General provisions on design and approval and assignment of tasks of public investment plan in Vietnam

Vietnam law has general provisions on design, evaluation, approval and assignment of tasks of public investment plan. Let’s find out this issue with Lawyer X through the following situation: “Dear Lawyer! I want to ask what are regulations on Classification of public investment plans in Vietnam? What are Bases for formulation of mid-term and annual public investment plans? Thanks for answering my questions!”

Legal grounds

• 2019 Vietnam Law on Public Investment

Classification of public investment plans

– Public investment plans shall be classified by the planned time limits, including:

+ Mid-term public investment plan that must be valid for the period of 05 years and must be in line with the 5-year socio-economic development plan;

+ Annual public investment plan that must be made to support the implementation of the mid-term public investment plan and must fit into objectives of the annual socio-economic development plan and the annual public investment budget balance.

– Public investment plans shall be classified by levels of regulatory authority, including:

+ National public investment plan;

+ Public investment plans of Ministries and central regulatory authorities;

+ Public investment plans of local authorities at any level.

– Public investment plans shall be classified by funding sources, including:

+ Plan for investment of the central budget funds, including investments specific to sectors, industries, public investment programs and portions of state capital participation in projects in the public-private partnership form, subject to law on state budget;

+ Plan for investment of the local budget’s funds, including investments specific to sectors, industries, public investment programs and portions of state capital participation in projects in the public-private partnership form, subject to law on state budget;

+ Plan for investment of legitimate revenues that state regulatory authorities and public service units retain for investment purposes.

Bases for formulation of mid-term and annual public investment plans

– Midterm public investment plan shall be formulated on the following bases:

+ Current conditions and outcomes of implementation of the 5-year socio-economic development plan and the midterm public investment plan developed in the previous stage;

+ Socio-economic development strategy; national, sector-specific, industry-specific and local 5-year socio-economic development plans; 5-year financial plan; 5-year borrowing and public debt repayment plans; preferred investment objectives included in 5-year national, sector-specific, industry-specific and local public investment plans;

+ Related planning scheme provided for in law on planning;

+ Demands for and forecast of capabilities of mobilization of funding sources invested in construction of socio-economic infrastructure and of balancing the state budget’s capital;

+ Forecast of impacts of global and domestic situations on development and capabilities of mobilization of investment funds;

+ Regulatory and policy framework on calling for investment funds from different economic sectors for the purposes of construction of socio-economic infrastructure.

– Annual public investment plan shall be formulated on the following bases:

+ Review of progress in and outcomes of implementation of national, sector-specific, industry-specific and local socio-economic development plans; outcomes of implementation of the previous-year public investment plan;

+ Annual socio-economic development plan;

+ Midterm public investment plan;

+ Demands for and capabilities of balancing resources for the purposes of investing in construction of socio-economic infrastructure in the plan year.

Principles of formulation of mid-term and annual public investment plans

– Agree with developmental objectives included in the socio-economic development strategy, 5-year and annual national, sector-specific, industry-specific or local socio-economic development and other approved plans, 5-year financial plan, and 5-year borrowing and public debt repayment plan.

– Correspond to capabilities of balancing public investment funds and calling for different investment capital from other economic sectors; ensure macroeconomic balance and prioritization of public debt safety.

– Distribution of public investment capital must adhere to principles, criteria and norms of distribution of public investment capital in specific stages that have already been approved by competent authorities.

– Prefer to distribute funds to sectors, industries or territorial areas by taking account of developmental objectives and guidelines existing over periods of time.

– Ensure public disclosure, transparency and fairness.

– Make sure that managerial activities must be performed in a concentrated and consistent manner in terms of objectives, regulations and policies; ensure that investment management powers are decentralized and autonomy is granted to Ministries, central and local regulatory authorities in accordance with laws in order to enhance investment efficiency.

– Annual public investment plan must be consistent with the approved midterm public investment plan.

Contents of reports on midterm public investment plans submitted to competent authorities to seek their approval

– Review of progress in and outcomes of implementation of the midterm public investment plan existing in the previous stage.

– Socio-economic development objectives; mid-term sector- and industry-specific investment objectives and investment structure directions. Classification by specific sectors or industries shall be subject to provisions enshrined in the Law on State Budget.

