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DECENTRALIZATION OF PUBLIC INVESTMENT
MANAGEMENT IN VIETNAM: SITUATION AND SOLUTIONS
PHÂN CẤP QUẢN LÝ ĐẦU TƯ CÔNG TẠI VIỆT NAM:
THỰC TRẠNG VÀ GIẢI PHÁP
Ngo Ngan Ha, M.A - Nguyen Thi Nguyet, M.A
Thuongmai University
hann.vcu@gmail.com
Abstract
Public investment plays the important role in Vietnam’s development, it not only contributes
to change the socio-economic, but also to increase the technical infrastructure of the economy
and labor productivity. Apart from those positive contributions, public investment in Vietnam still
exists many limitations, especially the investment efficiency is low. Besides, the inadequacy in
decentralization of public investment management between the central and local government is
one of the most interested causes. This paper discusses the perspectives on decentralization of
public investment management, the situation and some recommendation for decentralization of
public investment management in Vietnam.
Keywords: public investment, decentralization, Vietnam
Tóm tắt
Đầu tư công góp phần làm thay đổi cơ cấu kinh tế - xã hội của Việt Nam, gia tăng cơ sở
vật chất kỹ thuật của nền kinh tế, tăng năng suất lao động. Bên cạnh những đóng góp tích cực
vào quá trình phát triển đất nước, đầu tư công tại Việt Nam tồn tại nhiều hạn chế, nhất là hiệu
quả đầu tư còn thấp. Trong đó, bất cập trong phân cấp quản lý đầu tư công giữa các cấp Trung
ương và địa phương là một trong những ngyên nhân được đặc biệt quan tâm. Bài nghiên cứu
luận bàn về quan điểm phân cấp quản lý đầu tư công, thực trạng phân cấp quản lý đầu tư công
tại Việt Nam và đề xuất một số giải pháp nhằm hoàn thiện phân cấp quản lý đầu tư công tại Việt
Nam trong thời gian tới.
Từ khóa: đầu tư công, phân cấp, vietnam
1. Introduction
In the process of State management over public investment, the State emphasizes the con-
centration of management. The concentration is an attribute of the management over public in-
vestment in general and the management of the state in particular. The State management over
public investment is understood as the positive impact on public investment management
processes in order to achieve certain goals. The concentration is talking about the unity of State
management on public investment, rather than concentrating all power on a central goverment,
inevitably leads to autocracy, authoritarianism, abuse of power in public investment management.
The history has shown that, no State can bring the country to development, increase the efficiency
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of public investment when all rights to govern the country and solve all affairs are concentrated
in the central government. Excessive centralized management over public investment can con-
strain the efficiency of public investment. But a lack of concentration will lead to the dispersion
of resources, which makes the, possibly overlapping functions and tasks in public investment
management. Therefore, it is necessary to clearly define what problems the central government
deals with in public investment, and which issues to hand over to local goverment.
Decentralization of public investment management is understood as the transfer and de-
termination of management authorities and responsibilities between the central government and
the local government based on the real characteristics and capacity of local goverment through
the legal documents. In which, the central government transfers to local authorities on a regular
basis, one or a number of tasks and powers for public investment management by issuing legal
documents. In Vietnam, the decentralization of public investment management has clearly defined
the functions, tasks and implementation resources of the central and local governments in public
investment management. This reduces the workload of the central government, thereby further
facilitating the macro-level policymaking process. In addition, the decentralization process of
public investment management also creates more initiatively for local goverment in implementing
public investment activities in accordance with their competence and requirements of duties.
However, the decentralization process of public investment management still lacks synchroniza-
tion, does not ensure consistency between the decentralized powers and duties with the ability to
exercise those rights and the responsibilities of local goverment. That leads to ineffective decen-
tralization of public investment management.
In the scope of this article, through secondary data, this research focus on analyzing the
current situation of decentralization of public investment management relationship of two most
important levels of government which are central and local governments and the conditions for
decentralizing public investment management in Vietnam.
