluating the influences of development investment from the local state budget on the socio-economic development in Ha Nam province in the period 2008-2013 12 Table 3.5: The development investment capital from the local state budget according to the invesment portfolio in the period 2008 - 2013 Unit: Million VND, %, current price calculations. Or. A1 A2 A3 A4 A5 A Targets Development investment from local state budget funds into the system of socio-economic infrastructure A1 / A x 100% Development investment from local state budget for supporting activities of state enterprises economic institutions in fields that are essential for the economy state participation A2 / A x 100% Development investment from local state budget in developing human resources A3 / A x 100% Development investment from local state budget in science and technology A4 / A x 100% Development investment from local state budget in other fields A5 / A x 100% Total of development investment capital from local state budget 2008 2009 665.935 690.270 88 81 2010 2011 2012 2013 835.224 77 959.959 1.281.112 1.083.569 74 72 80 The period average 2008 2013 78,74 3.915 4.000 4.836 6.490 6.973 6.351 0,52 0,47 0,45 0,50 0,39 0,47 0,47 21.749 2,87 36.487 4,29 43.869 4,06 96.606 7,40 67.281 3,79 70.656 5,24 4,61 22.833 30.661 19.121 117.502 148.235 98.228 3,01 3,61 1,77 9,00 8,35 7,28 43.411 88.175 177.794 124.480 271.314 89.976 5,73 10,38 16,45 9.54 15,29 6,67 757.843 849.592 1.080.844 1.305.036 1.774.914 1.348.780 Source: Author collected from [95, 105] and author’s calculations. 5,5 10,68 100 13 3.4.1. The influence of development investment from the local state budget on the socio-economic development in Ha Nam province 3.4.1.1. Development investment from the local state budget had a lot of influences on the local socio-economic development (Table 3.8). a) The influences of the development investment from the local state budget on the local transport infrastructure: The number of communes with motorways reaching their centres increased yearly (the number was only 96 in 2008, increased to 116 in 2013, reaching 100%). On the average, about 160km of highways and roads linking provinces, districts, and communes were newly built, upgraded, or widened annually; b) Development investment from the local state budget in the irrigation system helped to upgrade the current canals as well as build a number of new ones. However, the number of newly built canals was rather small; c) The influences of development investment from the local state budget in the infrastructure in industrial zones: the number of industrial zones with garbage-central - processing systems increased at a rather slow speed annually. In 2013, there were 3 industrial zones with garbage- centralprocessing systems; d) The influences of development investment from the local state budget in the education infrastructure: The number of nationallystandardized schools fluctuated year by year. On the average, 18 schools were nationally standardized each year; e) The influences of development investment from the local state budget in the cultural infrastructure: In 2013, 116/116 communes in Ha Nam province had cultural houses and libraries of their own, improving the spiritual welfare of the people in the province. 3.4.1.2. The influences of development investment from the local state budget on alleviating poverty and constructing modern rural areas: + The percentage of poor households decreased year by year.+ At the end of December 2013, development investment from the local state budget in constructing modern rural areas achieved the province’s criteria on the construction of modern rural areas. However, those achievements were still low. (Table 3.13) On the average, about 160km of highways and roads linking provinces, districts, and communes were newly built, upgraded, or widened annually. Table 3.8: Results of development investment from the local state budget in Ha Nam province in the period 2008-2013 Or. Criteria 1 Results of development investment of technicaleconomic infrastructure systems The result of infrastructure investment in developing 1,1 Unit 200 8 200 9 201 0 201 1 2012 2013 14 1,2 1,3 2 2,1 2,2 2,2, 1 2,2, 2 2,3 2,3, 1 2,3, 2 transport systems Number of kilometers of highways, and roads linking provinces, districts and communes were newly built, upgraded, or widened annually. The result of development investment of irrigation systems’s infrastructure Number kilometers of canals were newly built, upgraded ore widened annually The result of development investment of industrial zone’s infrastructure The number of industrial zones with garbage-central processing systems increased annually Results of development investment of social infrastructure. Results of development investment in the education infrastructure The number of nationallystandardized schools fluctuated year by year Results of infrastructure development investment in the field of health, population, family planning Number of patient beds/ thousand population increased annually The percentage of children under age 1 fully immunized vaccines The result of infrastructure development investment in the environmental field The percentage of municipal waste was collected and processed and increased annually Forest coverage rate increased every year Km 64 101 100 89 90 516 Km 44 63 69 69 83 392 Iz 0 1 1 2 3 3 Sch ool 17 22 27 13 15 15 29.8 31 31 31 20,8 Bed % % % 96.9 94.4 95.4 84.0 96,1 77 85 85 85 0.11 0.12 0.08 0.03 90 95 0.7 5,5 Source: [25;94;105;108] 15 Table 3.13: Influences of development investment from the local state budget on constructing modern rural areas in Ha Nam province The number of investment criteria of new 15 14 rural construction achieved Total commune has achieved the criteria 1 1 13 12 1 5 11 10 9 8 6 6 5 4 2 1 Source: [94, 114] 3.4.1.3. Development investment from local state budget contributed to ensuring social stability in the province: Development investment from local state budget created modest influences on social stability. However, a number of social policies (children protection and care, free medical care for the poor, preferential policies for people with meritorious were approved. 