Overall GFMIS Model and Roadmap in the Period of 2015-2025 Hanoi, August 2014

Outline Situational review and the rationale Vietnam’s perspective for GFMIS GFMIS model for Vietnam GFMIS objectives Possible key sub-systems of GFMIS Implementation roadmap

1. Situational review and the rationale 1.1 Legal basis : Financial Strategy towards 2020 as approved by the Prime Minister in Decision No. 450/QD-TTg dated 18/4/2012 Decision No. 304/QD-BTC on the Medium-term Action Plan in the Period of 2014-2016; Decision No. 224/QD-BTC dated 30/01/2013 on the Action Plan of the Financial Sector Notice No. 08-KL/BCSD dated 16/4/2014 on the evaluation of the Public Financial Management Reform Project and orientation for the coming phase

1. Situational review and the rationale 1.2 Outcomes of the recent Public Financial Management Reform Project The implementation of TABMIS is a great leap forward in the modernization of State budget management in all stages from budget allocation to budget revenue and expenditure implementation, accounting, and reporting; in the strengthening of the sense of responsibility and clear definition of the mandates and functions of the Ministry of Finance and other Ministries, agencies, sub-national government and finance departments for improvement in public financial management. The technical assistance in public debt management, the implementation of DFMIS have made great contributions to the enhancement of public debt management capacity in the Ministry of Finance, integration of debt management, formulation of the public debt strategies, planning of public debt management reforms.

1. Situational review and the rationale Budget management and debt management have been significantly modernized in a centralized and integrated manner, relevant to the current trend of financial management technologies in the world. The connectivity is seamless to all agencies and units in the financial sector, related applications have been upgraded and completed in both technologies and technical infrastructure to ensure compatibility with TABMIS… those are some of the great impacts rendered by the Project. It also sets the pre-conditions, creates experience and capacity for the implementation of the major projects to follow for the cause of financial management reforms and modernization. The Ministry of Finance’s credibility has been enhanced from the perspectives of development partners: the World Bank has reaffirmed this and appreciates the strong commitment of the Ministry of Finance’s leaders, the commitment and dedication of all staff participating in this successful endeavor.

1. Situational review and the rationale 1.3. Outcomes of the implementation of some other modernization projects and other IT applications Public Asset Management: there is now a software application to assist in the registry and management of assets of budget spending units. Customs administration: the e-customs system and the adoption of the National Single Window mechanism for the modernization of customs services in Vietnam (VNACCS/VCIS). Tax administration: The Personal Income Tax software application (PIT) and the centralized tax administration system Securities regulation: The market information system and the securities transaction surveillance system as financed by the Luxemburg, .. Treasury management: Projects on cash management reform, State general accounting function, and cash investment State inventory reserve management: The application system for inventory and warehouse management Public services: public services in electronic tax return filing, e- customs,...

1. Situational review and the rationale 1.4. Some difficulties and limitations The achieved outcomes of the Public Financial Management Reform Project as well as other modernization project of the Ministry of Finance has rendered not insignificant impacts on public financial management, but these are only the initial steps and have not provided a full coverage of the demand of public financial management modernization in Vietnam. Compared with the functions in the public financial management cycle, there remain a number of functions that have not been computerized: Budget preparation Public investment spending management Open budget reporting, Government financial statistical reporting (GFS) More expansive coverage of the management of sub-national government debt, domestic debt More expansive coverage and targets of public asset management The State general accounting function Supports in financial management and asset management at budget spending units Auditing and evaluation. ...

1. Situational review and the rationale The establishment of the State General Accounting function has been started in accordance with the initiative approved by Decision No. 1188/QD-BTC dated 30/5/2014, initiating the need of collecting accounting information from administrative and public service delivery units, State investment holders, State-owned enterprises, and other State-owned asset using units. At the same time, these units have not and should be supported with a uniform system to feed information to the State General Accounting function.

1. Situational review and the rationale 1.5 The rationale for the expansion of reforms and modernization of several public financial management functions Budget preparation: it is worth to consider computerization of the process of budget preparation covering the whole network from finance ministry/departments to budget spending units at all tiers. However, this is dependent on the ultimate outcomes of the existing revision of the State Budget Law. Capital expenditure management: Although budget expenditure management has been well computerized in TABMIS, the system has neither yet fully supported the needs in public investment management nor the linkages with the Ministry of Planning and Investment in this area.