– Capabilities of calling for and balancing funds; estimated gross investment in carrying out socio-economic, sector- and industry- specific midterm development goals and tasks, including funds for carrying out planning tasks, investment preparatory tasks, project execution tasks and repayment of advances and other borrowings granted by local banks for investment purposes.

– Total state budget capital in the midterm public investment plan, including the central budget’s capital, the local budget’s capital; the central budget’s gross capital specific to sectors, industries and proposed transfers to specific Ministries, central regulatory authorities and target transfers from the central budget to the local budget, with respect to reports presented to the National Assembly. Total capital of each entity allocated the public investment plan using the local budget specific to sectors, industries and target transfers to the inferior budget with respect to reports presented to People’s Councils at any level.

– Principles and criteria for allocation of capital from the midterm public investment plan.

– Arranging public investment projects in order of priority, selecting the investment portfolio and capital allocated to specific public investment projects in the midterm period to ensure relevance to capabilities of balancing public investment capital and calling for other funding sources for the purposes of carrying out goals, tasks and directions in the 5-year socio-economic development plan.

– Measures for implementation and expected outcomes.

Contents of reports on annual public investment plans submitted to competent authorities to seek their approval

– Review of progress in implementation of the previous-year public investment plan.

– Directions for making public investment in the plan year.

– Capability of calling for and balancing capital to be realized in the plan year.

– Selecting the investment portfolio and capital allocated to specific projects to ensure relevance to the portfolio of projects belonging to the midterm public investment plan and capabilities of balancing the annual budgeted capital.

– Measures for administration, arrangements for implementation and expected outcomes.

Principles for allocation of capital included in the midterm and annual public investment plans for public investment programs and projects

– Serve the purposes of carrying out developmental goals and directions specified in the approved socio-economic development strategy, plan and planning scheme.

– Comply with capital allocation principles, criteria and norms already obtaining the competent authority’s decision.

– Concentrate on allocating public investment capital to complete and accelerate the progress in implementation of national target programs, public investment projects of national significance, key public investment programs and projects of great significance to the socio-economic development of the entire nation, regulatory authorities at any level and sectoral administrations.

– In each sector or industry, public investment capital shall be allocated in the following order of priority:

+ Public investment projects already completed and transferred for use and yet to obtain the adequate amount of allocated capital;

+ Reciprocal capital for investment projects using ODA and other preferential borrowed funds of foreign sponsors;

+ State capital participation in implementing projects in the public-private partnership form;

+ Transitional projects to be implemented according to the approved schedule;

+ Projects expected to be completed during the plan period;

+ New projects meeting requirements specified in clause 5 of this Article.

– Budgeted capital for new public investment programs and projects must be allocated in conformance to the following requirements:

+ These new public investment programs and projects must prove its necessity and meet regulatory requirements for being allocated budgeted capital as provided in Article 52 and 53 herein;

+ These new public investment programs and projects must be implemented after allocation of capital for repayment of debts accruing from capital construction which are subject to clause 4 of Article 101 herein;

+ The adequate amount of allocated capital must be provided for completion of these new public investment programs and projects according to the approved investment schedule.

– The National Assembly shall make its decision on the investment capital, the use and date of use of the central budget’s general provisions for the national midterm public investment plan. People’s Councils at any level shall make its decision on the investment capital, the use and date of use of the general provisions in their respective budget for midterm public investment plans.

Requirements for eligibility of other public investment programs, projects, tasks and objects for entering into the midterm public investment plan

In order for other public investment programs, projects, tasks and objects to enter into midterm public investment plans, they must comply with law on principles and criteria for allocation of public investment capital and meet one of the following requirements:

– Transitional projects belong to the portfolio of projects in the midterm public investment plan in the previous stage;

– Public investment programs and projects already obtaining investment policy decisions from competent authorities, and new public investment projects, have to ensure that the maximum duration of disbursement of capital for implementation of group-A, group-B and group-C public investment projects is 6, 4 and 3 years, respectively.

