Speech at the international conference on fiscal reform in transition countries – Lessons for Viet Nam

Sep 15, 2011

Speaker: Ms. Setsuko Yamazaki, UNDP Country Director
Date:      Thursday, 15 September 2011
Event:     International conference on fiscal reform in transition countries – Lessons for Viet Nam
Venue:    Hoi An, Quang Nam Province

Mr. Nguyen Duc Kien, Former Vice Chair of the National Assembly;

Mr. Grzegorz Kolodko, Former Deputy Prime Minister of Poland;

Honorable National Assembly Deputies;

Distinguished development partners;

Ladies and Gentlemen;

I would like to extend a warm welcome to all participants to the International Conference on Fiscal Reform in Transition Countries, Lessons for Viet Nam here in Hoi Ai. It is great pleasure for me to meet the re-elected and newly elected members of the National Assembly. We also look forward to working with you to support your important work on formulating laws, providing oversight of state agencies and representing the aspirations of all Vietnamese people.

In Viet Nam and China we have just celebrated the Mid-Autumn Festival, which traditionally celebrates harvesting. This conference on fiscal reform is a great opportunity to harvest lessons from countries which have made the transition from a centrally planned to a market economy and learn from their rich reform experience. 

Over the course of just three decades, Viet Nam has gone through several transitions: from war to peace, from a centrally planned to a globally integrated market economy, and from high levels of poverty to a middle income country. As a middle income country, Viet Nam is now facing new kinds of development challenges. To manage these complex challenges and changes strong and sophisticated institutions are needed. In particular, strengthening the role of the National Assembly and its committees is vital, so that it is better able to perform its oversight and representation role. 
During the past 15 years, UNDP has been working closely with the National Assembly on exactly that – strengthening its legislative, oversight and representation functions. For example, over a number of years we have helped the Finance and Budget Committee to fulfill its mandate to oversee the Government’s management of public finances. Some of us here today attended last year’s conference here in Hoi An and reviewed lessons from the XII Legislature.  One of the findings from that conference was the need for technical and specialized knowledge on areas such as public fiscal management and oversight of the state budget. The important oversight role of the Finance and Budget Committee was also stressed. Over the next two days we will focus on building this technical knowledge and further strengthening the capacity of the Committee.

The purpose of the conference is to review lessons learnt in the last few decades by countries which have made, or are making, the transition from non-market to market economies. Ten years ago, the state budget was still kept secret in Viet Nam. Since then, reform efforts have taken place but there is still some way to go to achieve international standards of fiscal responsibility. And with a growing budget deficit and rising public debt the reform of public finances will be a key focus area for the Government.

There have been many different experiences in other transition countries but all have had to make deep changes to their systems of public financial management. This has involved moving to more transparent fiscal management and creating greater government accountability to citizens for how their tax revenue is spent. Transition countries have had to deal with how to manage their fiscal deficits, reform their tax systems, restructure budgets and budget systems, reorient public investment, create independent external audit bodies, and manage the changed relations between central and local governments. Each one of these topics will be discussed over the next two days and, I hope, will provide useful material for the work of elected bodies.

With the ongoing revision of the state budget law, now is also an opportune time to hold this kind of conference. Viet Nam's State Budget Law of 2002 gave considerable authority to central and local elected bodies to approve the allocation and execution of the budget. Over the last nine years fiscal management has developed, and the role of the National Assembly in the oversight of public finances has strengthened. The National Assembly and Government are now discussing what needs to be done to further increase transparency and accountability and how to reflect this in the revised law. Strong financial and budgetary oversight is critical to build resilient financial systems in Viet Nam.

The discussions and outcomes of the conference today will therefore be very useful in helping to inform the proposed revisions to the law and the Committee's future strategy.

In closing, I would like to stress that UNDP will continue to support the National Assembly and its work in oversight of financial management. We recognize and appreciate the progress that has been made so far and look forward to further progress during this next session of the Assembly.

I very much look forward to the sessions and wish you fruitful and stimulating discussions. Thank you