2. Overview of decentralization of public investment management
2.1. The concept of decentralization of public investment management
The investment is the process of using resources in a coordinated time to achieve a defined
result or set of goals in a certain socio-economic condition (Le Viet Thai, 2007). Sharpe (1999)
argues that the investment means the present firm sacrifice of value in order to achieve (possibly
uncertain) future value. The investment can be investment of the State, investment by enterprises
and investment in the form of public - private partnership. The investment can be towards socio-
economic or profit-oriented goals. Public investment means an investment activity chaired by
the State to implement socio-economic development programs and projects on the basis of the
State’s resources and other resources.
Initially, almost countries managed public investment according to the centralization model.
In this model, making the management decision and implementing the functions of mornitoring
and evaluation are mainly carried out by the central government. The central government regulates
issues relating to planning the public investment, allocation of the capital sources and implemen-
tation of public investment projects. As a result, it is really difficult for local government to pro-
mote the dynamism, creativity, autonomy and self-responsibility in public investment
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management. Therefore, decentralization of public investment management is considered as an
alternative management model which can overcome the limitations of centralization mechanism.
Decentralization of public investment management can be understood as the transfer and
clear delimitation of authority and responsibility between government levels in public investment
management by promulgating in legal documents (Vu Thanh Tu Anh, 2012). In general, it is the
process of redesigning the system of authority, responsibitlity and accountability (base on func-
tions of state management in public investment) in the direction of shifting from the central gov-
erment to the local government, as well as the business relationship process among stakeholders
(inside and outside the system of public investment management). In essence, decentralization
of public investment management aims to transfer the decision - making power to the lower levels
to suit with the actual situations and to ensure the use of rescource more effectively, thereby to
contribute to the local socio-economic development. In federal countries – the degree of decen-
tralization ensures the highest independence for local government, the central government only
approves the national socio-economic development plan and the local governments are enable to
decide some issues on public investment management including: planning the public investment;
allocating the public investment capital plan; approving, evaluating, deciding, implementing and
supervising the public investment projects. In countries applying delegation in public investment
management, the central government has the right to promulgate policies, regimes, standards,
norms of public investment management decentralization while the local governments are mainly
assigned responsibility and power to manage and implement public investment.
Decentralization of public investment management includes the following main contents:
planning the public investment; allocating the public investment capital plan; approving, evalu-
ating, deciding, implementing and supervising public investment (Tran Thi Thu Huong, 2011).
However, the transfer of authorities and responsibilities in the decentralization of public invest-
ment management is not a mechanically arrangement, but according to John M. Cohen & Stephen
B. Peterson (2002), decentralization of public investment management must be operated in close
relation with administration decentralization, fiscal decentralization, market decentralization, po-
litical decentralization). In a study by Lorena Viñuela (2014) in 40 countries on the quality and
trend of decentralization of public investment management, it is stated that “there is no common
model, no general uniformity in the public investment management decentralization applies to
all countries “. Therefore, the countries need to base on the goals of economic management in
general and public investment management in particular, as well as the political, economic and
social situation of each country, each region to make decisions on the content and form of decen-
tralization of public investment management.
The important problems of public investment management decentralization are the con-
sistency between contents of public investment management decentralization (planning the public
investment; allocating the public investment capital plan; approving, evaluating , deciding, im-
plementing and supervising public investment) with decentralization forms (administration de-
centralization, fiscal decentralization, market decentralization, political decentralization) and how
to coordinate to create an expected decentralization model. Besides, because of the interation be-
tween the contents and forms of public investment management decentralization, it is necessary
to pay attention to the order and coordination between them to get the highest efficiency. For ex-
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ample, within the scope of fiscal decentralization, if the revenue decentralization is not preceeded,
or at least parallel with expenditure decentralization, the local government will not have enough
financial resource to carry out the other tasks of public investment management. On the other
hand, if administration and fiscal decentralization are expanded but not associated with political
decentralization, the use and alloction of resource will also not be controlled exactly.