1. Situational review and the rationale Public asset management is currently supported by a software application for the registry and management of assets used by budget spending units, in regards of assets as lands, buildings, architectural structures, car vehicles, other fixed assets with the historical cost of above VND 500 million. It is required to upscale the software to manage additional assets such as road infrastructure, natural resources… The asset management system should also have features to tract assets from the stage of commitment for procurement, linkage with TABMIS should also be established obtain information on asset procurement by the units as well as the public procurement management system Debt management has been supported by DMFAS system, but there should be some further investment to cover the management of sub-national government debt, Government guaranteed domestic debt, for integration of the information to the common public debt database, in response to the demand of unified public debt management as required by the Public Debt Management Law. It is also important to develop risk analysis, assessment, management and mitigation models, and the medium-term debt strategy model….

1. Situational review and the rationale Modernization projects should be implemented for each functional areas, within the context of an overall enterprise architecture The already developed applications focus on servicing daily transactions and events, then it is necessary to develop a national financial database that can integrate and pool all financial information flows from all the agencies and units under the Ministry of Finance and related Ministries and agencies so as to support in-depth data analytical and business intelligence instruments to provide for the needs of fiscal reporting, evaluation reporting, auditing and GFS reporting… hence improving the transparency of public financial management in line with international practices.

1. Situational review and the rationale 1.6. Conclusions: In addition to the needs of maintaining and making optimal use of the already developed systems, it is important to continue the reforms and modernization of public financial management, and ultimately to develop a GFMIS aiming at the following requirements: Maximum efficiency in Government financial management. Comprehensive coverage to cover other functional areas such as budget preparation, capital expenditure management, public asset management, debt management, general accounting, financial management at spending units, open budget reporting, and economic forecasting…, Fully responsive to the requirements of timeliness and completeness of Government financial information, and other financial and management reporting requirements of the Government. Strengthening of public disclosure and transparency in Government financial management. Being aligned with the Financial Development Strategy towards 2020, in line with the general trend of the region and the world, and enhancing the capability for international integration of Vietnam in the area of public financial management.

2. Vietnam’s perspective on GFMIS The vision of GFMIS is the vision of the Government, and the financial information requirements should be aligned with those of Ministries, agencies and budget spending units, which should be in line with the 2020 Financial Strategy. GFMIS is considered an important part of the overall vision of public financial management reform of the Government, not only purely as an IT system. GFMIS will be an overall information system in the whole financial sector, a set of application systems (“core” components) being integrated as a unified and integrated financial management information system for consistent and transparent operations to support financial management businesses to ensure compliance with national laws and regulations in Vietnam and aligned with international practices . GFMIS will be developed on the basis of taking full advantages of financial investments and inheritance of the achieved outcomes of the existing core application software such as TABMIS, PIT, VNACCS/VCIS, DMFAS....

3. GFMIS model for Vietnam

4. OBJECTIVES 4.1. Overall objectives: Developing in synchronization the system of laws and regulations, administrative procedures in the financial sector; simplifying and publicly disclosing administrative procedures and processes in the financial sector Continuing to embark on the modernization of public finances, with emphasis on IT application in the whole public financial management cycles starting from budget planning to budget execution, accounting, reporting, auditing, and budget performance scrutiny in contributions to strengthening of performance in the management and use of financial resources Integrating and synchronizing financial information system; completing the development of the national financial database and development of sector specific databases; developing management information systems, strengthening the effective use of information system to support leadership and governance. Establishing a set of public financial management application systems that are connected, exchanged and sharing public data in the whole of government to support financial management in an efficient, transparency manner, relevant to the conditions of Vietnam and international practices.

4. OBJECTIVES 4.2. Specific objectives Improve the legal framework as a pre-condition for implementation Continue to develop or upgrade or upscale other information systems to expand to or cover other functional areas such as budget preparation, capital expenditure management, public asset management, debt management, general accounting function, financial management at spending units, open budget reporting, economic forecasting… to ensure linkages and integration of all information systems and financial information flows of the Government from all agencies and units under the Ministry of Finance and related Ministries and agencies so as to establish a national financial data warehouse, to provide data and feed into other thematic data analytical tools, business intelligence tools.

