04 things you should know about public utility in Vietnam

04 things you should know about public utility in Vietnam (Internet image)

1. What is public utility?

According to Clause 4, Article 3 of Decree 32/2019/ND-CP, public utility refers to a commodity or service of which production and supply according to the market mechanism can hardly offset any cost incurred; or which is a particular commodity or service that has access to the Government’s subsidy against the spread between the selling price, the market or selling price or value under the Government's regulations;

or between the sum that a beneficiary of a public utility pays as per the Government's regulations and total reasonable production cost that a producer or supplier thereof incurs to production or supply of any public utility ordered by the Government (or commissioned under regulatory provisions of relevant industry-specific law (if any)).

2. Classification of public-sector goods and services in Vietnam

The list of public products and services according to Article 5 of Decree 32/2019/ND-CP is as follows:

- Public goods funded by the state budget's regular expenditures are classified into the following lists:

+ List of public services financed by the state budget;

+ List of public utilities.

- Public services financed by the state budget that are shown in Appendix I (Chart 01 and Chart 02) attached to Decree 32/2019/ND-CP are classified into the followings:

+ Chart 01. Industry- or sector-specific state-funded public services.

Details about classification of governmental state-funded public services of Ministries and central authorities shall be given according to the Prime Minister's decisions; details about classification of state-funded public services within the local government jurisdiction shall be given according to decisions of Presidents of provincial People’s Committees.

Chart 01

+ Chart 02. Several lists of state-funded public services.

Chart 02

- Public utilities are classified as shown in Appendix II attached to Decree 32/2019/ND-CP.

Appendix II

- If there is any modification or supplement to classifications of public-sector goods and services over time, Ministries and central authorities shall take charge of and cooperate with the Ministry of Finance, the Ministry of Planning and Investment, Ministry of Home Affairs or any relevant agency on seeking the Prime Minister's decision to approve the central government budget’s estimated funding for such modification or supplement;

The decisions of Presidents of provincial People’s Committees to approve the local government budget’s estimated funding for such modification or supplement. The updated classifications of public-sector goods and services shall be subject to regulatory provisions of Decree 32/2019/ND-CP.

3. Budget or funding for supply of public goods in Vietnam

Budget or funding for supply of public goods according to Article 4 of Decree 32/2019/ND-CP are as follows:

- State budget’s regular expenditures available for use in public and economic activities prescribed in the Law on State Budget, including:

+ The central government’s budget expenditures used as funding for the process of commissioning, ordering or tendering for public goods by Ministries and central authorities;

+ The local government’s budget expenditures used as funding for the process of commissioning, ordering or tendering for public goods by local authorities.

- Amounts retained to pay for service provision and fee or charge collection according to law on fees and charges.

- Revenue gained from public services at the public service prices regulated by the Government.

- Other financial sources stipulated in law (if any).

4. Methods for commissioning, ordering and tendering for public-sector goods and services in Vietnam

Methods for commissioning, ordering and tendering for public-sector goods and services according to Article 6 of Decree 32/2019/ND-CP stipulates as follows:

- With regard to state-funded public services, the commissioning, ordering or tendering methods shall be employed.

- With regard to public utilities, the ordering and tendering (or commissioning, once permitted by specialized law) methods shall be put to use.

- Ministries, central authorities, provincial People’s Committees, district People’s Committees or directly-affiliated managing or regulatory agencies can be given the freedom of choice of any appropriate method for administering public-sector goods and services if the chosen method fully meets the conditions set forth in Chapter II and Chapter III and any applicable specialized law.

Quoc Dat

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE