1 ABSTRACT The necessity of the research Defense industry is an important part of the national industry under the Ministry of Defense and is a specific area with a secret and sensitive characteristic In the process of transitioning to a socialist-oriented market economy, in order to develop the defense industry, the role of the State is critical, especially for investment with the state budget capital in the field of defense industry In recent years, the role of the State in state budget investment in the field of defense industry in Vietnam has always been concerned, paid attention and gained important achievements, contributing to the developing of the construction of Vietnam's national defense as nowadays However, during the course of operation, many shortcomings still exist such as the formulation of investment strategies and planning; promulgating mechanisms and policies; implementation and investment inspection These shortcomings need to be researched and continue to be completed in order to successfully complete the heavy task assigned by the Fatherland and the people, especially in the context of ongoing developments in the world and the region with unpredictable complexity as today Stemming from that practical requirement, the PhD student has chosen the issue of "The role of the State on investment by the state budget capital in the field of defense industry in Vietnam" to be the doctoral thesis topic Research objectives and missions 2.1 Research objectives Proposing a system of viewpoints and feasible solutions to enhance the State's role in state budget investment in the field of defense industry in Vietnam 2.2 Research missions To accomplish the proposed research objectives, the thesis has the following basic tasks: - Systematizing and supplementing the theoretical basis for the role of the State in state budget investment in the field of defense industry - Doing a survey about international experience on the role of the State on investment by state budget capital in the field of defense industry and drawing lessons for Vietnam - Analyzing the status of the role of the State on state budget investment in the field of defense industry in Vietnam in the period of 2013-2018; assessing achievements and limitations and find out the causes of the limitations of that situation - Proposing key views and solutions to enhance the role of the State on state budget investment in the field of defense industry in Vietnam to 2025 and a vision to 2030 Object and scope of the study 3.1 Research object The research object of the thesis is the role of the State on the state budget investment in the field of defense industry 3.2 Scope of the study - Scope of content: studying the role of the State on the state budget capital investment in the field of defense industry through the formulation of strategies and plannings; enacting laws, mechanisms and policies; organizing the implementation of investment to examine and inspect investment with the state budget capital in the field of defense industry - Scope of space: focus on researching the role of the State on the state budget investment in the field of defense industry in Vietnam, within the scope of performing the function of the law enforcement agency on the use of state budget capital in the field of defense industry without considering the allocation of defense budgets under the function of the legislature - Scope of time: studying the status of the role of the State in investing with state budget capital in the field of defense industry in Vietnam in the period of 2013-2018; proposing viewpoints and solutions to enhance the role of the State for state budget investment in the field of defense industry in Vietnam to 2025 and a vision to 2030 New contribustions of the thesis - The thesis has a new approach on the role of the State from a two-sided relationship: On the one hand, due to the requirements of the investment process in the field of defense industry - a specific field On the other hand, is the positive impact of the State on this process - The thesis introduces a new concept of the role of the State on state budget investment in the field of defense industry It is an economic category reflecting economic relations, in which the State is the subject that influences on the object as an investment activity in the field of defense industry in order to enhance the defense potential - The thesis has built a system of qualitative and quantitative criteria that reflect the positive relationship between the role of the State and the results of the State's intervention on investment which is mentioned for the first time - Lessons learned are inheritance and new creative development on the role of the State on investment in the field of defense industry - The thesis has proposed a system of viewpoints and orientations for groups of solutions to enhance the role of the State on investment on the field of defense industry, in which the implementation is a breakthrough solution, overcome the current limitations and exists Structure of the thesis The content of the thesis is presented in 152 pages; in addition to the introduction, conclusion, the list of published works related to the thesis, the list of references and appendices, the thesis content is structured into chapters and 12 periods 3 CHAPTER I OVERVIEW OF RESEARCH WORKS AND RESEARCH METHODS OF THE THESIS 1.1 Overview of research works related to the thesis topic 1.1.1 Research situation in the world In this section, the author reviews a number of research projects on public investment from the state budget; investment on developing defense industry in China; the trend of developing defense industry in the context of 4.0 industrial revolution; defense sector reform of some countries 1.1.2 Research situation in Viet Nam The author reviews a number of research works on investment and state management of investment capital in the field of defense; state management of defense economic enterprises; improving the quality of forecasts on building defense development strategies; combining economic development with defense; the trend of reforming the defense