3.4.1.4. Influences of development investment from the local state budget on stimulating development investment from other resources in order to meet the aims of improving the local socio-economic system: Development investment from the local state budget worked as a medium that attracted and maintained and stimulated the investment from other resources (the development investment capital, none-state investment capital, FDI). However, these influences were modest. (Table 3.14) 3.4.1.5. The influences of development investment from the local state budget on improving the quality of the public human resources: The quality of the public human resources increased preliminarily, meeting the requirements of the state management of development investment from the local state budget in the province. 3.4.1.6. The influences of development investment on reducing the environment pollution: The percentages of urban rubbish, solid and medical garbage which were collected and processed annually increased. The percentage of land afforested also increased yearly. The results were not high, though. (Table 3.8) 3.4.1.7. The influences of development investment from local state budget on developing science and technology in the province: In the period 2008-2013, hundreds of projects and innovative ideas were applied to boost the productivity and improve the effectiveness of the state management in public organizations and enterprises in the province. 3.4.2. Limitations and causes of development investment from local state budget in Ha Nam province. 3.4.2.1. Limitations of development investment from local state budget in Ha Nam province: + The development investment capital from the local state budget did not meet the requirements of socio-economic development in Ha Nam province; + The allocation of the capital between sectors and industries was not reasonable. Development investment capital mainly flew into those sectors such as socio-economic infrastructure and science and technology. 16 Human resource development was not sufficiently invested; + Development investment from the local state budget in the socio-economic infrastructure: the capital from the local state budget did not meet the requirements in this sector. The investment was not focused. The road system was not linked reasonably, failing to satisfy social and production requirements within the province as well as requirements of linking with other provinces; + Development investment from local state budget did not really complete its important role in constructing modern rural areas in Ha Nam province. 3.4.2.2. Causes of the limitations: + The quality of making socio-economic development plans was not good; Also, there were several weaknesses in writing and verifying investment plans, in managing and planning and implementing investment; + There were weaknesses in several stages of development investment projects from the state budget in general and the local state budget in particular, including proposing and verifying investment projects, consulting, completing and using the projects; + The workforce in the sector of development investment from the state budget in general and local state budget in particular was of low quality.+ There were several limitations in structuring the organizations, managing staff; + Inspecting and supervising development investment from the local state budget did not bring good results; + The legal frame related to development investment from the state budget in general and from the local state budget in particular included several unreasonable points which were not adjusted timely. 17 Table 3.14: Influences of development investment from the local state budget on stimulating development investment from other resources in the period 2008 - 2013 Unit: Millions VND, %, by comparison with 2010 prices Or. 1 2 3 4 Targets Total of development investment capital from local state budget 2008 885.351 Continuous growth rate The total development capital in the province Continuous growth rate Influences of development investment from the local state budget on stimulating development investment in the province Invested by the state sector Continuous growth rate Influences of development investment from the local state budget on stimulating development investment in state sector Invested by the none - state sector Continuous growth rate Influences of development investment from the local state budget on stimulating development investment in non-state sector 5 FDI investment capital Continuous growth rate Influences of development investment from the local state budget on stimulating development investment in FDI sector 2009 2010 2011 2012 2013 893.038 1.080.844 1.120.645 1.392.985 998.601 8.733.928 - 0,87 7.944.655 -9,04 21,03 8.975.558 12,98 3,68 10.716.773 19,40 24,30 11.388.356 6,27 -28,31 11.852.420 4,07 4.834.206 - -1.041 4.651.900 -3,77 62 4.763.558 2,40 527 5.581.423 17,17 26 5.092.515 -8,76 -14 4.251.665 -16,51 3.157.392 - -434 2.856.461 -9,53 11 3.262.000 14,20 466 3.612.306 10,74 - 36 4.547.653 25,89 58 5.415.520 19,08 742.330 - -1.098 436.295 -41,23 68 950.000 117,74 292 1.523.044 60,32 107 1.748.188 14,78 -67 2.185.235 25,00 - -4.748 560 1.638 61 -88 Source: [25;105] and author’s calculation 18 CHAPTER 4: VIEWS AND RECOMMENDATIONS TO INCREASE DEVELOPMENT INVESTMENT FROM LOCAL STATE BUDGET IN HA NAM PROVINCE 4.1. The background, views and orientation about development investment from the local state budget until 2020 By analyzing the national and international background related to development investment from the local state budget, the author has indicated her views and suggestions about development investment from the local state budget in Ha Nam province until 2020. 4.1.2. Views about development investment from local state budget: +) It is necessary to synchronise development projects on the bases of Ha Nam’s internal strength and suitability with socio-economic development of the Red River Delta and the whole country; +) Development investment from the local state budget should be implemented on the basis of taking the comparative advantages and strength of subregions and important sectors; +) Development investment from the local state budget should stimulate investment from other resources. 