DIRECTIVE No. 49/2004/CT-TTg OF DECEMBER 24, 2004 ON SERVICE DEVELOPMENT IN THE 2006-2010 FIVE-YEAR SOCIO-ECONOMIC DEVELOPMENT PLAN

Over the past years, the State has adopted many undertakings and policies to create favorable conditions for the development of service activities. As the results, the service sector has witnessed positive changes, better and better meeting people’s production, consumption and daily-life demands and contributing to speeding up economic growth. Some service domains such as post and telecommunications, finance, banking, insurance, air transport, sea transport, tourism, labor export… have seen  high growth rates; the quality of services has been raised considerably, having attracted a large number of laborers and contributed to boosting export.

However, the growth rate of the service sector remains low as compared to the general economic growth rate; recently, its proportion to GDP tends to gradually sink, the restructuring remains slow, many services have not yet been formed and exploited efficiently. The legal environment as well as mechanisms and policies for service development are still inadequate and inconsistent while branches have failed to closely coordinate with one another for mutual support and development. The quality and efficiency of service business remain low; the added value is low; the service charges in a number of branches remain rather high as compared to those of other countries in the region and world, some services of great significance for the national competitiveness have not yet been properly developed.

The above-stated weaknesses are attributed mainly to the limitations in the ministries’, branches’ and localities’ awareness of the role of services in the economy; the failure to pay due attention thereto, the absence of practical development measures and management and administration experiences; the shortage of information and data for formulation of plans and policies, and the failure to be updated with information on practical operations of service markets at home and abroad.

In order to further promote the obtained results and address the above-stated weaknesses, thereby to create a breakthrough in service development, to accelerate the process of economic restructuring, to raise the service proportion commensurate to the sector’s potentials to the general economic growth, to raise the competitiveness of service products, further attract the participation of all economic sectors and foreign investment in the service sector, increase export and meet the requirements of economic renewal and international economic integration, the Prime Minister instructs:      

1. In the 2005 as well as 2006-2010 plans, it is necessary to heighten the position and role of the service sector; to consider it one of the spearhead sectors for national economic development with the following objectives:

- To concentrate on developing potential service domains such as tourism, insurance, air transport, sea transport, warehousing and storing yards, transshipment, finance, banking, audit, post and telecommunications, construction, labor export, etc, and encourage the development of new services of high competitiveness; to strive for a growth rate of the service sector in the 2006-2010 period higher than that of the entire economy; to boost the restructuring within the service sector and gradually raise the service proportion to the national GDP to around 45% by 2010.

- To raise the quality of service products and the competitiveness of service enterprises on domestic, regional and international markets; to further exploit potentials and advantages of each service domain and enhance cooperation among service domains for competition and development.

- To boost service export and services for on-spot collection of foreign currencies through activities of tourism, finance-banking, foreign exchange collection and on-spot goods sale, post and telecommunications, air and sea transport; to reduce service deficit.

- To boost the socialization so as to develop cultural, educational, medical, physical training and sport, employment… services according to market mechanism, thus meeting the people’s increasing demands and step by step integrating into international market.

- To survey and assess the competitiveness of each service domain at present and in future, to classify domains which need to be protected and domains temporarily banned or definitely banned so as to open service domains and render national treatment and most favored nation treatment to foreign service providers.

2. On the orientations for formulation of strategies and plannings on service development.

In the process of preparing the 2006-2010 five-year plan, the Ministry of Planning and Investment shall put forth major orientations on the structure, macro policies and mechanisms in order to boost service development; ministries and branches shall take initiative in formulating the strategies, plannings and action programs for the development of services within their branches, as well as specific solutions to the implementation thereof on the basis of the general orientations and strategies on their branches’ development.

a/ On the general orientations for service development investment

- To continue mobilizing investment capital sources from all economic sectors at home and abroad in order to upgrade and build infrastructures and equip modern technical facilities in order to create favorable conditions for service development.

- To prioritize the State budget capital sources (both central and local budget) for development, consolidation, upgrading and modernization of key infrastructures, especially communications and transport, airports, seaports, post and telecommunications, tourism, finance and banking. To render support in modern technical equipment and facilities to major service domains so as to raise their competitiveness on domestic and international markets and to better and better satisfy people’s production and consumption demands.

- To open the service market according to international commitments, enhance the mobilization and promotion of foreign investment in service domains, ensuring that more than 30% of capital demand shall be satisfied with FDI sources.