industry sector; developing the defense industry and defense industry complexes; renovating state management on investment projects from the state budget; strengthening state management on capital construction investment from the state budget; improving the effectiveness of financial inspection of state-funded construction investment projects in Vietnam; International and foreign integration on national defense; 1.2 Research gap and analytical framework of the thesis 1.2.1 Research gap and research questions 1.2.1.1 Research gap Comments on the research works: A number of studies have mentioned the state investment situation in developing defense industry A number of studies have investigated the model of developing defense industry and the direction of the investment on defense industry A number of studies have mentioned the role of the State in developing defense industry in a volatile world but have not yet analyzed in depth the role of the state in investing in developing defense industry The author asserted that, so far, there has not been any scientific research on the role of the State on state budget investment in the field of defense industry in Vietnam comprehensively in terms of economic science and politics 1.2.1.2 Research questions 1/ Why does the State have a role on the investment by the state budget capital in the field of defense industry?; 2/ How is the role of the State shown on the investment by the state budget capital in the field of defense industry? 3/ What factors affect the role of the State on investing in the defense industry sector? 4/ What is the current situation about the role of the State on the investment by state budget capital in the defense industry sector in Vietnam nowadays? 5/ What are the viewpoints and solutions to enhance the role of the State on state budget investment in the field of defense industry in Vietnam in the coming time? 1.2.2 Analytical framework of the thesis Factors affecting the role of the State on state budget investment in the field of defense industry International experience on the role of the State on state budget investment in the field of defense industry The content of the State's role on state budget capital investment in the field of defense industry Current situation of the State's role on state budget capital investment in the field of defense industry in Vietnam Solutions to enhance the role of the State on state budget capital investment in the field of defense industry in Vietnam Figure 1.1 Analytical framework of the thesis Source: Authors' collective 1.3 Research methodology of the thesis 1.3.1 Approaching method of the thesis Applying a combination of history and logic to approach the research of the State's role on state budget investment in the field of defense industry is an interactive relationship: on the one hand, due to the demands of the investment process with state budget capital in the field of defense industry; on the other hand, there are interventions that positively impact the State on investment in the defense industry sector 1.3.2 Analytical methods of the thesis The thesis uses a combination of major research methods, such as: scientific abstraction; the method goes from abstract to concrete; combining historical and logical methods; combining analysis and synthesis; system research method; methods of analysis, synthesis and inference; methods of statistics, comparisons and confrontation; methods of investigating, interviewing, collecting and processing secondary and primary data The main analytical method is qualitative and quantitative analysis method In particular, the method is qualitative analysis, due to the characteristics of the field of defense industry * Qualitative analysis methods: The thesis uses scientific abstraction methods to clarify the nature of the role of the State on investing with state budget capital in the field of defense industry It also analyzes the role of the State through the factors affecting the investment process That is the basis for constructing qualitative criteria * Quantitative analysis methods: Quantitative methods are implemented in the collection and processing of primary data through questionnaire distribution and processing of collected data For data processing, the author uses multivariate linear regression analysis, SPSS 20 software in combination with Excel software CONCLUSION OF CHAPTER I In chapter 1, the thesis has overviewed the domestic and foreign research works related to the role of the State on state budget investment in the field of defense industry; pointing out the gaps requiring the thesis to continue researching deeply, identifying research questions and analyzing the thesis framework; presentating the research methods used in the thesis 5 CHAPTER II This is a completely traditional investment model in the operating economy, with the State's deep intervention in production in defense industry sector The basic feature of model is the complete state 'selfsufficiency, self-supply' in defense industry sector * Model 2: The state provides finance and the private sector organizes the supply of goods according to the orders of the State in the field of defense indusry The state only provides finance from the state budget and orders private enterprises to research, produce and meet state requirements Model is commonly applied in the countries with developed market economies and with a long history of private enterprises engaged in arms production * Model 3: The state provides finance, the state and the private sector jointly produce goods in the field of defense industry Model is a combination of model and model Most countries in the world apply model However, for each country, there are certain characteristics to apply the model or highly inclined to model or model 2.2 Basic theory of the role of the State on investment by state budget capital in the field of defense industry 2.2.1 Definition and characteristics of the role of the state on investing with state budget capital in the field of defense industry 2.2.1.1 Definition of the role of the state on investing with state budget capital in the field of defense industry Applying historical and logical methods, generalizing the theoretical development of the economic role of the State reflected through economic models: • Socio-economic market model • Free market economy model • Mixed economic model By scientific abstraction method, the dissertation introduces the concept of the role of the state in state budget investment in the field of defense industry, an economic category reflecting the aggregate impact of the State on investment by state budget capital in the field of defense industry in order to strengthen defense potential, maintain national security and national sovereignty 2.2.1.2 Characteristics of the state's role on state budget capital investment in the field of defense industry • Demonstrating class political views on building defense forces, international cooperation, development orientation of defense industry and investment in defense industry • Leading and directing comprehensively the investment activities in the field of defense industry • Organizing the implementation of the state budget investment process in the field of defense industry under the command of the Ministry of Defense in an imperative and military discipline • Performing the role of the state on investing with state budget capital in the field of defense industry to ensure regulations on national security • The role of the state on investing with state budget capital in the field of civil engineering is assessed by socio-economic efficiency, the result of fulfilling planned tasks 2.2.2 Contents and criteria for evaluating the role of the State on investment by state budget capital in the field of defense industry 2.2.2.1 The content of the State's role on investment by the state budget capital in the field of defense industry Firstly, the State develops strategies and plannings on investment by the state budget capital in the field of defense industry The State is the subject of elaborating strategies and plannings on investment with state budget capital in the field of defense industry The development of strategy, planning, and investment plan for defense industry comes from the analysis and evaluation of risks, challenges, threats and the identification of long-term strategic goals as well as specific goals of defense activities Secondly, the State has developed and issued mechanisms and policies for state budget investment in the field of defense industry The policy of investing with the state budget capital in the field of defense industry represents the goals of the policy which will be achieved when investment is effective, efficient, sustainable, and transparent Thirdly, the State organizes the implementation of investment by the state budget capital in the field of defense industry Building the state management apparatus for investment projects; Organizing the investment by the state budget through the investment process; Coordinating among state management agencies of investment RATIONALE AND PRACTICAL EXPERIENCE REGARDING THE STATE'S ROLE ON INVESTMENT BY STATE BUDGET CAPITAL IN THE FIELD OF DEFENSE INDUSTRY 2.1 Some basic issues of defense industry and investment with state budget capital in the field of defense industry 2.1.1 Some issues related to defense industry 2.1.1.1 Defense industry concept There are many different understandings, approaches and expressions about defense industry On the basis of the conception, according to the author, the most general understanding of defense industry is as follows: Defense industry is a part of the national industry, an important part of the defense industry‘s force and capabilities, a specific sector with the task of researching, developing, manufacturing, repairing, renovating and modernizing weapons equipments, supplies, technical equipment and other products to serve the national defense 2.1.1.2 Defense industry characteristics Characteristics of the denfense industry include: high security; surprise, accuracy and high damage; large investments; a field that requires a management team and highly qualified labor 2.1.1.3 The position and role of defense industry - Defense industry is a part of national industry, an important part of the national security and defense resources and potentials - Defense industry plays an important role in the task of building and defending the Fatherland - Defense industry contributes to creating the country's military strength, preventing and repelling the risk of war - Defense industry meets urgent requirements of the task of protecting the Fatherland in all situations 2.1.2 Concept, characteristics and importance of investment by state budget capital in the field of defense industry 2.1.2.1 The concept of investment by state budget capital in the field of defense industry Investment by state budget capital in the field of defense is an activity invested with state budget capital in programs and projects in the field of defense industry aiming at protecting the national security and defense Investing with the state budget capital in the field of defense industry is a form of state investment using state budget capital and investment purposes to serve public goals 2.1.2.2 Features of investment by state budget capital in the field of defense industry - Investments comply with the Law on National Defense, the Law on Public Investment and the Law on State Budget Management - Investment to produce special products with high accuracy and damage - The investment process including planning, implementation, inspection and supervision is highly confidential - Investment products have security, accuracy and high reliability when putting into practical use 2.1.2.3 Importance of the investment by state budget capital in defense industry sector - Investing with state budget capital in the field of defense industry contributes to ensuring the development of the national defense for the entire people; - Investing with state budget capital in the field of defense industry contributes an important part in developing the country's military potential - Investment with state budget capital in the field of defense industry is a very important