Patience required in public funding process

While Vietnam attempts to boost public funding in service of socio-economic development, disbursement of this type of capital however remains slow.

Nguyen Duc Kien, deputy chairman of the National Assembly’s Economic Committee, talked with VIR’s about the issue.

Patience required in public funding process

Nguyen Duc Kien

Many National Assembly members have affirmed that the current slow disbursement of public investment capital is not due to the existing Law on Public Investment. However, since the law came into force in 2015, disbursement has always failed to meet the annual schedule. What is your take on this?

I would say that the slow disbursement is ascribed to weak awareness and the actions of ministries, sectors, and localities. The key reason is that though the law stipulates strict procedures from making investment proposals, prefeasibility and feasibility studies, to appraisal and decisions on investment and implementation of projects, many officials and organisations still implement publicly-funded projects based on their habits and personal experience.

In fact, many works and projects have been implemented without obedience of procedures and regulations of the Law on Public Investment. As a result, they have been delayed and forced to abide by the legal regulations. This has led to slow disbursement.

How long will it take, however, to abide by all the procedures and regulations in the law, and is this also responsible for slow disbursement?

The implementation of state-funded projects is obliged to obey the Law on Public Investment, but also to be suitable with other legal documents, such as the laws on Public Procurement, Construction, and Land.

After projects acquire an investment decision, they are required to produce designs. But in order to have designs, design biddings must be organised. Then you have to create bidding dossiers, invitations, organisation, and then marking bidding. This process can often take at least four months to complete.

After results are announced on the selection of contractors, design consultancy, and detailed design, state management bodies and councils will check and assume control of the results, and this process may take another eight months. Then, investors must send a document to authorised agencies to establish a council to appraise and approve the projects, which is another three months.

When all procedures are completed, investors have to submit the projects to the prime minister for approval. This process will take at least one month if adopted immediately, but will take months more if the prime minister first asks related ministries and agencies to provide comments.

 

After approval, investors have to create dossiers to invite contractors to implement the projects. Normally, it will take six months for investors to select contractors that can effectively implement the projects.

Thus if everything goes smoothly, it will take about 26 months to implement all procedures prescribed in the laws of Construction and Public Investment. Thus it is easy to understand that the disbursement for state-funded projects has been always slow.

In that case, why has the ­National Assembly’s Economic Committee still stated in its report on appraising the country’s socio-economic ­situation in 2018 that one of the biggest shortcomings last year was the slow ­disbursement of public ­investment capital?

The disbursement reached less than 76 per cent as ­compared to the initial plan. It was clearly slow, but I would repeat that this was slower than the initial plan.

For example, we can imagine a reporter registered to write six articles in a week, as he is expecting to attend four meetings and meet with two experts for interviews. However, perhaps the reporter is not allowed to attend one meeting, and while he gathers little information at another meeting, he also fails to meet one of the two experts, who has now left for a business trip.

As a result, though the reporter has tried his best, he produces only four articles as compared to the initial plan of six. It is not his fault. He fails to fulfil his plan due to objective reasons. And even in the case he can produce six articles, it is likely the two additional articles will be of poor quality. The same is also true to disbursement of public investment capital. The failure in reaching plans is partly due to objective reasons and also due to the plans, which have been set too high.

Thus it can be concluded that the slow disbursement is due to both weak awareness and ­actions, as well as the long procedures?

I would say that the process and procedures on public investment in Vietnam are relatively in line with international practices and standards. Because public investment capital come from the state budget, domestic and foreign loans, and tax paid by the public, and because public investment can have significant impacts on the state budget balance and public debt, it is necessary for public investment procedures in all nations in the world to be very stringent.

Many people have the one-sided view that because the process and procedures in public investment are tough, they have led to slow disbursement and wastefulness in resources due to the prolonged time in construction. However, they fail to realise that if the process and procedures are not strict, public investment will become ineffective as many unnecessary projects will be initiated without investment capital taken into account, and that would cause great wastefulness. VIR

Manh Bon

 
 

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