2.2. The conditions of public investment management decentralization
Public investment management decentralization is not the intrinsic attribute of local gov-
ernment, but it reflects the relationship between the central and local government in performance
the duties of state management on public investment. Therefore, in order to implement effectively
and achieve the target of public investment management decentralization, the local government
should implement in certain conditions. According to Jennie Litvack (1998), the conditions to
ensure effectiveness of public investment management decentralization include:
Firstly, it is the condition of implementation resources. The local government must have
sufficient resources to implement decentralization of public investment management including
human, financial and material resources. The condition of human resource requires local public
investment managers must ensure both in quantity and quality and have the capacity to perform
the assigned tasks. If the public investment managers are not satisfied the condition, the local
government cannot well implement contents of decentralization, even corruption and power abuse
can occur. Physical resources are physical factors ensuring the process of public investment man-
agement decentralization can be carried out smoothly such as office systems, working equip-
ment…Therefore, physical resources are the important resource to ensure the local government
can have adequate equipment to implement decentralization contents. Financial resource here
means the budget for public investment management decentralization. If budget and other re-
sources do not follow the authority and responsibility, decentralization of public investment man-
agement will be very difficult to succeed. Therefore, decentralization must link the autonomy of
budget with the authority and local management function of public investment. Thanks to budget
autonmy, local governments can ensure the budget for their decisions and implementation of state
management of public investment.
Secondly, it is the condition of information transparency. Information transparency can be
understood as the full, prompt, accurate notification for local people of the public investment
plan, solutions for allocating public investment capital plan and approval, evaluation and decision
on public investment projects implemented by local government as well. If the information is
transparent, on the one hand it will help ensure the the provision of public goods and services
becomes meaningful and on the other hand residents may participate in checking, supervising or
even may detect some mistakes in the implementation process of public investment management
decentralization which can enhance the efficiency of public investment.
Thirdly, it is the condition of opinion collection mechanism from residential community.
This mechanism means people can express their expectation to local governments about the con-
tents of public investment management decentralization. Along with the condition of information
transparence and accountability, the opinion collection mechanism of residential community also
encourage people to actively participate in the process of developing public investment plans and
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allocating the public investment capital plan. As a result, this mechanism can help overcome the
situation of spreading public investment, wasting resources, low efficiency of public investment
and decrease many public investment projects which are not suitable with expectation of local
residents.
Fourth, it is the condition of accountability. The local government must have two-way ac-
countability: first is with the upper level and second is with the lower level who directly are in-
fluenced by decentralization. The local government must publicize, account and take
responsibility for the results of public investment management so that residents can supervise
their activities to ensure efficient implementation of public investment management. If account-
ability mechanisms are not ensured in both two ways, the decision making not only may not guar-
antee to serve residents better but also take it out of control of central government.
Fifth, it is the condition of instituational environment. The conditions of resources, infor-
mation transparency, opinion collection from residents, accountability are only necessary condi-
tions for the success of public investment management decentralization. In fact, these conditions
are affected, even in some extended cases, they can be products of instituational environment.
Therefore, in order to successfully decentralize public investment management, the factors of in-
stitutional environment must be adjusted so that regulations, legal policies must operate in the
same direction and support the process of public investment management decentralization. How-
ever, institution is often self-sustaining, so sometimes it not only does not support but also impede
decentralization of public investment management.
3. Situation of public investment and decentralization of public investment management
in Vietnam
3.1. Situation of public investment in Vietnam
In the social investment structure, investment of public sector plays an important role in
the economy development of Vietnam. In the period from 2014 – 2018 and preliminary 2019,
social investment capital continuously increased, in average it increased of about 12% per year.
In which, public investment always accounts for an important proportion in the total social in-
vestment capital. The total public investment capital which the state budget is allowed to imple-
mented in 2020 is nearly 700 trillion VND and 2.2 times to the real capital disbursed in 2019.
