State to hammer errant builders

NAILED: Decision makers behind wasteful state construction will be targeted

Addressing a national convention to review a National Assembly resolution on state-funded construction held in Hanoi last week, Deputy Prime Minister Dung ordered all ministries and provincial authorities to seek out investment projects that had strayed from their approved plans or were economically inefficient.
The Ministry of Planning and Investment (MPI) was given responsibility for finding projects belonging to the A-categorised group, while those pertaining to the B and C-listed groups would fall under the supervision of other ministries and provincial governments.
“These projects must be stopped immediately,” Dung said.
He gave the directive in the midst of millions of dollars being wasted on basic construction works, an epidemic that has been caused in large part by corruption and unproductive investments. The projects have cost the state budget millions of dollars, while banks have reported huge amounts of non-performing loans.
“The MPI will have to summarise [the review] and report to the government in the first quarter of this year, so that [the government can] report to the National Assembly in May. This is not a difficult job because ministers and provincial people’s committees chairmen are all aware [of the situation],” Dung said.

Minister of Planning and Investment Vo Hong Phuc said his ministry would collaborate with relevant ministries and government agencies to draft a state budget-funded investment management statute for the government’s approval, which would place the responsibility for failed projects on decision makers.
“The decision makers will have to bear corresponding responsibility for investments that are not in line with approved plans or for those that perform inefficiently,” he said.
“They will be subject to administrative fines or dismissed from office if they are found to have given incorrect approval to investments that waste the state’s money. We should not accept any more of the situation, and those giving incorrect investment approval can’t go unpunished,” he said.
Phuc pointed out that responsibility for state management over basic construction projects remained unclear and did not highlight personal responsibility. An incomplete legal framework on basic construction with state capital was one of the causes behind many poor investment decisions, he said.
“In addition to further decentralisation in investment and construction management, more powerful regulatory mechanisms should be supplemented to increase the responsibility of the entities that participate in construction,” he said.
He also proposed a crack down on the close decision making process being employed by some ministries, typically those relating to transport, construction, and agriculture and rural development.
“The ones that approve these investments must not concurrently be investors. The selection of investors and project management consultants should be based on bidding,” he said.
“Independent supervision consultancy should be increasingly employed in implementing projects, particularly large ones,” he advised.
He added: “Design consultancy organisations, contractors and supervision consultancy agencies of the same projects must not all belong to one ministry, province or city.”
Heavy losses in state-financed construction projects are rampant in Vietnam, with one of the main causes thought to be the lack of a clear decision making process. Although the exact ratio of losses to total state-sourced investment is not available, recent inspections have found that it stands at a relatively high level.
In 2002, the State Inspectorate conducted inspections on 17 state-funded projects and discovered that illegitimate spending accounted for 13.6 per cent of their total investment capital. In 2003, similar inspections among 14 large projects unveiled an even higher ratio of 19 per cent.
Last year, the total investment capital injected into national development rose by 15 per cent to around $16 billion, with about 53 per cent coming from state sources, including state budget allocation, state credit and investment from state-owned enterprises.