Vietnamlawmagazine

The XIIth National Assembly (NA) opened its third session in Hanoi on May 6 to pass a wide range of bills, discuss the national growth and the expansion of Hanoi capital, among other issues.

How to curb inflation?

Prime Minister Nguyen Tan Dung asked the NA to consider the reduction of the national growth target for the year to 7% from the planned 8.5-9% as a measure to control inflation, stabilize the macro economy, ensure social security and maintain sustainable growth.

Mr. Dung said the Government’s proposal on the planned target of 8.5-9% was the result of poor ability to forecast future developments and the shortage of market information in 2007. He also conceded that Government weakness in management and performance had contributed to an already weak economy.

High inflation, trade deficit and the volatility of the securities and real estate markets had seriously threatened the stability of the nation’s macro economy, affected production and the investment climate, Mr. Dung said.

He listed five key reasons for the plight of the economy with particular emphasis on Government confusion about financial and monetary management.

“The loosening of monetary policies; the slow adjustment of foreign exchange rates; the lack of thrift in state spending and inefficient investment in the state sector contributed to the problem,” he said.

In this regard, a majority of the NA deputies asked the Government to investigate the root cause of the country’s high inflation rate as they wanted to know which agencies or ministers were to blame.

“In his report, Prime Minister Nguyen Tan Dung said a major contributor to the high inflation was the poor ability to forecast. So, who in the Government are in charge of this mission? If they failed to accomplish their assignments, they must be penalized,” said deputy Nguyen Van Be from Ho Chi Minh City.

NA deputies also asked the cabinet to clarify scientific grounds for lowering the target of GDP growth to 7% and to provide more information about global economic forecasts and the country’s main sources in order to minimize external impacts on Vietnam’s economy.

Prime Minister Dung presented to the NA an eight-point plan emphasizing the Government’s determination to further tighten monetary policy as the way to meet the year’s revised socio-economic targets. These included reduction of state budget investment and expenses, close control of payments and loans, reduction and review of the spending of investment capital raised from the sale of government bonds.

The Prime Minister also said that the Government would continue to pursue its policy of dropping price subsidies, introduce a roadmap for the market-driven economy and initiate a comprehensive plan to ensure sustainable development if the world oil price kept rising.

Expanding capital city

Adjustment of the administrative boundary of Hanoi and surrounding provinces was one of the “hottest” issues at this session.

Home Affairs Minister Tran Van Tuan reported that northern Ha Tay province, Me Linh district of Vinh Phuc province and the four communes of Dong Xuan, Tien Xuan, Yen Binh and Yen Trung in Luong Son district, Hoa Binh province would be added into the capital city of Hanoi.

The expansion will increase the total natural area of Hanoi from 92,000 ha to nearly 334,400 ha and its population from 3.5 million to over 6.2 million.

The move is aimed at building and developing Hanoi into the political and administrative center of Vietnam as well as a giant cultural, scientific, educational, economic and international exchanges hub of the country.

The capital expansion plan stirred a heated discussion in the NA. Many deputies argued that if “we just want to turn Hanoi into the nation’s political and administrative center, we don’t need to expand it 3.6 times.”

Deputy Dang Van Khanh compared Hanoi as a “small shirt” that could not accommodate a giant Hanoi as proposed by the Government. He asked the Government to come up with a specific development map for the scheme.

However, deputy Do Can, who is political commissar to the Hanoi Military Commander in Chief totally supported the Government’s proposal. He said that at present position, it was impossible for the city to allocate land for security protection.

During group discussions, most deputies said it was imperative to ask for people’s suggestions and opinions before making any decision.

“The Government should prepare the project more thoroughly so that when the NA adopts a resolution on expansion it will receive strong support from the people,” deputy Nguyen Minh Ha suggested.

“To decide just how big it (the capital) will be, the Government should discuss and consult with relevant agencies,” architect Nguyen Truc Luyen, former chairman of the Vietnam Architects’ Association said.

Reporting on investigation results about the Hanoi expansion plan, Director of the NA Law Commission Nguyen Van Thuan said that a majority of the commission’s members supported the plan but urged the Government to give more scientific basis and concrete implementation roadmap in order to consider and make decision.

Making laws

According to NA Chairman Nguyen Phu Trong, at this session the lawmakers plan to pass 13 bills and give comments on 7 others, including the bills on state property management and use, property purchase and requisition, value added tax (revised), corporate income tax (revised), atomic energy; and amendments and supplements to some articles of the Civil Code, the Publishing Law, the Law on Drug Prevention and Combat, the Law on Officers of the Vietnam People’s Army, the Petroleum Law, among others.

Regarding the corporate income tax, NA deputies discussed the reduction of the tax rate from 28% to 25% so as to foster domestic competitiveness and foreign investment. Many deputies agreed with this proposal but some worried that it would cost the Government VND 5-7 trillion each year.

On the VAT Law, lawmakers debated goods and services exempt from VAT and how to calculate VAT deductions and refunds. Most of them agreed that goods and services subject to VAT should be widened and that the tax collection should be monitored strictly. They also agreed to set rules for tax offices to refund VAT via the banking system so as to restrict individuals and companies from using forged invoices and documents for refunds.

Debating changes to the Publishing Law, chairman of the NA Commission for Culture, Education, Youth and Children Dao Trong Thi said it was necessary to make the law conform to Vietnam’s commitments to the WTO, particularly the Bern Convention and the nation’s civil and penal codes.

“In our WTO commitment, as of January 1, 2009, foreign companies will have the right to import and distribute in Vietnam publishing products, except newspapers and special journals,” Mr. Thi said.

He said the proposed changes to the law would provide specific conditions on granting permits to and cooperating with foreign companies.

In an appraisal report on the bill on state property management and use, the NA Standing Committee said the key objective was to cover properties allocated by the Government to public agencies, social organizations and professional associations. Regarding state properties used for national defense and security, the bill only provided guiding principles for the Government.

Debating the bill on compulsory purchase and requisition of state property, deputy Tran Van Tan from Kien Giang province was worried about the possibility of collusion between the valuating council and government officers to lower the price of a property. Mr. Tan asked the drafting committee to include the owner’s rights to petition if they considered the valuation of their properties was under value.

Also at this session, the NA plans to debate a resolution that allows foreigners to buy and own houses in Vietnam for a fixed term on a trial basis. The session is expected to last for one month, until June 8.-