factor in the production of national-specific weapons 2.1.2.4 Some major investment models in defense industry sector * Model 1: The State provides finance and the State completely organizes the production of goods in the field of defense indusry 7 projects Fourthly, the State carries out examination and inspection of investment by the state budget capital in the field of defense industry The State shall inspect the implementation of strategies, plannings, mechanisms and policies on investment by the state budget capital from organizations and agencies with the task of making investment by the state budget capital in the defense industry sector 2.2.2.2 Criteria for evaluating the role of the State on investing with state budget capital in the field of defense industry Firstly, qualitative criteria: Qualitative criteria assessing the role of the State on state budget investment in the field of defense industry are considered in the following aspects: relevance, effectiveness, efficiency and sustainability Second, quantitative criteria: In fact, quantifying the role of the State on investing in the field of defense industry is very difficult and complicated; it is difficult to collect and process secondary data due to the statistical system of defense industry and the principle of confidentiality of national defense In the study, it is necessary to use sociological survey data to collect primary data and perform by multivariate linear regression analysis with independent variables as an impact factor to show the role of the State and the dependent variable to determine the impact level of each factor 2.2.3 Factors affecting the role of the State on investment by state budget capital in the field of defense industry 2.2.3.1 Military defense strategy and policy of developing national defense industry 2.2.3.2 Level of economic development and investment ability of state budget in the field of defense 2.2.3.3 Impact of military restructuring on defense budget 2.2.3.4 Infrastructure and adaptability of defense industry with the process of international integration 2.2.3.5 Qualification of officials in charge of executing the role of the State on investment by the state budget capital in the field of defense industry 2.2.4 Necessity of the role of the State on investment by state budget capital in the field of defense industry The role of the State on investing with state budget capital in the field of defense industry is necessary and objective, because of the following reasons: Firstly, there must be a role of the State on investing with state budget capital in the field of defense industry in order to overcome market failures in the defense industry sector, in order to ensure that they work effectively Secondly, there must be a role of the State on investing by state budget capital in the field of defense industry in order to create an equitable and healthy investment environment and condition in the defense industry sector Thirdly, due to the necessity of ensuring the development of national specific weapons, it must ensure the independence of the nation's military development strategy Fourthly, due to the requirement that there is a need for unity in the development of the management of national weapons and military equipment 2.3 International experience on the role of the State on investment by state budget capital in the field of defense industry and lessons learned for Vietnam 2.3.1 Experience of some countries 2.3.1.1 Experience from Australia The role of the State in Australia's development of defense industry is confirmed by the strategy and viewpoint of developing the national defense industry Identifing an autonomy strategy in building defense capabilities, and at the same time enhancing the wepons export cooperation; developing the field of "designing, building and exporting 2.3.1.1 Experience from China The viewpoint of the role of the State in investing and developing the state's defense is as follows: The state continues to play a leading role in developing the defense industry; defense industry building must obey and promote economic development ; It must be based on economic capacity and scientific and technological potential to build a modern defense industry of Chinese identity ; It moves to production and development under the market mechanism under the management of the State 2.3.1.1 Experience from Indonesia : The strategy of building an independent and autonomous industrial development platform, at the same time, cooperating with the developed industrial countries in the defense industry under the motto of "leapfrog" Due to the limited budget allocated for the state defense industry in the context of high demand for weapons and equipment, the government requires strict management of state budget investment in the field of defense 2.3.2 Lessons learned for Vietnam Firstly, perfecting the strategy for developing defense industry, especially in the context of the fourth industrial revolution Secondly, reforming the organizational structure to manage and renovate financial mechanisms in line with the system of legal documents invested with state budget capital Thirdly, strengthening the State's inspection and supervision of state budget investment in the field of defense industry Fourthly, strengthening the expansion of international cooperation in developing defense industry CONCLUSION OF CHAPTER II In chapter II, the thesis has performed the specific tasks as follows: (i) Clarifying the concept and characteristics of defense industry and investment by state budget capital in the field of defense industry (ii) Overviewing some key theories about the economic role of the State; analyzing contents and criteria for evaluating the role of the State in state budget investment in the field of defense industry (iii) Analyzing the six influencing factors and the necessity of the role of the State on state budget investment in the field of defense industry (iv) Doing a survey on the experiences of Australia, China and Indonesia and drawing four practical lessons for Vietnam on the role of the State on state budget investment in the field of