DECISION No. 1179/1997/QD-TTg OF DECEMBER 30, 1997 ON A NUMBER OF POLICIES AND MEASURES TO EXECUTE THE 1998 SOCIO-ECONOMIC DEVELOPMENT PLAN AND THE 1998 DRAFT STATE BUDGET

THE PRIME MINISTER

Pursuant to the Law on Organization of the Government of September 30, 1992;

Proceeding from Resolution No. 12/1997-QH10 of the second session of the Xth National Assembly on December 12, 1997 on the 1998 tasks;

At the proposals of the Minister of Planning and Investment and the Minister of Finance,

DECIDES:

I. REGARDING THE POLICIES AND MEASURES TO EXECUTE THE 1998 PLAN

Article 1.- The field of agriculture and rural economy:

1. To adopt measures to overcome difficulties and boost agricultural development and rural construction, in the immediate future, to concentrate efforts on surmounting consequences of storm Linda, stabilizing the people's life and quickly restoring the aquaculture and fishery in the disaster-stricken areas.

2. To concentrate on development of areas specialized in farming rice for export, specialty rice, maize, rubber, coffee, cashew nuts, sugar canes, fruit trees...To organize agricultural produce outlets for peasants. To give incentives in terms of land, ital, taxes and other types of support to the quick development of the processing industry in combination with the development of the sources of agricultural, forestry and aquatic products to be used as raw materials. To sum up and multiply the effective production models in rural areas. To set reasonable selling prices of electricity applicable to peasant households along the directing of narrowing the gap between the selling prices of electricity in the rural and urban areas. To step up the assignment of land and granting of land use right certificates to peasants. To encourage and create conditions for the development of the household economy, create favorable conditions for peasants' households to borrow ital for production.

3. To formulate a policy to manage, protect then proceed to close natural forests. To prepare good conditions for directing the implementation of projects to for afforestation of five million hectares, to create conditions for inhabitants in the areas to develop production, stabilize their life and put an end to nomadism and destruction of forests for milpa farming. For free migrant households that have settled down in the new land, the local authorities shall take concrete measures to create favorable conditions for them to feel assured in their production and life for a long time..

4. To issue the regulation guiding the mobilization of the people's resources in order to strictly control the setting of contribution amounts and openly inspect financial revenues and expenditures in all communes.

Article 2.- The industrial field:

1. To concentrate on drawing up plans for the development of each production branch and a number of key products, particularly export products and processed products so as to prepare rational and effective investment plans, quickly developing products of high competitiveness on the domestic and overseas markets. To rationally protect domestic production in conformity with Vietnam's roadmap for joining AFTA, WTO and other international economic organizations.

2. To promote in-depth investment, technology renewal and production restructuring in effectively operating industrial enterprises, particularly in the export goods processing and producing industry.

Article 3.- The field of development investment:

1. To adopt measures to mobilize to the maximum the domestic ital sources and attract more foreign ital sources (ODA and FDI) for development investment.

2. To study, amend and supplement Decree No. 29-CP of May 12, 1995 detailing the implementation of the Law on Promotion of Domestic Investment along the directing of encouraging all sources of investment ital and forms of investment from every economic sector, simplifying procedures of application for investment preferential treatment.

3. To announce the list of projects calling for foreign direct investment ital, the list of domestic and foreign BOT projects, to drastically improve the investment environment and create the most favorable conditions for foreign investors and domestic investors of all economic sectors to realize these projects.

4. To announce the planning and list of ODA projects. To supplement and renew the bid evaluation and consideration process so as to simplify procedures in compliance with the international agreements which Vietnam has signed, and speed up the disbursement of ital to ensure that ODA projects are put to use on schedule and with high-quality.

5. For budget-funded projects, the ministers, the heads of the agencies attached to the Government, the presidents of the People's Committees of the provinces and cities directly under the Central Government shall have to scrutinize and rearrange these projects, re-evaluate the effectiveness and urgency of each project, promptly solve the problem of scattered and low effective investment; concentrate investment on important projects and projects which shall be completed and put to use in 1998. To restrict to the minimum the start of new constructions belonging to Group B and C projects. Over 70% of the ital allocated to Group C projects must be channeled to on-going or new constructions due to be completed in the year. To suspend constructions which are not really urgent; not to include into their plans investment projects that fail to complete the procedures under Decree No. 42-CP of July 16, 1996 and Decree No. 92-CP of August 23, 1997 of the Government regarding the management of investment and construction.

