In the past, state budget revenue regularly exceeded government estimates by at least 8.7 per cent. In response to the decline, National Assembly members last week demanded answers.

Despite agreeing with the government’s report that the state income fell on the back of decreases in crude oil output and the reduction of import taxes, National Assembly members pointed out that poor management of state-owned enterprises was a factor.

Deputy Tran Van, from Ca Mau province, said only 10 out of around 2,000 state-owned enterprises were expected to contribute 12 per cent more to the state budget than they did last year, while the rest of enterprises’ contributions were expected to be lower than in 2006.

State-owned enterprises are currently using 60 per cent of the country’s total financing and possess most of the country’s skilled labour force, land and natural resources. If the enterprises operated more effectively and efficiently, the state’s income would increase, said Van.

National Assembly deputies also said that the government had not collected money efficiently from foreign enterprises. Deputy Nguyen Van Phuc, from Binh Thuan province, said contributions to the state budget by the foreign sector had been lower than budget estimates for a number of years and this year’s contributions were likely to be VND633 billion ($39.5 million) less than estimated.

“Why is this repeatedly happening? Is it a price transfer problem that we have not been able to control?” asked Phuc, adding that some multi-national corporations had used the price transfer technique to reduce their contributions to local budgets. As a result, Phuc and other deputies asked the government to seek measures or enact a new law to prevent price transfer.

National Assembly deputies also highlighted that the government had incurred losses from capital construction and land use sales. Many deputies said that due to the backward frame of land prices, in 2007 the government had only collected VND16,000 billion ($1 billion) from land use taxes. Phuc quoted a minister’s calculations that if the government updated its current frame of land prices and improved management and supervision, its income could double or even triple.

Regarding capital construction, deputy Bui Thi Hoa from Dak Nong province said that losses in this sector would be in the thousands of billions of dong. In 2007, after carrying out 23 inspections, the Government Inspectorate discovered losses of $23.2 million as a result of financial mismanagement. Scrutinising projects to build commune centres in eight provinces alone, the Government Auditor discovered VND6.8 billion ($425,000) in state budget misappropriations. “If we had strong management and supervision, our state income in 2007 would have been much higher,” said Hoa.

The government generally submits reports on state budget disbursement and allocation to the National Assembly for the following year in October or November for approval. To ensure better use of the state budget and higher revenues, National Assembly deputies said the first thing that the government should do is to change its way of submitting reports. In particular, reports should be submitted much earlier, in May or June, and should comprise more details and analysis. Some deputies said that they felt they were working blind when they reviewed the reports as they were unsure about the accuracy of figures provided.

“According to the report, the state income in 2007 is expected to reach VND287,900 billion ($18 billion). Is that number correct? Realistic? I doubt that with the exception of the Ministry of Finance, most National Assembly deputies as well as National Assembly agencies don’t know how accurate the numbers are,” said deputy Dang Nhu Loi from Ca Mau province.

Source: VIR.