Table 1. Public investment in the total social investment structure
Unit: billion VND
Public investment Non-state invest- Foreign investment
No Year Total ment
Percent Percent Percent
Scale (%) Scale (%) Scale (%)
1 2014 1.220.704,0 486.804,0 39.9 468.500,0 38.4 265.400,0 21.7
2 2015 1.366.478,0 519.878,0 38.0 528.500,0 38.7 318.100,0 23.3
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3 2016 1.487.638,0 557.633,0 37.5 578.902,0 38.9 351.103,0 23.6
4 2017 1.668.601,0 594.885,0 35.7 677.510,0 40.6 396.206,0 23.7
5 2018 1.857.061,0 618.661,0 33.3 803.298,0 43.3 435.102,0 23.4
6 Preliminary 2.046.838,0 634.948,0 31.0 942.449,0 46.0 469.441,0 23.0
2019
Source: General statistics office of Vietnam
Public investment includes major sources including state budget, credit investment capital
from state and state-owned enterprises, in which investment from state budget and state-owned
enterprises accounts for over 70% the public sector investment.
Table 2. Structure according to public investment capital
Unit: billion VND
State budget Loans Capital of state
capital enterprises and
No Year Total other
Scale Percent Scale Percent Scale Percent
(%) (%) (%)
1 2014 486.804,0 207.704,0 42.7 198.202,0 40.7 80.898,0 16.6
2 2015 519.878,0 233.378,0 44.9 201.000,0 38.7 85.500,0 16.4
3 2016 557.633,0 270.883,0 48.6 202.052,0 36.2 84.698,0 15.2
4 2017 594.885,0 290.135,0 48.8 210.549,0 35.4 94.201,0 15.8
5 2018 618.661,0 324.109,0 52.4 193.831,0 31.3 100.721,0 16.3
6 Preliminary 634.948,0 342.948,0 54.0 186.390,0 29.4 105.610,0 16.6
2019
Source: General statistics office of Vietnam
According to General statistic office, for the first 7 months of 2020, public investment dis-
bursement reached 203 trillion VND, equaling 42,7% of the year plan and increased 27,2% in
compared to the same period of last year (41,6% in 2019 and increased 4,7%). Specifically, the
central capital reached 32,5 trillion VND, equaling 38,4% of the year plan and increased 60,1%
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compared to the same period of last year; the local capital achieved 170,5 trillion VND, equaling
43,6% of the year plan and increased 22,5% in comparison with the same period of last year. No-
tably, the capital implemented from state budget in 7 months of 2020 of some centrals citites
like: Hanoi city reached 22,063 trillion VND, equaling 48,6% of the year plan and increased
2,8% compared to the same period of last year; Ho Chi Minh city reached 17,128 trillion VND,
equaling 35,8% and increased 73,2%; Quang Ninh reached 8,465 trillion VND, equaling 60,9%
and increased 64,6%...
Disbursement of public investment capital in many Vietnamese provinces was “frozen” in
the first half of the year due to the complicated Covid-19 epidemic. The “social distancing” policy
and other prevention measures affected site clearance in many areas. Furthermore, many investors,
project management boards, consultants, contractors of all construction works must stop working
and implement general cleaning, cleaning up construction sites, coordinating with functional
agencies to contribute to epidemic prevention and control. Therefore, the disbursement of public
investment capital was delayed. In addition to objective causes relating to the epidemic situation,
the main cause of the current slow disbursement is mostly due to subjective factors in managing,
operating and implementing the project such as: slowly completing investment procedures and
assigning detail plans for capital allocation; delay in site clearance; the selection of contractor
and construction organization is still low… Especially, some ministries, sectors, localities and
project management boards are not proactive and drastic in coordination and direction; the role
and responsibility of headers have not been highly appreciated…
Public investment in recent years played the important role in the difficult time of economic
development, become great motivation to promote growth and economic restructuring and had
large spreading effects in projects of transportation infrastructure development, energy…. Besides,
the positive changes in public investment structure promoted investment in infrastructure, im-
proved the investment environment and handled unreasonable issues of regions. The state budget
has focused more on human development, improving the quality of workers. Specifically, invest-
ment in infrastructure development accounts for a big proportion, over 90% on average of total
development investment expenditure from the state budget.
