Vietnam, Korea Share Experience in Public Finance Management

2015 Asia Knowledge Sharing Programme Convention on public finance management reform in Asian countries with Vietnam in 2015 was jointly hosted by the Development Strategy Institute (Ministry of Planning and Investment) and the Republic of Korea (ROK) Ministry of Strategy and Finance. This programme has been carried out with a series of collaborative research, training, consulting and technical support activities alternately held in South Korea and partner countries.

 

Mr Bui Tat Thang, Director of the Development Strategy Institute, said financial resources are not simply huge financial resources that play an important role in State budget system, but also include natural resources relating to land, sea, forests, and transport infrastructure. The good management of this resource not only provides social and economic benefits for current generations but also brings long-term value for all future generations.

 

Sharing this point of view, Ms To Quynh Thao, Deputy Director of the Department of Public Asset Management under the Ministry of Finance, said public finance comprises State budget and public assets. Public assets consist of land, other natural resources and assets invested and managed by the government. Currently, in Vietnam, to manage public finance and public assets effectively, the government has introduced policies on use financial resources from land, policies on use of financial resources from rearranged estate owned by the State and use of financial resources from infrastructure. However, according to experts, although this policy system is relatively complete, it is complicated, inconsistent and unstable. Therefore, although resources are abundant, they are ineffectively used. The financial instrument system is established, it is not strong enough. These in combination restrict market-regulating and controlling roles of financial instruments.

 

Dr Yoon Daehee, former Minister of the Office for Government Policy Coordination of the Republic of Korea, said a nation that wants sustainable, prosperous development must first of all build an effective, healthy financial management system. South Korea’s costly experience showed that the current miraculous progress comes from effective public financial management policies. Specifically, the South Korean Government has continuously reformed its public financial management in case of necessity through its electronic accounting and budgetary performance assessment systems and transparent and effective investment management measures since 1962. ROK also built the Public and Private Infrastructure Investment Management Centre (PIMAC) affiliated to the ROK Development Institute (KDI), a lead agency of public investment projects and private infrastructure projects in South Korea. This agency has successfully conducted pre-feasibility studies and reassessment studies on public investment projects and private investment projects based on economic and policy analysis to improve the country’s fiscal management efficiency. He added that by properly implementing public finance policies, South Korea has witnessed marvellous economic growth and raised its GDP per capita from only US$87 in 1962 to US$28,000 in 2015.

Mr Sungmin Han, Senior Researcher at Public Investment Evaluation Division under the Public and Private Infrastructure Investment Management Centre, the Korea Development Institute, said as Vietnam has its own characteristics; it should not do the same way as ROK or any other country. But, to effectively manage public finance, the first thing that Vietnam needs to do at this time is to take a harmonious calculation of public income and expenditure, particularly strengthen the close coordination of ministries, branches and localities in spending and revenue issues, and apply a monitoring and responsibility assignment system to public financial income and expenditure.