6. To allocate investment credits according to the State plan, with priority given to the branches and products that will shortly yield profits, particularly those targeted at export and import substitutes.

Article 4.- The field of finance and currency:

1. To continue reviewing and revising of the tax policy along the direction of both ensuring budget revenues and creating conditions for enterprises to accumulate ital for development investment so as to nurture sources of revenues while taking into account the requirements of international integration.

2. The Ministry of Finance shall assume the prime responsibility for studying, then submitting to the Government for issuance the regime of incentives for profitably operating enterprises which pay higher profit taxes year by year along the direction that they shall be reimbursed part of the profit tax amount in excess of the previous year's profit tax for reinvestment. To issue regulations on the stabilization and public announcement of the tax rates every six months or every year applicable to small production and business households; to expand the coverage of special consumption tax to a number of goods items which are not encouraged to be consumed. To step up the sale of State-owned houses so as to increase budget revenues. To prepare good conditions for implementing the Law on Value-Added Tax and the Law on Enterprises' Income from January 1, 1999.

2. To adopt the policy of practicing thrift in budget spending. To continue supplementing and finalizing the spending mechanisms, policies, norms and criteria, to ensure that they are rational and compatible to the State budget' ability and can be uniformly applied throughout the country. To implement the regulation on price evaluation and bidding in the use of budget ital to procure equipment and supplies of high value or in large quantities, equipment and properties of construction investment projects.

To minimize the use of State budget ital to build new working offices, purchase new cars and new expensive equipment and furniture by administrative non-business agencies. On the basis of the results of the asset and land inventory in the administrative and non-business sector and the asset supply regime, to transfer properties from places with surplus properties to places with inadequate properties to ensure their effective use. In the first quarter of 1998, the Minister of Planning and Investment shall submit to the Prime Minister for decision a list of offices to be constructed in 1998; the Minister of Finance shall submit to the Prime Minister for decision the numbers of cars to be purchased and units permitted to do so in 1998. The funds for the construction of new offices and the purchase of cars must be included in the assigned 1998 draft budgets.

Training and medical examination and treatment establishments of the Corporations shall be partly supported by the State budget (not exceeding 45% of the 1997 State budget allocations) and be allowed to account the remainder into their the production and business costs; the specific level of support for each establishment shall be determined on the basis of the effectiveness of its production and business.

4. To assign to the ministries and central agencies 90% of the 1998 draft budget expenditures under the plan on allocation of the central budget already adopted by the National Assembly Standing Committee (except for expenditures on salaries and expenditures of salary character, expenditures on payment of foreign and domestic debts, donations and development investment and current expenditures from the source of foreign loans and aid). The People's Committees of the provinces and cities directly under the Central Government shall allocate to their attached units 90% of the 1998 draft budget expenditures (except for the expenditures on salaries and expenditures of salary character, expenditures on repayment of debts and development investment, current expenditures from the source of foreign loans and aid) and to the lower-level budget 100% of draft budget expenditures under the plan on allocation of the draft local budget expenditures already decided by the provincial People's Councils. Basing themselves on the above-mentioned principle, the district People's Committees shall allocate to their attached units 90% and to the lower-level budget 100% of the draft budget expenditures under the plan on allocation of 1998 draft budget expenditures already decided by the district People's Councils.

5. To continue implementing the mechanism on the use of revenues left for the local budget (revenues from the assignment of land-use right, proceeds from the sale of State-owned houses, revenues from public lotteries, agricultural land use levies, forest resources tax, revenues from television advertisements,...) for investment in the construction of socio-economic infrastructure, agricultural and rural development, re-creation of forest funds, development of housing fund and development of the television service,,,,, as in 1997.

6. To continue implementing the mechanism on rewards for extra revenues from import and export duties and special consumption tax to localities on the principle:

- For import and export duties and special consumption tax on goods imported through land borders, 100% of the revenues in excess of the draft revenues shall be rewarded to the locality.

