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Viet Nam: National Projects to Receive Closer Scrutiny by Legislature
Source: english.vietnamnet.vn
Source Date: Friday, May 07, 2010
Country: Viet Nam
Created: May 10, 2010

High on the agenda of the meeting of the National Assembly Standing Committee yesterday was the discussion of changes to National Assembly Resolution No 66/2006/QH11 on national projects that must be approved by the plenary meeting.

According to a report by the Government reviewing four years of implementing the resolution, two more important national projects were considered by the National Assembly: the nuclear power plant in the central province of Ninh Thuan and the Lai Chau Hydro Power Plant in the northwestern region.

"The Government is preparing three more projects to submit to the National Assembly for consideration and approval. They are the Ha Noi-Ho Chi Minh Express Railway and the Long Phu 1 and Thai Binh 2 coal-fired power plants," said the report.

Speaking at the meeting, Minister of Planning and Investment Vo Hong Phuc said that the gross domestic product (GDP) for 2009 was 1.7 times higher than that of 2006.

"Rapid economic development and deep international integration have led to an increase in both the scope and scale of many projects," said Phuc.

He said that many changes had been made to market prices and foreign exchange rates since 2006 when the resolution was approved.

"It is high time for the National Assembly to make some changes to the resolution so it can respond to the real situation to enable projects to be implemented," said Phuc.

Specific changes suggested by Phuc included criteria, order, administrative procedures and project profiles to be submitted to the National Assembly for consideration and approval.

Phuc suggested that there should be a separate resolution governing Vietnamese projects abroad.

Ha Van Hien, chairman of the Economic Committee, did not agree with Phuc’s proposal to have two separate resolutions for domestic and foreign projects.

"There should be only one resolution to govern projects inside and outside the country, as the contents of the two resolutions will be very similar," said Hien.

He wanted to raise the required investment capital from VND20 trillion (US$1.1 billion) to VND35 trillion ($1.8 billion) for a national project needing approval from the National Assembly.

During their discussion, participants also raised concerns over the 30 per cent capital investment requirement in a national project by joint stock companies in which the State held more than 51 per cent of the shares.

"This is a very difficult question, as it is not easy to certify that the capital entirely belongs to the State or if it originated from the Government budget," participants said.

The National Assembly Standing Committee turned its attention to the prime interest rate yesterday as it discussed proposed changes to laws on credit institutions and the central bank.

Under the draft Law on the State Bank of Viet Nam (revised), the State Bank would only be authorised to set the refinancing interest rate and would regulate lending interest rates charged by credit institutions, but it would no longer set the prime rate.

Since lending interest rates are capped pursuant to the Civil Code at no more than 150 per cent of the prime rate, these proposed changes to the law have been viewed as a substantial curtailing of the powers of the State Bank.

However, National Assembly Economic Committee chairman Ha Van Hien disagreed, saying that the State Bank was the last resort for the market and that it would continue to have impact on market interest rates and monetary supplies.

The central bank had already been moving to deregulate lending interest rates, he added.

A number of members of the Standing Committee yesterday backed the limitation on the power of the State Bank, with the understanding that it would retain its regulatory authority over the monetary market.

But they also wondered how the changes would affect the balance of power among the National Assembly, the President, the Prime Minister and State Bank of Viet Nam in setting financial and monetary policies.

Tran The Vuong, head of the National Assembly’s Ombudsman Committee, said the draft Law on the State Bank of Viet Nam remained confusing in clarifying the relative responsibilities of the State Bank and the Government.

Vice Chairman of the National Assembly Nguyen Duc Kien noted a provision in the draft law stating that the National Assembly would continue to determine inflation targets each year and supervise the implementation of monetary policy. The President would sign and promulgate international treaties related to banking and monetary issue, Kien said, while the the Prime Minister and the State Bank would wield tools and measures to achieve monetary and financial targets set by the National Assembly.

Turning to the draft Law on Credit Institutions, members of the Standing Committee focused on provisions that would limit the of an ownership stake in a commercial bank, ban credit institutions from holding stock in other credit institutions, and credit supply for stock business.

State Bank of Viet Nam deputy governor Dang Thanh Binh said that these provisions would prevent certain stakeholders from cornering the market, protect small shareholders, and avoid systematic risks.
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