defense industry 9 10 CHAPTER III CURRENT SITUATION OF THE STATE'S ROLE ON INVESTMENT BY STATE BUDGET CAPITAL IN THE FIELD OF DEFENSE INDUSTRY IN VIETNAM 3.1 Overview of Vietnam's defense industry 3.1.1 The process of formation and development After independence, on September 15, 1945, the President Ho Chi Minh signed a decision to establish the Military Division (directly under the Military Supply Department) On March 25, 1946, the Military Division was separated from the Military Supply Department to become a Military Department, tasked with researching and manufacturing weapons and military equipment Decree No 22 / HDBT of March 3, 1989 of the Council of Ministers officially established the General Department of Defense Industry and Economics On December 24, 1998, the Prime Minister signed Decision No 249/1998 / QD-TTg renaming the General Department of Defense Industry and Economics into the General Department of Defense Industry 3.1.2 Development characteristics of Vietnam's defense industry - The capacity of mobilized industrial establishments is still limited - Vietnam's defense industry has made a shift from a central planning mechanism to a market mechanism - Investment capacity for defense industry is limited; capacity, technological level, scientific and technological level of human resources of defense industry had an initial basis but were still low compared to the world - The combination of production of defense goods and economy remains difficult; the development of defense industry is still inadequate with the ability to meet the resources for development 3.2 Situation of the role of the State on state budget investment in the field of defense industry in Vietnam 3.2.1 Situation of elaborating strategies and plannings on investment by state budget capital in the field of defense industry Strategies, master plans and investment plans with state budget capital in the field of defense industry determine the strategic goals for the period 2011-2020 of the defense industry, that are: to build and develop the defense industry into an important part of the national defense-security potential; the organizational structure and management mechanism need to be implemented in the direction of a combined model: a model combining technical development with modern technology development; combining the management mechanism with strategic planning, focusing on the market mechanism, with the macro management and regulation of the State and with the participation of all economic sectors 3.2.2 Situation of promulgating mechanisms and policies on investment by the state budget capital in the field of defense industry In order to implement the strategies invested by the State budget in the defense industry sector, in the period of 2011-2020, investment mechanisms and policies have been issued synchronously with the strategic system and plannings, the system of the State budget law, the Law on public investment and ordinances of the Standing Committee of the National Assembly 3.2.3 Situation of organizing the implementation of investment by the state budget capital in the field of defense industry The organization of state budget investment in the field of defense industry is implemented under annual approved investment projects in the period of 2013-2015 and approved under the medium-term investment plan for the 2016-2017 period The process of investing in projects complies with the provisions of the 2014 Law on Public Investment, the 2015 SBL and Resolution No 73 / NQ-CP / 2016 providing the target program for defense industry The Government Resolution on allocation of public investment capital according to mediumterm plan (Resolution No 73 / NQ-CP / 2016 providing for the target program of defense industry to implement Resolution No 06-NQ / TW / 2013 of the Politburo is specified in the medium-term portfolio 20162020) Table 3.4: Investment by state budget capital in the field of Vietnam's defense industry in the period of 2013-2017 Targets Unit of calculation Total expenditure for Defense Million Spending expenditure on the state's defense industry from the state budget Million Percentage of investment spending for defense industry / defense expenditure % 2013 2014 2015 2016 90,000 99,000 110,000 113,534 1,568.3 1,845.0 2,039.4 3,311.0 3,462.8 2.01 2.05 2.06 3.01 Source: Author's calculations based on SPRIS and World Bank data State budget expenditure on the field of defense industry is allocated according to investment projects in three main expenditure items, especially, for investment in chains and technical infrastructure in service of weapons production, repair and improvement, technical equipment accounted for an average of 74.8%, spending on scientific research, manufacturing of defense technology accounted for an average of 22.8% and about 2.4% spent on quality improvement training, human resources in the defense industry 3.2.4 Situation of examination and inspection of investment by the state budget capital in the field of defense industry In the period of 2016 - 2018, the Inspection Department of the General Department of Defense Industry has carried out many inspections performed on such aspects as: financial management and use; production business activities; capital construction investment; management and use of defense land Table 3.7:Situation of inspections of defense industry sector Targets Number of inspections Total number of complaints The number of letters has been resolved Number of citizen reception 2017 78,024 2016 17 113 98 115 2017 18 127 112 145 2018 21 211 198 232 Source: Electronic Journal of Inspection 3.2.5 Quantitative analysis of the impact of the components of the State's role on state budget investment in the field of defense industry in Vietnam Regression analysis results show that, based on the track and the magnitude of State budget capital in the field of defense industry is the variable KHCLCS (with beta coefficient is 0.558), followed by the TCNL variable (beta factor is 0.360), followed by the TCBM variable (beta factor is 0.279) and finally TTKT variable (beta coefficient is 0.138) The sig value of all variables is