Vietnam should encourage decentralisation so that the central government would do only "What local government can’t do," economist Vu Thanh Tu Anh told a conference to discuss decentralisation on Thursday.

This was in contrast to the prevailing philosophy where the local government did only that which the central government did not want to do, he said

The HCM City-based Fulbright School director said the Viet Nam Central Government was overloaded with work, while local governments which have limited autonomy, tend to passively depend on the centre – essentially for budget allocation.

Anh, who is also a consultant to the USAID-funded Viet Nam Competitiveness Initiative programme, hailed the success of decentralisation in management of foreign direct investment (FDI) projects where provincial governments had almost complete autonomy in deciding to accept or reject projects, except in conditional sectors.

He quoted some provincial administrators as saying: "It’s the decentralisation in FDI management that helps the provinces [to carry out] administrative reform."

"Some provinces [are so proactive] that they look for even further decentralisation."

Anh was speaking at the "Provincial Forum: Collaboration for Growth" co-chaired by the Agency for Small and Medium-sized Enterprise Development (ASMED) and development projects funded by DANIDA, EU, IFC/MPDF, GTZ, SNV, UNIDO and USAID.

The first of its kind, the two-day forum attracted about 200 representatives from ministries, provinces and organisations.

Vietnam has embarked on a decentralisation process through which local governments are given more autonomy and power to steer local economic development.

However, the overloaded central government, unclear and conflicting policies, together with limited human, infrastructure and finance resources of provinces are the weakness of the decentralisation process in Vietnam, according to Anh.

"In the context of unclear institutional framework, specific roles of province leaders are very important in deciding the proactivity of each province," he said.

Anh said that the government and international donors had paid attention to decentralisation to provincial and grassroots (commune) levels, while ignoring the district level. However, district governments had a very important role in land-related issues such as site clearance compensation and private sector development.

Income gap

There were provinces which generate huge budget revenue and are net contributors to the central government’s coffers while some others are net recipient of State budget.

More than 10 of Vietnam’s 64 provinces generate budgets to be distributed to the rest, more than 50 provinces.

They also attract 70-80% of FDI, ODA and bank credits of the entire country.

Citing the Public Expenditure Review data during 1996-04, Anh said that budget money had increasingly been transferred between central and local levels which meant the more than 50 less prosperous provinces were being increasingly reliant on central government for budget.

In 2010 per capita income in Cuu Long (Mekong) Delta provinces would be only one sixth of that of HCM City and south-eastern provinces, which would cause issues of migration, traffic jam, flooding, education and health care overload.

The forum also discussed the WTO impact on Vietnam’s current "mix" of decentralisation and central planning, with relation to supporting industries, agriculture, and environment.

Participants also discussed the role of provinces in issues of land use planning, simplification of business start-up registration procedures and provision of business development services.

Source: Viet Nam News.