HCMC has proposed the National Assembly Financial and Budgetary Committee ask the Ministry of Finance to seek Government approval for a special financing mechanism for the southern economic center.

A view of HCMC. The city government has proposed the National Assembly Financial and Budgetary Committee ask the Ministry of Finance to seek Government approval for a special financing mechanism - PHOTO: QUANG DUC

Speaking at a meeting with the committee in the city on June 7, Pham Thi Thang, director of the HCMC Department of Finance, said the proposed mechanism would allow the city government to get more from the budget revenue surplus and from capital divestments at State-owned enterprises in the city for development investment.

Thang said the city wants to retain part of import-export tax revenues in 10 years, at 8-12% of total collections, and collect half of land use fees from organizations managed by central agencies.

The city wants additional tax collections from businesses with advantages in terms of commerce and location. The city needs to retain 30% of higher-than-targeted budget revenues.

The city expects to keep funds from divestments of State capital, mainly from equitization of State-owned enterprises established by the city government. This money will be transferred to the finance department to fund infrastructure projects.  

The city seeks to get extra loans which are used to invest in feasible projects, and credit sourced from foreign loans of the Government. According to the 2015 State budget law, outstanding loans of a province or a city include those sourced from the Government’s foreign loans, Thang said.

HCMC’s outstanding loans from overseas sources are expected to rise steadily in the coming time. If these loans are taken into account, the city would not be permitted to borrow more as regulated by the State budget law.

Le Thanh Van from the Financial and Budgetary Committee threw his weigh behind the proposal but he said it is not new. He asked the city to map out a plan for the special mechanism and pass it to the NA.

Nguyen Duc Thu, permanent member of the committee, said the country would fall into trouble if the city’s budget revenues and expenditures do not go well. He said the current mechanism is inappropriate for the city.

NA deputy Tran Du Lich, who has experience in preparing such a mechanism, said instead of seeking a special mechanism, the city should seek autonomy. 

HCMC Party chief Dinh La Thang said a special mechanism would benefit the city and the nation as a whole. He said the city is coordinating with experts to build this mechanism.

Tran Ngoc Tam, director of the HCMC Tax Department, said the Ministry of Finance has ordered the city to collect an additional VND23 trillion to offset the State budget shortfall, leading its 2016 budget collections to rise by 25% versus 2015, a heavy burden for the city.

Thang of the HCMC Department of Finance said the HCMC Department of Customs is tasked with collecting import and export taxes of VND102.5 trillion this year, accounting for 37.96% of the country’s total.

She said the customs would try to meet the tough target as Vietnam’s commitments to free trade agreements include tax exemptions and reductions for various imported products while the oil price still stays low.