3.2. Situation of public investment management decentralization in Vietnam
For public investment activities, the spirit of management decentralization has been demon-
stated since 1999 in Resolution No 52/1999/NĐ-CP on 08/07/1999 with the basic principles “de-
fine clearly the state’s management fuction and management decentralization of investment…
in accordance with each type of investment capital source and investor”. Accordingly, apart from
important national projects approved by National Assembly, investment projects using state
budget are divided into 3 groups A, B, C depending on the field and/or total capital. Depending
on each project group, the competent authority may be Prime Minister, Minister, Heads of min-
istry-level agency or President of People’s Comittees at all levels. At the local level, before 1997,
all investment projects were appraised and approved by Central agencies. Then, in the 2003 pe-
riod, it was decentralized to locals to evaluate and approve the projects of group B and C; The
Prime Minister allows investment in group A projects and Chairman of the Provincial People’s
Committee decides to invest (organize to evaluate and approve) the projects of group A. Since
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2006, all projects of group A, B, C has been assigned to local to evaluate and approve, the Prime
Minister only approves the national important projects which are decided by National Assembly
according to Resolution No. 49/2010/QH12 on 19/06/2010. From 2015 to recent years, the local
governments have full authority to decide on investment projects and allocating the development
investment plans.
Regarding investor decentralization, Decree 40/2020/ND-CP guiding the Law on Public
investment on 06/04/2020 and consolidate document 905/VBHN-BKHĐT in 2019 consolidating
the Decrees guiding the Law on Public investment (Decree 136/2015/NĐ-CP guides to implement
some articles of Public investment law and Decree 120/2018/NĐ-CP amends Decree
136/2015/NĐ-CP), for projects using the state budget capital, investor will be decided by project
decider before project formulation to suit with regulations of the Law on state budget. For projects
decided by the Prime Minister, the investor is one of the following organizations: Ministry, Min-
istry-level agency, government agency, other central agencies, the Provincial People’s Committee,
central cities and state owner enterprises. For projects under investment decisions of Ministers,
Heads of ministry-level agencies, Presidents of People’s Committees at all levels, the investor is
organization of managing and using the construction.
Fiscal decentralization is also an important issue because it affects the ability to allocate
public investment capital of local government or the ability to meet reciprocal capital. The 2015
Law on State budget specifies that the Central Budget is approved by the National Assembly,
while the Local Budget is approved by the Provincial People’s Committee. The law also issues
clearly to increase the autonomy for local governments in operating local budget, especially in
revenue and expenditure. In order to support for decentralization process of public investment
management, the Law on State Budget in 2015 also stipulated to keep the local budget stable for
a few years, while some localities that cannot balance the budget will be awarded the supplement
from the Central budget.
The bidding field is also decentralized according to the Law on Bidding in 2013. Accord-
ingly, the Prime Minister takes responsibility in bidding contents, approving or authoritizing con-
tractor selection for projects under the Prime Minister’s investment decision. Ministries/ branches
and local People’s Committees at all levels are responsible in bidding for projects under their
management.
Finally, an important group – the basic construction investment projects – is also promoted
to decentralize for local governments. These regulations comply with the regulations of public
investment management decentralization, but also supplement with regulations relating to man-
agement decentralization of construction investment. Specifically:
- Decree 52/1999/CP on 08/07/1999 about promulgating regulations on investment and
construction management.
- Decree 12/2000/CP on 05/05/2000 about amending and supplementing some articles of
investment and construction management, issued together with Decree 52/1999/CP on
08/07/1999.
- Decree 07/2003/ND-CP on 30/01/2003 about amending and supplementing some articles
of investment and construction management and related laws.
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- Decree 85/2009/ND-CP about guiding to implement Bidding law and to select the con-
struction contractor according to the Construction Law.
- Decree 16/2005/ND-CP on 07/02/2005 about managing construction investment
projects.
