Decentralisation Process Flags

Goods are unloaded at Cua Lo Port in Nghe An Province. Many provinces nationwide have rushed independently to develop infrastructure, including seaports and industrial zones, resulting in an ineffective use of public resources. — VNA/VNS Photo Lan Xuan

HA NOI — Local decent-ralisation plans have largely failed to conform to national strategies, according to a report released yesterday by the Viet Nam Institute of Economics (VIE) and Central Institute for Economic Management (CIEM).

The report, which focuses on eight cities and provinces including Ha Noi, HCM City, Hai Phong and Kon Tum, reveals that improperly controlled decent-ralisation has caused an imbalance between industries' growth and energy supply and brought about serious damage to the environment.

Before 2003, only the Government and central level could approve State budget-funded projects. From 2003-06, the scale and characteristics of projects determined what level was authorised to approve them. In 2006, ministries and ministerial-level agencies and localities were permitted to approve a majority of projects.

However, in many cases, ministries and localities have had to rely on the Government for funding, causing many approved projects to fall short on funds and forcing localities to compete for the limited funds from the State budget, according to the report.

In many provinces nationwide, localities all vie for the same industries, such as sea transport and mine exploration, creating tougher competition and reducing national competitiveness in international integration, said VIE senior economist Vu Tuan Anh, a member of the report compiling board.

In Viet Nam, Anh said, decentralised models were applied both prior to and during the integration process in order to give localities flexibility and reduce administrative bureaucracy, especially in more complicated socio-economic activities.

However, so far, decentralisation had not been properly linked to economic integration, he said. Both national and local socio-economic development plans lacked clear objectives and forecasts about how economic integration would impact their economies.

Director of Viet Nam Institute of Economics Tran Dinh Thien said that decentralisation was a major part of restructuring the country's economy, as it related to practically every sector.

And while economic integration had many potential benefits, it was necessary to have suitable mechanisms in place in order to realise those benefits.

Besides assessing the situation of socio-economic planning and economic integration, the study also addressed foreign direct investment attraction and management, public investment and public infrastructure/services development, land management and regional co-operation.

The report is part of the Beyond WTO Programme, developed in response to a request from the Vietnamese Government for donor support to help with managing economic integration and the transition to a market economy in the period after Viet Nam's accession to the World Trade Organisation. It was funded by the Australian Agency for International Development and the UK Department for International Development. — VNS