4.1.3. Orientation for investement development from local state budget: a) Development investment from the local state budget is to be the pioneer, which means it is to flow into those regions, sectors that have not been invested yet or those that are difficult to be invested; b) A focus should be made in development investment from the local state budget in developing the socio-economic system, creating a breakthrough; c) Development investment from the local state budget should contribute to stimulate the strength of the province;d) Investement development from the local state should contribute to improve the local human resources so that it can meet the demand. 4.1.2. Forecasts about the demand for development investment capital from the local state budget of Hanam province until 2020 By using statistical analysis, ordinary least squares (OLS) forecast regression, comparative methodthe thesis has forcasted demands for development investment capital from the local state budget in Ha Nam province until 2020. There are four different options, corresponding to different GDP rates and needs for the average development investment from the local state budget in the period 2014-2020 in Ha Nam province (Table 4.5) 19 Table 4.5: Forecast about the demands for development investment capital from the local state budget in Ha Nam province in the period 2014-2020 Order Options 1 2 3 4 Option 1 Option 2 Option 3 Option 4 Growth rate GDP(%) Development investment capital from the local state budget (Million VND) 8 2.492.000 10 2.747.000 11 2.884.000 12 3.028.000 Source: Author’s calculation 4.2. Some solutions for development investment activities from the local state budget in Ha Nam province. 4.2.1. Improving the quality of the formulation, management planning, formulation, evaluation and development of investment plans from local state budgets: a) Improving the quality of the formulation, planning management development investment from the local state budget: Need to raise awareness of the role of the formulation, management planning; Need to focus on innovation methods for planning, development investment plans from the local state budget and implementing the plan; b) Good performance in the preparation and implementation of planed: Based planning: must be based on orientation, strategic socioeconomic, potentials, advantages and resources of the province, and in accordance with the planning of the Red River Delta and the whole country. Create clearly goals oriented in planning. Unified, systematic synchronized planning is the basis for the formulation and implementation of development projects from local state budgets bring high efficiency; c) Improving the formulation, evaluation and implementation of development investment plans from the local budget: To complete the formulation, evaluation and development of investment plans from local budget demands new necessitate the combination of processes, methods, content planning. Ha Nam needs proactive formulation, evaluation and implementation of development investment plans from the local state budget in earnest spirit, to meet the strategic objectives of socioeconomic of the province to 2020. To ensure the quality of the development investment projects from local state budgets, we must adopt methods of analysis and forecasting of science. It is urgent to transfer the development investment work plan from the local state budget to the planned medium-term investment; Following the CT 23/KT-TT, authors specify the steps 20 in planning process for development investment from medium-term local state budgets - Ha Nam province should proceed. 4.2.2. Perfection, innovation and organizational structure of the investment managers developed from local budgets: a) The author's thesis offers two options and dissociates the manner in restructuring the organizational structure and functions of investment management development from the local budget: Forming the organization reviews rates of development investment projects from local state budgets. The organization is available on the Ha Nam People's Committee or Ha Nam authority for planning and investment but this is an independent department. b) Improving the quality and accountability of state managers for development investment from the local state budget: Need to strengthen training and improve professional skills, abilities Management for development investment state managers from local state budgets at the provincial, district and commune; Should strengthen the responsibility of the leader for their decisions at the local level (People's Council, People's Committee, departments and branches of districts, cities). c) Completing the training and recruitment examination mode for civil servants, who working in the development investment activities from local state budget. 4.2.3. Change the capital structure and investment structure evolved from local budgets The author has systematized resources and structural resources for development investment from the local state budget in view of the author according to Figure 4.1 of which: +) Capital investment in developing from Ha Nam local state budget consists primarily four sources: Income from fees, taxes (T1); revenue from land (T2), budget revenues from the central regulation (T3) and ODA (T4). +) Expenses for local state budget consists of 3 main items: recurrent expenditure (N1), debt and reserves (N2) and the rest is spent on development investment from state local budgets (N3). The author made two major plans to increase total development investment capital from local budget and have 1 option to change the development investment structure from the local state budget. The specific plans are as follows: +) Option 1: To increase development investment capital from local state budgets must be the T1 to T4 earnings: The author argues that it is difficult to increase the T3 and T4, can only increase on the T1 and T2
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