Proposed budget cut to hurt many Vietnamese localities

During a budget discussion of Vietnam’s lawmaking National Assembly (NA) on Saturday afternoon, a proposal was made that looks to cut portions of the annual budget revenue of several Vietnamese cities and provinces in the 2017-20 period.

Ho Chi Minh City will only be allowed to keep 18% of its annual revenue starting 2017 under the budget reassignment, with the rest being added to state coffers. Currently, the city keeps 23% of its revenue.

Similar cuts are also set to be in place for Hanoi, Da Nang, and Binh Duong Province, which will suffer a 14, 17, and four percentage-point budget cut respectively under the new plan.

Ho Chi Minh City leaders and economic experts were the first to voice objections to the cut, which they said would hurt the city’s economy and slow much-needed infrastructure projects in the economic hub.

Binh Duong Party Chief Tran Van Nam said half of the province’s retained revenue is spent on infrastructure projects, but the amount is hardly enough.

The province relies heavily on foreign investment in industrial zones and factories for its budget, and an underdeveloped infrastructure would appeal less to investors, Nam said.

Meanwhile, Hanoi would lose nearly half of the budget it is allowed to keep, as the proposal looks to reduce the percentage from 42 to 28%.

“Hanoi and Ho Chi Minh City are the two economic locomotives [of Vietnam] whose needs for public investment are still substantial. I think investment should flow to where motives for development are generated instead of being distributed evenly across every locality,” Ngo Duy Hieu, vice-head of the Hanoi NA Delegation, said.

The central city of Da Nang will suffer the most yawning budget cut, from 85% down to 68%, which is “placing too much of a burden on the city,” Nguyen Thanh Quang, head of the Da Nang NA Delegation, said.

Vietnamese Prime Minister Nguyen Xuan Phuc explained on the sidelines of the NA working session that the central budget was going through hard times, and that major cities should share the burden with the central government and other provinces.

The premier added that socioeconomic projects do not necessarily have to be funded by state coffers and could be developed by the private sector.