After such duration has expired, the Prime Minister shall grant the decision on the time of disbursement of capital for implementation of public investment projects using the central budget’s capital while the provincial-level People’s Council shall grant the decision on the time of disbursement of capital for implementation of public investment projects using the local budget’s capital;

– Public investment tasks and projects are classified as those referred to in clause 6 of Article 18 herein;

– They have to be classified as public investment objects referred to in clause 4 and 6 of Article 5 herein.

Requirements for eligibility of other public investment programs, projects, tasks and objects for access to the budgeted capital specified in the annual public investment plan

– Other public investment programs, projects, tasks and objects have to be listed in the midterm public investment plan, except urgent public investment projects.

– Other public investment programs, projects, tasks and objects have obtained the competent authority’s decisions.

Investment preparatory capital, capital used for carrying out planned tasks and capital used for implementing projects listed in midterm and annual public investment plans

– Investment preparatory capital may be allocated for the purposes of designing, evaluating and grant decisions on investment policies; designing, evaluating and grant decisions on investment in projects.

– Capital used for carrying out planning tasks may be allocated with the aim of formulating, evaluating, adopting or approving, releasing and adjusting a planning scheme, subject to provisions laid down in law on planning.

– Capital used for implementing projects may be allocated for the purposes of clearing project sites, making technical designs, construction drawings, creating an estimate of costs of projects or workloads thereof, carrying out construction and other activities under project approval decisions.

Procedures for design and evaluation of midterm public investment plans

– Prior to June 30 of the fourth year in the previous public investment plan, the Ministry of Planning and Investment formulates and petitions the Prime Minister to approve directions and criteria for distribution of estimated midterm public investment funds to Ministries central and local regulatory authorities.

– Prior to July 31 of the fourth year in the previous public investment plan, the Prime Minister promulgates the directive for design of the subsequent midterm public investment plan in which the estimated gross investment is equal to total public investment capital specified in the previous midterm public investment plan, and informs the estimated gross investment decided by Ministries, central and local regulatory authorities as a basis to grant the decision on policy for investment in public investment programs and projects to be implemented in the following plan period.

– Prior to August 15 of the fourth year in the previous midterm public investment plan, the Ministry of Planning and Investment provides Ministries, central and local regulatory authorities with instructions about objectives, requirements, duration and schedule of formulation of the midterm public investment plan.

– According to the Prime Minister’s regulations and instructions given by the Ministry of Planning and Investment, other Ministries and central regulatory authorities shall assume the following responsibilities:

+ Authorize bodies specialized in management of public investment to provide instructions to design midterm public investment plans;

+ Authorize their directly affiliated entities and units using public investment capital to design the subsequent midterm public investment plan within the scope of their respective duties, report supervisory bodies to consider such plan according to the schedule under the Prime Minister’s regulations and according to the instructions given by the Ministry of Planning and Investment;

+ Authorize bodies specialized in management of public investment to carry out the evaluation of the subsequent midterm public investment plan according to the schedule specified in the Prime Minister’s decision and instructions given in the Ministry of Planning and Investment;

+ Authorize bodies specialized in management of public investment to prepare the midterm public investment plan for submission to the competent authority to review, complete and send it to the Ministry of Planning and Investment and the Ministry of Finance according to the schedule specified in the Prime Minister’s regulations and instructions given by the Ministry of Planning and Investment.

– According to the Prime Minister’s regulations and instructions given by the Ministry of Planning and Investment, provincial-level People’s Committees shall assume the following responsibilities:

+ Instruct local authorities and units to prepare the subsequent midterm public investment plan;

+ Authorize entities and units using public investment capital to design and evaluate the subsequent midterm public investment plan to ensure that these activities fall within the scope of their assigned duties and the investment capital used for such plan does not exceed the budgeted capital under their management, and report to supervisory bodies to review it before submission to bodies specialized in management of public investment at the provincial level;

+ Carry out the evaluation or authorize bodies specialized in management of public investment at the provincial level to carry out the evaluation of midterm public investment plans prepared by provincially-controlled departments and divisions;

+ Authorize bodies specialized in management of public investment at the provincial level to prepare provincial-level midterm public investment plans for the subsequent period for submission to provincial-level People’s Committees for review purposes;

+ Petition provincial-level People’s Councils to give their opinions on midterm public investment plans for the subsequent period;

+ Prepare complete ones for submission to the Ministry of Planning and Investment and the Ministry of Finance.