- Decree 12/2009/ND-CP on 12/02/2009 clarified more the functions of state management,
and investors. Besides, it has specifically defined power, responsibility of all levels, sectors in
each stage of the entire process of investment and construction management, especially in plan-
ning, investment preparation, project appraisal, investment decision, implementation of invest-
ment project, bidding management, settlement of investment capital…
- Decree 59/2015/ND-CP on 18/06/2015 about managing investment and construction
projects.
- Decree 42/2017/ND-CP on 05/04/2017 about amending and supplementing some articles
of Decree 59/2015/NĐ-CP.
One of the important documents for local authorities to promote decentralization of public
investment management is the Law on Organization of People’s Councils and People’s Commit-
tees (2013). The law specified the duties and powers of both the People’s Councils and People’s
Committees at all levels in the locality. Accordingly, decentralization of state management ac-
cording to fields is given to all three levels: province, district and commune. The law has also
strengthened the supervisory role of People’s Councils at all levels for state’s administrative man-
agement at localities. This change has enhanced the performance of People’s Committees at all
levels. Furthurmore, law allowed local authorities at each level to decide on local issues within
the framework of state laws.
In general, the regulations on decentralizing public investment management have helped
to clarify the functions, tasks, and resources of local governments for public investment projects
depending on their importance, nature and/or the size of the project. Thereby, it helps to reduce
the workload for central government and support for policy making process at the macro level.
In addition, the decentralization process of public investment management also creates initiative
for ministries, branches and local governments to implement public investment activities in ac-
cordance with their competence, requirements and duties.
Decentralization of public investment management by giving more authority, responsibility
for the local governments has help the local authorities in Vietnam become more creative and
autonomous in public investment management. Public investment plans developed by local gov-
ernments are also more suitable with the local socio-economic conditions and better respond to
the needs of local people because the local government is close to the local residents and under-
stand their needs and desires most. In addition, decentralization in public investment allocation
has enabled the local authoritites to decide the allocation of public investment capital, which has
help local governments to reimburse full autonomy in public investment. Furthermore, the de-
centralization of public investment implementation for local governments will help the locality
to be more proactive in bidding, implementation, amending and operating the public investment
projects. Local public investment work and projects have been implemented more effectively
due to the enhanced function of checking and supervising public investment in localities. Thereby,
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it helps reduce negative impacts in public investment and contributes to promote the socio-eco-
nomic development of the locality.
Apart from these achievements, decentralization of public investment management in Viet-
nam still has certain limitations. Specifically:
Firstly, the decentralization of public investment management is massive. If locality is con-
sidered as the unit of decentralization, provinces and central citites in Vietnam are divided into
three groups. The first group includes Hanoi and Ho Chi Minh city which have the special de-
centralization policy. The second group consists of three central citites including Hai Phong, Da
Nang, Can Tho with decentralization policies not extensive as the first group but more open than
the third group. Group three includes the remaining 58 provinces which use the same decentral-
ization policies despite of the difference in size, fiscal space, resources and capacity… Having a
common decentralization mechanism for almost provinces may be understandable from the cen-
tral government’s perspective, but this can limit the effectiveness of decentralization policy. An
efficient decentralization system will adjust the self-determination level of each province to best
suit with that provincial government’s capacity. Of course, if a locality’s decentralization space
is more open, the accountability must be more strictly and operations must be more transparent
as well.
Secondly, decentralization of public investment management has not synchronized with
fiscal and political decentralization which not only cannot create resonance effect but also limit
the efficiency of the decentralization. For example, the local government may collect some taxes
but these taxes are not stable and the taxe rate is not allowed to adjust by local authority. As a re-
sult, while the space of self-determination is expanded, the local financial resources still remain
the same.
Thirdly, the coordination mechanism between localities are still weak. As analyzed above,
the relationship of localities currently is more competitive than coordinated. Although there are
some regional coordination mechanisms such as through Regional Steering Committees, but these
Committees only operate on a part time basis and meet only a few times in a year. Furthermore,
the resources of human, finance and organization of the Steering Committees are very limited,
so the coordination between localities is really lax.