- For revenues from special consumption tax on domestically produced goods, imported goods and from import and export duties on goods imported or exported by sea or by air, the Prime Minister shall decide to reward the locality with a percentage (%) deducted from the revenues in excess of the draft revenues.

The revenues in excess of the draft revenues from import and export duties and special consumption tax on imported goods which serve as basis for reward consideration shall be determined on the basis of the difference between the assigned draft revenues and the actual revenues from the goods actually imported or exported through land border gates, sea and air entry gates in the territory of each locality.

The above-mentioned reward for excess revenues shall be used only for investment in the construction of socio-economic infrastructure projects.

7. On the basis of the money supply plan for the whole of 1998, to assign the Governor of the State Bank to closely monitor the market fluctuations so as to execute the money supply plan in consistence with the monetary policy and ensure the stability of the currency and prices.

- To adopt incentive policies so as to step up the mobilization of domestic ital for meeting the demand of ital for the economy.

- To continue reserving part of short-term credits for medium- and long-term investment and priority objects, particularly remote, deep-lying and mountainous areas, and the production of export goods.

- To execute the policy on flexible interest and exchange rates along the direction of possibly lowering the lending interest rates and stabilizing the exchange rates at a necessary level, ensuring the encouragement of export and the control of import, increasing international reserves and reducing the imbalance in international payment.

8. To expeditiously elaborate and issue documents guiding the impleme3ntation of the Law on the State Bank and the Law on Credit Institutions. To reorganize the operation of the system of commercial banks.

9. To closely follow the monetary crisis in the region and the world, to apply comprehensive measures to prevent and deal with its negative impacts on our economy and society.

Article 5.- The field of circulation of supplies and goods:

1. Regarding the mechanism for the import and export management in 1998, the Prime Minister shall have a separate decision.

2. To issue decrees to guide the implementation of the Commercial Law, To concentrate on directing the implementation of the tax reduction schedule and rationalization of tax rates in conformity with the commitments within the AFTA framework.

3. The Ministry of Trade shall, together with the concerned ministries, work out a management mechanism and ensure essential goods, particularly for mountainous, island, remote and deep-lying areas. To continue to subsidize the transportation costs for goods supplied under social policies to mountainous areas and ethnic minority peoples residing in highland areas. To raise the responsibility and role of the State run trade service and the network of cooperatives in rural and mountainous region.

Article 6.- Renovation of the management of State enterprises, encouragement of the development of enterprises in other economic sectors:

1. For State enterprises, they should be soon categorized, rearranged and reorganized in terms of production and business activities. The enterprises where the State needs to own 100% of the ital or dominant shares shall be consolidated. The rest shall be extensively equitized. Active and drastic measures shall be taken to equitize 150 State enterprises in 1998. Small enterprises and enterprises suffering from prolonged losses where the maintenance of State ownership is no longer necessary shall be merged, sold or, open for bidding, leased to collectives or individuals under business package contracts (an enterprise may be assigned under a package contract to the collective of its employees and workers for business operation), dissolved or declared bankrupt under the Law on Enterprises' bankruptcy.

To arrange jobs and render good support for redundant laborers in the equitized or merged State enterprises or in enterprises where the form of ownership is changed.

To organize a preliminary review of the corporation model; to adopt measures to ensure a healthy financial status in State enterprises; to resolutely settle delayed payment of debts and ital misappropriation among enterprises; to re-evaluate the enterprises' assets. To issue regulations on the control of costs and prices with regard to monopoly enterprises and State corporations; to make public the results of financial operations of State enterprises.

2. To encourage a robust development of enterprises in various economic sectors, to study and determine additional forms of companies, expand the subjects entitled to establish and contribute ital to companies, to effect the business registration and the license-granting through quick and simple procedures.

3. To issue uniform regulations on the State agencies' inspection and supervision over enterprises and the circulation control; to prevent arbitrariness, causing hassles and troubles.

Article 7.- The field of science and technology:

1. To adopt economic policies and mechanisms to promote the intensified technological renovation and raise the country's technological level. To finalize soon the Bill on Science and Technology for submission to the National Assembly.