- To vigorously boost the equitization and organization of business activities after new and effective models so as to mobilize resources from the entire society for service development investment, first of all in the domains of insurance, banking, tourism, passenger and cargo transportation, post and telecommunications, real estate business, goods wholesale and retail and other domains.

b/ On orientations for investment in some major service domains

- Communications and transport services:

+ To invest in the maintenance, consolidation, upgrading and focal development of material foundations of communications and transport infrastructures. To upgrade the existing land-road traffic works, build some key works and step by step build systems of expressways, first of all, the system linking key economic zones, important traffic axes with high traffic flow and special tourist sites as well as cultural and historical relics of Vietnam and the region. To raise the quality of passenger- and cargo-transportation services, thus meeting in time socio-economic development requirements and people’s traveling demands.

+ To renovate, upgrade and synchronize the existing railway networks, modernize the information and signaling system and raise service quality, striving to catch up with the regional level.

+ To make investment so as to synchronize and modernize the system of seaports. To build a number of seaports after the model of open ports and step by step increase transshipment services. To develop the national sea-going fleet along the direction of specialization and modernization. To rejuvenate the fleet, combining the domestic shipbuilding with the purchase of ships from foreign countries. To further boost the equitization of maritime service enterprises. To raise the quality and professionalism in exportation of transport services and crewmembers, to pay attention to the development of package maritime services.

+ To invest in renovating, upgrading, modernizing and building a system of international airports and flight-control and -administration establishments. To invest in the procurement of new airplanes and modernization of the flying fleet, making it capable of competing in regional airway market. To step by step open the market and attract international airlines to participate therein.

- Tourist services:

Vietnamese tourism should become a spearhead economic branch on the basis of mobilizing the entire society’s resources so as to efficiently exploit the country’s potentials and advantages regarding natural and ecological conditions and cultural-historical traditions; to strive to attract over 6 million foreign tourists and over 25 million domestic tourists by 2010. To continue concentrating on providing State budget capital for investment in the development of tourist infrastructures, first of all, in national key tourist sites and regions with tourist development potentials, especially tourist sites associated with cultural-historical relics for which the plannings and development strategies till 2010 have already been approved by the Prime Minister. To continue providing State budget support for the implementation of the national action program on tourism.

- Construction services:

To create legal framework and motive forces for boosting the development of construction investment activities and form a large, diversified and abundant construction market; to further decentralize and clearly define rights and responsibilities of subjects participating in construction with a view to ensuring construction quality and efficiency.

- Financial services:

To create a favorable environment for organizations of all economic sectors to participate and compete in a healthy manner in the financial market and financial services; to adjust mechanisms and policies for financial market and financial service market to operate in accordance with the conditions of the economy as well as international commitments on finance and financial services. To clarify financial situation and enhance the financial potentials of State-run financial service organizations. To enhance the State’s capability to control over assorted types of financial services.

- Banking services:

To boost the modernization of the via-bank payment system and enhance banking facilities in order to encourage economic sectors, including individual consumers, to use via-bank payment services and restrict the use of cash in commercial relations, to continue formulating and perfecting mechanisms and policies to attract foreign currencies. To raise the commercial banks’ capability to mobilize capital, especially medium- and long-term capital sources, and at the same time, to simplify process and procedures for further expansion of credit-providing activities in a safe and efficient manner in accordance with international practices, thus better and better satisfying capital demands for economic growth. To continue adhering to the policies of diversifying activities of commercial banks along the direction of approaching new financial services, meeting customers’ diversified demands, raising the competitiveness of domestic commercial banks and preparing for regional and international economic integration, especially in realizing the commitments under the Vietnam-US Bilateral Trade Agreement and commitments after joining in the WTO.

- Post and telecommunications services:

To build and develop a widespread post, telecommunications and information technology network along the direction of modernization and higher service quality as well competitiveness so as to better satisfy socio-economic development requirements, ensure security and defense, develop and apply information technology according to objectives set in the Strategy on development of Vietnam’s post and telecommunications till 2010 and orientations till 2020, which has been approved by the Prime Minister.

- Scientific and technological services:

To concentrate on developing scientific and technological services in service of the process of national industrialization and modernization along the following directions:

+ Hi-tech services, such as services on installation and operation of technological chains; renovation, repair and adjustment of machinery, equipment, testing devices, measuring facilities, and scientific and technical equipment with automatic control units.

+ Data processing, calculation and analysis in direct service of research, development, expertise, and testing; elaboration of pre-feasibility and feasibility study reports.

+ Activities related to the protection of intellectual property rights; activities in support of technology transfer and application of new techniques to production, technological demonstration; services on scientific and technological information and consultancy, technological brokerage and promotion; technology nurseries and business commencement; to step by step build a technology transfer market.

+ Activities of training and fostering technical personnel and raising business administration knowledge.

- Labor export:

To concentrate on developing and raising the efficiency of labor export; exported specialists and laborers must be trained so as to meet the requirements on profession, foreign languages, physical strength, behavior and working disciplines; to raise the percentage of skilled laborers, laborers of high qualification and specialists for export; to invest in the development of a network of training establishments for labor export, focusing on top job-training schools of high quality; to reorganize and renew State enterprises along the direction of specialization in these services; to diversify ownership forms of labor export enterprises.

