The Ministry of Finance (MoF), as part of Resolution 01/ND-CP, has released many solutions to control inflation, offer macro economy stability and social security assurance. Deputy Minister MoF Do Hoang Anh Tuan gives his general view of the national finance picture in the first six months of this year.
Can you tell us about the state budget spending and collection in the first six months of this year?
In June 2012, the state budget is estimated to collect VND48.85 trillion ($2.35 billion), by 80 per cent of the estimation of approximately VND61.7 trillion ($2.96 billion). The total collection of the state budget in the first six months 2012 reached VND346.125 trillion ($16.6 billion), 46.7 per cent of the estimation and down 1.7 per cent against the same period last year.
The state budget collection in the first six months was low because of some following reasons.
Firstly, the low economic growth had made it difficult for most of enterprises and a large number of goods in stock. Many enterprises had to narrow down production or stop operating business, especially in the sector of construction and building materials which affect the state budget collection.
Secondly, some goods which contributed much in the budget such as automobiles, motorbikes, electronic goods saw a slow consumption due to declining purchasing power. In addition, the real estate market remains gloomy which badly impacted on land auctions to contribute to the budget.
Thirdly, the import turnover of some main items with big turnover and high tax rates sharply lessened, causing the state budget decrease. Besides, in early this year, the oil and gas prices in the world market sharply went up. And to stabilise the domestic market, since February to early May 2012, the MoF had adjusted the import tax rate for oil and gas which make the budget collection reduce.
Regarding budget spending, in the first six month, the total sending was estimated at VND413.895 trillion ($19.9 billion), by 45.8 per cent of estimation and up 12 per cent against the same period of 2011. However, the capital disbursement speed was slow. In the first six months, the disbursed investment capital from the state budget is estimated by 34 per cent of the estimation and from the government bonds by 23.7 per cent.
What are the MoF's solutions to complete the estimation of the state budget collection 2012?
This year, the tax and custom authorities will closely control collection sources, prevent tax losses and commercial fraud, tightly check value added tax refunds, push up tax debt treatments and raising collection in other sectors to compensate for collection decreases.
The MoF will focus on six solutions, including anti-transfer pricing, VAT refunds, tax collection for the sector of property, land leases and usage, preventing a budget loss for commerce and tourism services, mining exploitation, preventing tax losses for new kinds of business such as e-commerce and online business and setting up an inspectorate to discover and treat tax debts.
Regarding anti-transfer pricing, the MoF targets to collect tax arrears not under the 2011 level of VND3 trillion (144 million).
The MoF and Industry and Trade (MoIT) have just allowed fuel wholesalers to decide on prices within the trading band and price adjustment frequency in accordance with Decree 84/2009/ND-CP on fuel trading while this decree's entanglements on transparency have not been revised. So how can this method stabilise the domestic petrol market?
This is just a temporary solution because the main petrol market problem is an enterprise holding up to 63 per cent of market shares has not been solved. We will step-by-step make a competitive market with the biggest players holding no more than 12 per cent.
Despite the fact that petrol wholesalers now have the right to fix wholesale prices as well as increase or cut prices, the ministry also requested petrol wholesalers to get permission from authorities before cutting or increasing prices because it is an important goods which much impacted on other economic industries.
Regarding electricity prices which were raised by 5 per cent from July 1, 2012 after Electricity of Vietnam (EVN) said it could not make people bear losses due to EVN's weak operations and that it would affect the consumer price index. What is your view?
I thought that we should have an objective and all-sided views on electricity price increases of 5 per cent this time. Currently, electricity is sold at a price lower than cost price and the coal sector is applying a specific selling price of coal for EVN to lower the cost price which can distort the economy. In the current macroeconomic situation, such electricity price increases are reasonable.
One of the most important tasks in project to restructure state-owned enterprises is to push up equitisation process. Besides, SOEs' capital withdrawal from non-core business face with many difficulties due to a gloomy real estate market. So what did the MoF have any solutions to step up the process in the next time?
The MoF recently released a circular on settling financial issues and valuating enterprises once transformation of enterprises with 100 per cent state capital into joint stock companies which gave regulations on enterprises valuation and state capital management in SOEs. Equitisation is still one of the most important solutions in the restructuring project which aimed at manage enterprises at the fairest way and leave a reasonable state stakes in enterprises. Up to June 21, 2012, there are 3,951 equitised enterprises, making up 67.4 per cent of the total SOEs currently.
Regarding capital withdrawals, the MoF submit a project to the government. However, each enterprises had to set up their owns plan in accordance with their own characteristics. In the current difficult economic situation, we should not be very impatient to divest state capital, because it is also necessary to ensure efficiency, transparency, to prevent loss and wastage of state capital.