2. To arrange, select and ensure the conditions for the effective implementation of applied technology research schemes along the direction of directly serving the improvement of product quality and competitiveness on the domestic and overseas markets.

3. To intensify the environmental inspection work, to enhance the acity of environmental observation posts, to finance the settlement of serious environmental pollution in a number of areas, to set up an environmental fund, to enhance the environmental communication and education among people of various strata.

Article 8.- The field of culture, education, training and social affairs:

1. To finalize soon the Bill on Education and submit it to the National Assembly for passage. To expand the forms of people-funded and semi-public schools at the general education level, including the primary education level. To diversify the training forms at the tertiary education level, encourage the foreign universities to open their affiliates in Vietnam.

2. To adopt the policy of granting scholarships to excellent learners so as to encourage them in their study and providing social allowances for poor pupils and students so that they can continue their study at various levels. To improve the school fee policy in the direction along determining the school fee bracket according to geographical areas; collected school fees shall be remitted into the State budget to fund the educational sector.

3. To reorganize and improve the medical insurance mechanism in the direction of increasing the number of the insured and ensuring uniform management and regulations throughout the country.

4. To continue implementing the social policies and undertaking to socialize several social services, creating legal basis for organizations and individuals to invest in sports and physical training projects and activities, restructuring the mechanism of managing sports and physical training clubs, stadiums...

5. To issue comprehensive and concrete regimes and policies to encourage and promote the policy on the socialization of the above-mentioned educational, medical, cultural and social activities.(priority shall be given to the granting of land-use right, credit and tax incentives, assurance of social insurance regime and legitimate interests for State employees who move to work in the people-funded and private sector).

Article 9.- Regarding the national programs:

1. The minister who manages national programs shall take responsibility to the Prime Minister for the fulfillment of such national programs' objectives. The Ministry of Planning and Investment shall assist the Government in performing the overall management of the national programs. The presidents of the People's Committees of the provinces and cities directly under the Central Government shall be responsible for managing and organizing the fulfillment of the objectives and tasks of the programs in their respective localities.

2. The ministry that manages national program(s) shall determine the tasks and objectives thereof, draw up a plan for implementing the whole program, calculate resources, work out solutions, provide guidance for on the formulation of projects within the framework of each program, draw up plans on the allocation of ital to each ministry, central agency or locality for implementing the target programs and send them to the Ministry of Planning and Investment; the Ministry of Planning and Investment shall assume the prime responsibility together with the Ministry of Finance for summing up and submitting them to the Prime Minister for decision. The ministers, the heads of the central agencies and the presidents of the People's Committees of the provinces and cities directly under the Central Government shall organize the approval of projects of the national programs on the basis of the assigned cost estimates; draw up implementation plans and send them to the program managing ministry, the Ministry of Planning and Investment and the Ministry of Finance so that the Ministry of Planning and Investment can sum them up and report to the Prime Minister.

3. For the national programs which have been implemented but not included in the 1998 list of the national programs, in the immediate future they still comply with the financial mechanism defined in Decision No. 531/TTg of August 8, 1996 of the Prime Minister and, at the same time, the ministries, branches and localities which manage such programs shall expeditiously prepare conditions for including them into their routine tasks from 1999.

II. REGARDING THE SYSTEM OF ASSIGNED PLAN NORMS AND QUOTAS

Article 10.- The Prime Minister assigns the ministries, ministerial-level agencies, agencies attached to the Government and Corporations 91 the following norms and quotas:

1. Import and export: Total value of imports and exports (assigned to the Ministry of Trade).

2. Goods, supplies and equipment essential for increasing the national reserves: paddy, rice, equipment, supplies, commodities exclusively for national defense, security and a number of branches.

3. ital construction investment:

- Total amount of ital for concentrated ital construction (domestic and foreign ital); including project-implementing ital structured according to a number of important branches and sectors;

- A list of Group A projects and their ital investment, including domestic and foreign ital.

4. Finance:

- Total budget expenditures and expenditures according to sector, including expenditures on the national programs.

- Total State budget revenues: assigned to the Ministry of Finance.

- Total revenues from import and export duties and special consumption tax on imported goods (excluding surcharges and fees): assigned to the General Department of Customs.

