Lessons in Land-sourced Revenue

2:12:33 PM | 26/7/2019

If budget revenue relies too much on land rather than many other potential areas, the poor stay poor, said Deputy Prime Minister Vuong Dinh Hue at a working meeting with Binh Dinh leaders on July 22, adding that land-sourced revenue should be seen as a valuable lesson.

In the year to date, Binh Dinh province fulfilled nearly 80% of its full-year budget revenue (VND5,906 billion), 54% more than a year ago. Its pubic investment disbursement reached 54% of the yearly target while the national average was only 34%. In the new countryside construction, 63.6% of its communes realized new countryside standards, higher than the national average of 50.1% and higher than localities with similar conditions in the region.

Besides, Binh Dinh has paid due attention to developing new agricultural production models such as large-field cultivation and high-tech applications to increase the average household income by VND15-20 million a year.

Nevertheless, its gross regional domestic product (GRDP) grew just 6.7%, lower than the country average, because local growth slowed on limited reforms of investment environment and business procedures.

Its Provincial Competitiveness Index (PCI) in 2018 ranked 20th out of 63 provinces and cities, down two places from 2017. Its Vietnam Provincial Governance and Public Administration Performance Index (PAPI) plunged from the 7th position to the 61st position out of 63 provinces and cities. Deputy Prime Minister Vuong Dinh Hue told the province to speed up administrative reform and build stronger e-government to better serve people and businesses.

Citing the case of Da Nang City as an example, the largest city in central Vietnam previously depended on land-use fees but its land income accounted for only 16% of the total budget revenue, he said. The local budget revenue has still increased on higher takings from services, restaurants, hotels and effective management. Another similar case is Nha Trang City of Khanh Hoa province.

“Thus, Da Nang or Nha Trang is an important lesson for Binh Dinh, which has a lot of advantages in service and tourism development,” he said. “The passive reliance on land to increase the budget income should be put to an end. The province is necessarily flexible, active and creative in local economic development, like immediately embarking on projects turning tourism into a key economic sector with diversified products, linking maritime tourism to countryside tourism, especially its Cham cultural and historical relics.”

In fact, many fields of Binh Dinh have developed strongly like tourism but budget revenue still relied mainly on land, causing it to struggle near the poor threshold.

Mr. Ho Quoc Dung, Chairman of Binh Dinh Provincial People's Committee, said, tourism continued to develop strongly in the first half of 2019. The province welcomed 2.6 million visitors, up 22% year on year, including 220,000 international visitors, up 49.1%.

Mr. Le Quang Tung, Deputy Minister of Culture, Sports and Tourism, said, Binh Dinh province, situated in the key tourist area, attracted VND14 trillion for tourism infrastructure from 2016 to 2018 and create development opportunities for this industry. He affirmed that tourism development is of great significance to local employment and social security. Therefore, Binh Dinh needs to pay special attention to training high quality human resources for tourism development.

According to Deputy Minister of Planning and Investment Nguyen Duc Trung, of nearly VND6 trillion from the provincial budget, land-sourced value accounted for more than half. Thus, its budget revenue and economic development are hardly sustainable.

At present, some localities tend to focus on tapping land fund for investment but this is a doubled-faced issue: Good in the near term but bad in the long term, he said. Given its shrinking land fund, particularly in the coastal region, if Binh Dinh taps it unreasonably, it can hardly achieve sustainable development.

Sharing the same views, Deputy Minister of Transport Le Dinh Tho said, “Binh Dinh has a lot of advantages in nature and traffic but it is still a ‘near-poor’ province. It should focus on developing maritime tourism, industries, handicrafts and rural areas to create sustainable revenues and ensure social security.

To grow and balance budget revenue and expenditure, Binh Dinh must attract large enterprises to invest in industries to tap seaport infrastructure advantages and Nhon Hoi Economic Zone. The province necessarily selects industrial projects and companies, rejects resources-intensive, labor-intensive and environment-harming projects.