3. In order to prepare for the formulation of mechanisms and policies for the development and organize the management of services in the remaining period of the 2001-2005 five-year plan and in the 2006-2010 period, the ministries, ministerial-level agencies, Government-attached agencies, provinces, centrally-run cities, branches and localities shall perform the following tasks:

a/ On the basis of the classification of services by the World Trade Organization and the guidance of the Ministry of Trade and the General Department of Statistics, the ministries and branches shall coordinate with the provincial/municipal People’s Committees in taking initiative in formulating strategies on development of services under their management, propose appropriate mechanisms and policies to boost services right in 2005 and the following years, and incorporate services in the contents of the 2006-2010 five-year plan.

b/ The Ministry of Trade: To revise and perfect mechanisms and policies on service import, export and trading in order to make them suit the World Trade Organization’s institutions and the General Agreement on Trade in Services (GATS). To disseminate information to and guide branches and localities in preparing conditions for the realization of commitments on trade and services after joining in the WTO, and commitments on trade and service liberalization within ASEAN framework (CEPT/AFTA, AFAS, etc.) up to 2010 and in the following period. The Ministry of Trade shall bear responsibility before the Government for the synthesis and direction of service import and export activities.

c/ The General Department of Statistics: To assume the prime responsibility for, and coordinate with the Ministry of Trade and concerned ministries and branches in, formulating and submitting to the Government for promulgation in early 2005:

- Classification lists of services and service import and export, which are formulated in compatibility with the internationally standardized lists and expanded according to Vietnam’s practical situation and requirements.

- The system of statistical reporting regimes for services and international trade in services; first of all, focusing on a number of main services such as post and telecommunications; air transport, sea transport, insurance, finance, banking, and tourism.

To collect and synthesize statistical reports on services and international trade in services according to the prescribed regimes in service of the formulation of policies and management and administration of the economy by the Government as well as briefings of the inter-branch task-force on services (already set up under the Prime Minister’s direction in the Planning and Investment Minister’s Decision No. 995/QD-BKH of August 26, 2004).

d/ The Ministry of Home Affairs: To assume the prime responsibility for, and coordinate with the General Department of Statistics, the Ministry of Planning and Investment and the Government Office in, revising service domains and activities, for which the managing agencies have not yet been identified; to propose the Prime Minister to supplement the State management functions for concerned ministries and branches in 2005. To coordinate with the ministries and branches in consolidating their organizational structures and personnel for the performance of statistical work according to the Law on Statistics.

e/ The Ministry of Planning and Investment: To coordinate with the Ministry of Finance and concerned agencies in studying the amendments and supplements to mechanisms and policies on investment in the service sector along the direction of encouraging the socialization; opening it for all economic sectors, including enterprises with 100% foreign capital, so as to attract investment capital from countries with large investment capital market and transnational groups, focusing on some service domains such as trade, tourism, finance, banking, communications and transport, post and telecommunications…

f/ The ministries, branches and provincial/municipal People’s Committees shall have to arrange full-time officials to monitor, make statistics and synthesize service activities within their branches and localities according to standards and norms of the statistical reporting regimes applicable to services and service trading already promulgated; to grasp thoroughly the situation and report on the service development as well as problems to be settled (on the 20^th every month and the last month of quarter) to the Ministry of Planning and Investment, the General Department of Statistics, the Government Office and other agencies according to the prescribed regimes for the Ministry of Planning and Investment and the inter-branch task-force to synthesize and report the service development situation to the Government at the Government’s monthly regular meetings.

In order to take initiative in integration in service domains, right from now, the Ministry of Trade shall have to immediately notify ministries, branches, localities and enterprises of international commitments on opening the service market; the ministries and branches shall have to prepare conditions for the realization of commitments which Vietnam has signed or acceded to; to direct service-providing companies to revise service activities within their respective branches so as to work out plans on expansion and maintenance of domestic market and customers before foreign service organizations start their activities in Vietnam; to study and work out appropriate mechanisms to further attract capital sources, take initiative in gradually opening main service markets such as tourism, air transport, sea transport, finance and banking, insurance, retail distribution, post and telecommunications and other services.

4. The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with concerned ministries and branches in, monitoring and synthesizing the implementation of this Directive and periodically, synthesizing and reporting the implementation results to Government.

The ministers, the heads of the ministerial-level agencies, the heads of the Government-attached agencies, the presidents of the provincial/municipal People’s Committees, the heads of State budget-funded organizations, the chairmen of the Managing Boards and the general directors (directors) of State enterprises shall have to implement this Directive.

Prime Minister
PHAN VAN KHAI