Article 11.- The Prime Minister assigns the provinces and cities directly under the central Government the following norms and quotas:

1. ital construction investment:

- Total amount of ital for concentrated ital construction, including domestic and foreign ital).

- A list of Group A projects and their investment ital, including domestic and foreign ital.

2. Finance:

- The total State budget revenues in their respective localities and detailed revenues: special consumption tax on home-made goods, import and export duties and special consumption tax on imported goods, including those imported through land borders.

- The total local budget expenditures..

- Additional allocations from the central budget (if any).

Article 12.- The Prime Minister authorizes the Minister of Planning and Investment:

1. To provide guidance for the ministries, central agencies, localities and Corporations 91 on the plan norms and quotas regarding production, import and export, circulation of goods and supplies, education, training, science and technologies, basic survey tasks, culture and social affairs in order to ensure the major balances of the national economy in compliance with the orientations set forth in the plan.

2. To provide guidance for the ministries, branches and localities on the objectives, tasks and funds of the national programs.

3. To assign the ministries and Corporates 91 the list and investment ital of Group B projects and constructions, including domestic and foreign ital, ital for the designing and planning work, investment preparation ital and implementation preparation ital.

4. To assign the localities: ital for the designing and planning work, investment preparation ital and implementation ital, the structure of investment ital for project implementation according to a number of important branches and sectors, the list and investment ital of Group B projects; to announce the list of the Central Government's Group A and B projects in their respective localities.

5. For credit ital invested under the State plan, the Ministry of Planning and Investment shall assign the list of Group A projects and determine the level of ital for each project, announce the list of Group B projects and assign the total ital of Group B and C projects to the ministries, branches and localities (after the total ital, subjects, interest rates and lending mechanism have been decided by the Prime Minister).

Article 13.- The Prime Minister authorizes the Minister of Finance:

1. To assign the draft State budget revenues and expenditures to the central agencies other than the ministries and branches directly assigned by the Prime Minister.

2. To provide guidance for the ministries, branches, localities and Corporations 91 on the norms and quotas for State budget revenues and expenditures, including draft expenses on the national programs in order to ensure the implementation of the draft State budget already passed by the National Assembly and assigned by the Prime Minister.

III. REGARDING THE DIRECTION AND MANAGEMENT OF THE PLAN EXECUTION

Article 14.- On the basis of the policies and measures to execute the socio-economic plan and the draft State budget already approved by the Prime Minister, the ministries, branches, provinces and cities directly under the Central Government shall have to elaborate their own concrete programs and plans for execution. They shall, at the same time, concretize and provide guidance on the matters under their charge for uniform implementation nationwide. Right from the beginning of the year, the ministries and branches shall work out programs on the study, elaboration and issuance of mechanisms and policies within the scope of their management for early implementation in 1998.

Article 15.- Monthly briefings on the plan implementation shall be held among a number of agencies under the chairmanship of the Minister of Planning an Investment to propose in time solutions to arising problems in order to ensure successful implementation of the socio-economic development tasks determined in the National Assembly's resolution. The coordination among the ministries and branches in solving each matter shall be concretely assigned under the uniform direction of the Prime Minister.

Article 16.- The ministries, branches and localities shall have to apply the regime of making monthly reports on the plan implementation in a number of major fields: production, ital construction, budget expenditures and revenues, currencies, import and export, circulation of supplies and goods, inflation... and send them to the Office of the Government, the Ministry of Planning and Investment, the Ministry of Finance and the General Department of Statistics not later than the 22nd day of every month. For Corporations 91, apart from sending reports to the above-mentioned agencies, they shall have to send reports to the branch-managing ministries. Quarterly reports should evaluate achievements and weaknesses with in-depth analysis of the causes and recommendations on the measures to execute the plan. On the basis of the reports from the ministries, branches and localities, the Ministry of Planning and Investment shall sum up and report to the Government on the 25th day of every month.

IV. IMPLEMENTATION PROVISIONS

Article 17.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the chairmen of the People's Councils and the presidents of the People's Committees of the provinces and cities directly under the Central Government , the chairmen of the Managing Boards and the general directors of Corporations 91 shall have to implement this Decision.

For the Prime Minister

Deputy Prime Minister

NGUYEN TAN DUNG