– District-level and commune-level People’s Committees take charge of designing, evaluating, or authorizing bodies specialized in management of public investment to design or evaluate, subsequent midterm public investment plans of their own, submit them to same-level People’s Councils to obtain their opinions and send them to superior-level People’s Committees in accordance with point a of clause 5 of this Article.

– Prior to January 31 of the fifth year in the previous midterm public investment plan, the Government estimates state budget balancing capabilities to determine capital expenditures for the subsequent period.

– From February 1 to April 30 of the fifth year in the previous midterm public investment plan, the Ministry of Planning and Investment presides over the evaluation of the plan and method for allocation of capital specified in midterm public investment plans funded by the central budget of Ministries, central and local regulatory authorities.

– After receipt of evaluation opinions from the Ministry of Planning and Investment, other Ministries and central regulatory authorities prepare their complete midterm public investment plans for the subsequent period for submission to the Ministry of Planning and Investment and the Ministry of Finance ahead of June 30 of the fifth year in the previous midterm public investment plan.

– After receipt of evaluation opinions from the Ministry of Planning and Investment, provincial-level People’s Committees shall assume the following responsibilities:

+ Authorize district-level and commune-level People’s Committees to prepare complete midterm public investment plans of their own for submission to same-level People’s Councils to seek their opinions before they have to submit them to provincial-level People’s Committees prior to May 31 of the fifth year in the previous midterm public investment plan;

+ Authorize bodies specialized in management of public investment at the provincial level to prepare complete midterm public investment plans of their own for submission to provincial-level People’s Committees that will then petition same-level People’s Councils to give their opinions prior to June 15 of the fifth year in the previous midterm public investment plan;

+ Prepare complete midterm public investment plans for the subsequent period for submission to the Ministry of Planning and Investment and the Ministry of Finance ahead of June 30 of the fifth year in the previous midterm public investment plan.

– Prior to July 31 of the fifth year in the previous midterm public investment plan, the Ministry of Planning and Investment compiles the national midterm public investment plan for submission to the Government.

Procedures for design and evaluation of annuals public investment plans

– Prior to every May 15, the Prime Minister promulgates regulations on designing the socio-economic development plan and making the subsequent-year state budget estimate under which this plan and estimate must describe main aims and objectives and assignment of duties to take control of drawing up the subsequent-year public investment plan.

– Prior to every June 15, the Ministry of Planning and Investment provides Ministries, central and local regulatory authorities with instructions about the socio-economic development plan, objectives, requirements, contents, duration and schedule of formulation of the subsequent-year midterm public investment plan.

– Prior to every June 30, Ministries, central and local regulatory entities provide their subordinate entities and units to prepare subsequent-year public investment plans.

– Prior to every July 20, bodies specialized in management of public investment take charge of preparing, evaluating and compiling subsequent-year public investment plans to ensure that these activities fall within the scope of their assigned duties and the budget for each of such plans does not exceed the limit of expenditures under their management, and reporting to same-level People’s Committees.

– Prior to every July 25, People’s Committees present the proposed public investment plan in the subsequent year to same-level People’s Councils to seek their ratification.

– Prior to every July 31, Ministries, central and local regulatory authorities prepares complete subsequent-year public investment plans for submission to the Ministry of Planning and Investment and the Ministry of Finance.

– Prior to every August 15, the Ministry of Finance presides over and cooperates with the Ministry of Planning and Investment in estimating capacity of state budget revenues and expenditures, and the state budget’s capital expenditures for use in implementation of the subsequent-year public investment plan. Ministry of Planning and Investment makes the public disclosure of the amount of the central budget’s development capital proposed to be allocated to Ministries, central and local regulatory authorities in the subsequent-year public investment plan.

– Prior to every August 25, Ministries, central and local regulatory authorities prepares complete subsequent-year public investment plans for submission to the Ministry of Planning and Investment and the Ministry of Finance.

– Prior to every August 31, the Ministry of Planning and Investment compiles the national subsequent-year public investment plan for submission to the Government.

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