The Vietnam Capital Management and Budgeting Case Study

The Vietnam Capital Management and Budgeting Case Study

Lien Nguyen (Old Dominion University, USA), Meagan M. Jordan (Old Dominion University, USA) and Thuy Thi Nguyen (Ministry of Finance of Vietnam, Vietnam)
Copyright: © 2019 |Pages: 30
DOI: 10.4018/978-1-5225-7329-6.ch013

Abstract

Divided into four parts, this chapter examines infrastructure investment in Vietnam through the lens of a normative framework for capital management and budgeting. Part 1 provides an overview of the country's socio-economic, political, and financial background that would affect the capital management processes. Part 2 introduces the status of Vietnam's infrastructure and its challenges. Part 3 is a comprehensive review of current procedures and processes of capital planning, budgeting, implementation, and maintenance being practiced in Vietnam. The authors then compare and contrast Vietnam's practices with the recommended provisions of the normative framework. Part 4 reviews the probable consequences associated with infrastructure inefficiency, which are implied by Vietnam's inconsistent practices with the framework. This chapter culminates with conclusions and recommendations for capital management and budgeting that are more specific to a developing country like Vietnam.
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Introduction

The normative framework for capital public management and capital budgeting processes is recommended to have four components: (1) long-term public capital planning, (2) capital budgeting and financial management, (3) project execution, and (4) infrastructure maintenance. In the United States, this framework is widely adopted and used by state and local governments (Ermasova, 2013a, 2013b). The application of the four components results in efficiency and effectiveness in public investment (Srithongrung, 2008). However, there is limited knowledge as to how the normative framework is globally practiced. Government practices are also influenced by country-specific factors including economic, political, legal and managerial situations (Srithongrung, 2010). The purpose of this chapter is to fill in this gap by illustrating Vietnam’s capital management and budgeting processes in comparison with the normative framework. The chapter also reviews Vietnam’s contextual factors that potentially influence their capital management and budgeting practices. The first section describes Vietnam’s socio-economic and political background. The second introduces Vietnam’s infrastructure system and its challenges. The third section compares Vietnam’s capital and management practices to the normative framework, and the final section analyzes and discusses any implications or associated consequences.

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