Decentralization of public investment management has been expanded to local authorities
but the coordination mechanism is lax, so every province plans to build airport, seaport…. Cur-
rently, the country has 39 seaports with more than 100 habors, which means for each 30 – 40 km
of the coast, there will be a habor. More than half (exactly 20) of these 39 seaports are classified
as “international” port – a gateway for trading goods between Vietnam and the world. With a
limited quantity of goods, this fragmentation of the infrastructure led to the situation that not ul-
tilize all the designed capacity, thus the cost increased and the competitiveness of Vietnamese
export products also reduced. Similarly, Vietnam currently has also 15 domestic airports and 7
“international” airports, many of which are only 1 to 2 hours away from each other. Even when
Can Tho airport is only using less than 20% of it’s capacity and is at a loss, An Giang airport,
which is about 70 km away (and about 60 km from Rach Gia airport) is still planned with the in-
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vestment capital of about 3400 billion VND. The spreading and inefficiency are also shown
clearly in developing the industrial infrastructure. The country has 18 coastal economic zones,
267 industrial zones, and 918 industrial clusters with occupancy rates of 4%, 26%, and 46% re-
spectively.
Fourthly, the monitoring mechanism of public investment is still lack and weak. The current
public investment monitoring mechanism is conflicting of interest (the investors both appraise,
monitor and evaluate results) and is uneffective. Besides, the effectiveness and efficiency of su-
pervisory activities of the People’s Councils at all levels are still also very limited. This is caused
by technical and institutional reasons. In technical aspect, time, budget and other resources serving
for supervisory activity are extremely limited, in addition, lacking of information and data re-
source also led to the People’s Councils cannot carefully supervise activities of the People’s Com-
mittee. In term of institutional, the specialized rate of the People’s Council is very low (only
about 10% to 30% depending on each localilty). This means that the majority of delegates of the
People’s Council are in charge of different duty and responsibility in government officials. Be-
sides, more than 90% of the delegates are Party members. Thus, the question is who these dele-
gates represent, for resident, for the government, for the Party, or for all. In addition, the
mechanisms for directly affected people to have the chance to participate in the decision-making
process and to supervise the investment process are currently only superficial, and not effective.
The above limitations are from many reasons. In order to decentralize effectively and eq-
uitably, it must be implemented in a good institutional environment with the transparency condi-
tions of information, voice, accountability and resources.
Firstly, the instituational environment for public investment management decentralization
remains limited. At present, Vietnam has many documents guiding public investment management
decentralization but they are scattered in many different documents, so it is really inconvenient
in tracking and implementing. The assignment of tasks between authorities at all levels has be-
come gradually more specific, but it is still not detail enough. Therefore, in fact, the central and
local governments still overlap in many fuctions. The overlap in functions, duties, interests and
responsibilities between central and local government is the main reason why many tasks are un-
dertaken by many levels and vice versa, many tasks are “missed”. In addition, there are a number
of duties that have been delegated to lower governments, but in fact the upper government is still
“holding”.
Secondly, the conditions for decentralizing public investment management in terms of
transparency of information, voice, accountability, and resources are not guaranteed. Information
related to planning the public investment as well as allocation public investment capital plan are
regularly not disclosed. People usually only know about public investment projects when these
projects came into operation, so they cannot raise any voice. In addition, information on public
investment projects is not clearly disclosed, so local people cannot participate in the process of
checking and monitoring public investment.
Accountability of local authorities is not high. This can be explained more clearly in the
issue of land claims (related to site clearance of local public investment projects). The number of
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citizens’ complaints denouncing officials, organizations and individuals that violate the law related
to public investment in the locality shows that the decentralization policy does not guarantee the
accountability and causes the increase in the number of complaints.