4. OBJECTIVES Manage public assets comprehensively in the linkage with public expenditure management, public procurement management in all the stages of budget preparation, investment implementation, procurement, and allocation, accounting, termination of assets; to ensure compliance with policies, standards and norms; public disclosure and transparency; effective use of public asset resources Strengthen capacity in budget preparation through the development of a budget preparation system. The budget preparation system shall be shared with Ministries, agencies, sub-national finance departments to enhance capacity and the effectiveness of inspection and supervision, scrutiny of State budget management performance, embark on performance- based budget management mechanisms

4. OBJECTIVES Continue the modernization of the management of sub-national government debt, Government guaranteed domestic debt for integration of the information to the common public debt database, in response to the demand of unified public debt management in accordance with the Public Debt Management Law. Develop risk analysis, assessment, management and mitigation models; develop the medium-term debt strategy model. Strengthen financial controls, support financial management capacity building at spending units level, effectively utilize data at budget spending units through the development of a centralized financial management system to provide financial management services to administrative and public service delivery units.

5. Possible key sub-systems of GFMIS (1) The Treasury and Budget Management Information System (TABMIS); (2) The Budget Preparation System; (3) The Capital Expenditure Management System (including the public investment management system of the MPI and MOF) (4) The Debt management information system (including the public debt portfolio, public debt risk management, DMFAS…); (5) The Centralized Tax Administration Information System (TMS); (6) The Centralized Customs Administration Information System; (7) The State General Accounting System;

5. Possible key sub-systems of GFMIS (8) The public asset management system; (9) The price surveillance and database system; (10) The financial management system for budget spending units; (11) The unified securities management information system; (12) The State inventory reserve information system; (13) The GFMIS integrating and consolidation system and GFMIS data warehouse, including the model of Open Budget System (OBS) for budget disclosure through Government’s and Ministry of Finance’s websites; audit and evaluation supports, economic forecast and policy formulation supports).

6. ROADMAP Component 1: Consulting services for technical assistance in the development of business processes, investment project preparation (pre-investment stage) in the period from 2014-2016: Reviewing the legal framework, implementation pre-conditions; researching financial management requirements, related business process re-engineering and design requirements; data flow and input data design requirements, GFMIS overall enterprise architecture requirements. Preparing the investment project proposal, request for proposals for project implementation

6. ROADMAP Component 2: Development of the consolidation and integration system and the national financial data warehouse (GFMIS data warehouse) in in the period of 2016-2020: Developing the enterprise architecture for information technology application the whole financial sector in the period of 2015-2025. Developing the financial sector integrated information backbone) Developing a centralized data warehouse (the national financial data warehouse) to ensure linkage and integration of all Government financial data flows from departments and units of the Ministry of Finance, other Ministries and agencies to provide input data for business intelligence and analytical reporting to facilitate fiscal reporting, budget assessment and disclosure reporting to the public and businesses; disclosure of Government financial information in line with international practices; strengthening of the public disclosure and transparency of the national financial system.

6. ROADMAP Component 3: Development of the budget preparation system, in the period of 2020-2025: The system will be developed in a centralized model to support budget preparation at Ministries, agencies, sub-national departments of finance at all levels in association with the reforming of the budget management mechanism to be performance-based. By 2020, the system will be rolled out to tier-1 spending units of Ministries, agencies and sub-national governments; by 2025, the system will be rolled out to direct subordinate units of tier-1 budget spending units of Ministries, agencies and sub-national governments

6. ROADMAP Component 4: Development of the financial management system for budget spending units, in the period of 2016-2025: Developing a centralized financial management system, providing i-cloud financial management services for administrative and public service delivery units in areas such as inventory management, asset management, expenditure management, payroll management and accounting. The rolling out to all the units will be implemented gradually under a multi-year roadmap. In the first place by 2020, the services will be rolled out to tier-1 budget units (to support expenditure management at the offices of tier-1 budget units); by 2025, the services will be rolled out to the direct subordinate units of tier-1 budget units of Ministries, agencies and sub-national governments.

6. ROADMAP Component 5: Debt and aid management (2015 – 2020) : Developing a database software on sub-national government debt and Government guaranteed debt for integration of the information to the common public debt database, in response to the demand of unified debt management in accordance with the Public Debt Management Law; developing software and models for risk analysis, assessment, management and mitigation; the medium-term debt strategy model. Component 6: Price surveillance (2015 - 2020) Developing national price surveillance database, software system. Some IT application initiatives, projects, mandates to be implemented in synch and integrated with GFMIS database (2015 – 2020) Public investment management, State general accounting, Public asset management, unified securities market, the centralized tax administration system.

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