Is cost cutting really effective?

(Baonghean) - In the past, many businesses considered the State budget as a "sweet star fruit bunch". In 2012, when public expense reduction was considered important and the State budget was increasingly tightened, this story was different.

In various forms, State agencies have practiced cutting down on public expenses. Since the Government's Resolution No. 01/NQ-CP dated January 3, 2012, Official Dispatch 6890 of the Ministry of Finance... expenditures have been strictly managed. Agencies have minimized costs for electricity, water, telephone, stationery, gasoline, conferences, and seminars. The use of means of transport, machinery and equipment has not required major repairs, and gasoline costs have been reduced. When going on business trips to the same location, leaders and officials use the same car, print documents and papers using both sides of the paper, and allocate travel expenses to officials to limit the use of public vehicles... Most recently, on November 26, 2012, the Prime Minister issued a Directive on strengthening the implementation of anti-waste, which clearly stated: "In the context of the country's many difficulties, strengthening thrift and fighting waste, especially in the use of the state budget, is of great significance, contributing to reserving resources for development investment, social security and important and urgent tasks". The need to strengthen thrift practice and fight waste is also a common concern of the whole society. These days, typing the phrase "Reducing public costs" into Google, after a few seconds, it immediately gives over 27,100,000 results.

On the contrary, when state agencies strictly implement cost reduction, many businesses in the fields of computers, auto repair, restaurants, etc. complain about hardship.

In previous years, companies and businesses specializing in providing telecommunications services, installing IT equipment, repairing and maintaining machinery had a large volume of work in state "territories", so the employees of these companies had regular jobs, with good salaries and bonuses. This year, the purchase and sale of machinery to groups is not much, especially state agencies. Large customers limit the installation of new equipment or repairs. In previous years, the installation of simple software was also called a service, but this year businesses install it themselves...

Talking to a leader of a reputable auto repair company in Vinh City, he said that the company specializes in repairing and replacing auto parts for government agencies, and the revenue from these agencies is not less than 10 figures each year. However, in 2012, the number of these customers decreased significantly, only about 1/10 of the previous year.

At specialty restaurants, places that are popular with customers for parties, conferences or to meet partners, this year is also different. Some restaurant owners said that 2012 was really difficult because the number of guests from government agencies was very low. It was rare to see a few agencies come to book parties and the money spent was quite limited…

Air conditioning installation businesses often sell to government agencies. In previous years, they were so busy in the summer that even the owners had to join the workers in the installation. This year, only a few units called for installation and the number was very small.

So, has the implementation of public cost reduction really been effective? Talking with some experts in the field of public finance, it is known that the public cost reduction has not really been truly effective. Because, in previous years, this issue has been implemented, in 2012, the implementation of public cost reduction was specified with slightly higher requirements. Moreover, there is no specific data reflecting how much a specific agency has reduced public costs, because they think that if they report it, the following year it will be cut.

Thinking about it, this is not unreasonable. Currently, State agencies implement the method of spending on fixed expenses. Every year, their superiors balance and approve a certain amount of budget for specific expenses. With the approved budget, these agencies must balance their expenses to make up for the deficit within a year. If there is a shortage, they will have to make up for it, if there is a surplus, they will enjoy it. Therefore, it is natural to save money. On the other hand, when most State agencies approve their plans, they have their public expenses cut by about 10% by their superiors, but the work still runs well, and no agency is seen to be stuck in work because of this. This shows that there has been a loosening, even a waste of the State budget in many years ago. The amount of money wasted in a State agency may be only a few hundred or a few million VND. But how much money will be wasted in the whole province, in the whole country? It is certainly not small.

In the current difficult economic period, it is clear that the need to reduce public expenditure in state agencies is very necessary. Not only that, reducing public expenditure will create a sense of saving in each cadre and civil servant. However, to be truly effective, further adjustments are still needed.

Nhat Lan