In order to implement the more decentralized responsibilities, the more resourses are the
prerequisite for local goverment. In recent years, although the local governments in Vietnam are
being allocated more and more budget but if we look deeper into the picture of budget revenues
and expenditures, it still exists some important issues. The recent increase in local budget revenue
rate did not result from fundamental changes in the design of budget decentralization in direction
of giving more revenue to the locality but from an increase in some revenue sources left 100%
in the locality, especially from land (the largest rate is tax on transferring right to use land). This
is a temporary income that cannot be maintained in the long term. In general state budget, the
rate of local budget revenue is still much lower than the expenditure rate. This means that a very
large portion of local budget spending depends largely on transfers from the central government
and thus increases the reliance of local gvernment on the central government. Although the share
of local budget spending has increased but a very large part of this rate is norm spending. There-
fore, the local government is not autonomous, but must comply and this is especially true with
provinces that do not have autonomy in the state budget.
The human resources of local authorities that have not yet met the task of decentralizing
public investment management is one of the reasons leading to the limitations in decentralization
process. Local human resources, especially at district and commune levels, are still lack and
weak, work concurrently, not being properly trained in public investment management. Therefore,
although many localities and districts are decentralized to appraise, approve and make investment
decisions, but they cannot appraise and have to transfer projects to the provincial level.
4. Some recommendations to improve decentralization of public investment management
in Vietnam
Given the above limitations, it is necessary to improve the decentralization of public in-
vestment management in Vietnam. Some recommendations should be mentioned such as:
Firstly, complete the institutional environment. The central government can issue a sepa-
rate law on decentralization of public investment management, or local authorities can gather
and issue a “handbook” to guide decentralization of public investment management which col-
lects current regulations for local authorities to follow and implement easily. Besides, it is nec-
essary to issue soon circulars and decrees guiding to implement regulations in 2019 Public
Investment law.
Secondly, complete the fiscal decentralization to suit with public investment management
decentralization. One of the amendments is needed to consider is the integration of the Central
and local budgets to create more proactive power for local governments in allocating and deciding
budget for public investment and to ensure suitability with the local practical situation. In addition,
to ensure the effectiveness of public investment plans and allocation of public investment plans
in localities, it is necessary to consider expanding revenue sources for local authorities. In devel-
oping countries, local governments can set up their own taxes and this is an ideal condition for
expanding budget revenue but in Vietnam it may not be feasible. Therefore, instead of building
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the own taxes, the local government should have right to set the taxe rates on some taxes such as
taxes on land and property.
Thirdly, promote the information disclosure and transperancy, improve accountability of
local governments. Local authorities must provide the correct, complete, timely, clear, accurate
and understandable information of planning, allocation of public investment capital plans, ap-
praisal, decision and implementation of public investment projects for local people. Therefore,
they can easily participate in the process of planning and monitering public investment imple-
mentation which help overcome corruption in public investment management decentralization.
Fourth, improve the capacity of officials who implement decentralization of public invest-
ment management at local authorities. The success of decentralization often depends very much
on the management capacity of officials. Currently, the improvement of the management capacity
seems to not be implemented proactively, corresponding to the decentralizaion process of public
investment management. Therefore, local governments need to regularly organize training courses
to improve the knowledge and qualifications of the staff, who are directly involved in local public
investment management. In addition, it is also necessary to improve professional ethics and have
a disciplinary mechanism for the offenders who caused serious consequences.
5. Conclusion
The public investment decentralization policy is correct and consistent with the general
trend. This policy has improved the effectiveness of state’s management on investment, enhanced
the autonomy, creativity of local government and improved the efficiency of public investment,
thereby contributed to the development of socio - economic.
However, the decentralization of public investment management in Vietnam over the years
has exposed many limitations and shortcomings. International experience in decentralization of
public investment management has shown that it is impossible not to adhere some basic principles
to get the success, which are: decentralization must be in accordance with resources (human, fi-
nancial potentials, etc.), the level of socio-economic development; fiscal decentralization must
correspond to authority and responsibility tranfered in public management between central and
local goverment... In addition, strengthening public investment management decentralization
from the central government to local governments must be associated with the establishment of
a complete legal system, a mechanism of highly promoting democracy to create favorable con-
ditions for people, communities and social organizations to participate in public investment man-
agement.
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of the National Assembly
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3. Tran Kim Chung (2015), Restructuring public investment, Finance publishing house,
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