The total public investment capital has increased sharply in the 2021-2025 period compared with 2016-2020, but the number of projects has fallen significantly.
The Ministry of Public Investment's (MPI) report to the Prime Minister on medium-term public investment in 2016-2020 and predictions for 2021-2025 showed that the total investment capital of the state in the next period is VND2.75 quadrillion, an increase of 37.5 percent over the previous period (the amount approved by NA in 2016-2020 was VND2 quadrillion).
MPI is determined to maximize the mobilization of all resources in the economy to reach the state’s investment of VND2.75 quadrillion.
The total number of projects to be allocated capital for the period is 6,447, a 50 percent reduction from the 2016-2020 period. This includes 3,304 new projects, or 78.5 percent of that in the previous period.
The average capital of each project is VND154 billion, a two-fold increase compared with the VND88 billion in 2016-2020.
As such, the number of new projects is on the decrease.
However, when supervising public investment capital expenditure plans, MPI found that some ministries, localities and agencies do not strictly observe the regulations and principles on capital allocation. They start projects while not ensuring the capital arrangement for transitional projects, and approve projects that exceed the allocated capital.
The problem needs to be fixed, and the rampant, fragmented investment needs to be stopped so that unfinished projects can be completed.
Only 7,354 projects were completed in the 2016-2020 period, or 66.2 percent of the total projects in the medium-term plan.
According to MPI, a series of large transport projects will be developed with public capital in the next five years.
The Government will spend VND97.9 trillion on 74 key inter-region projects, and arrange VND8.1 trillion to complete 10 projects belonging to the coastal route from Quang Ninh to Nghe An.
Regarding the criteria for capital allocation in 2021-2025, MPI said the allocation will follow the laws on Public Investment and State Budget, and National Assembly and National Assembly Standing Committee’s resolutions and Government’s decisions.
Public investment capital will be allocated to key industries and sectors, large projects and important projects at the national level that connect regions and create new development space, promoting the growth areas of Hanoi, HCM City and key economic zones.
MPI estimated that in 2020 every one percent in increase of public investment disbursement led to a 0.06 percent GDP growth rate over the previous year. As such, increased public investment capital in the next five years is expected to give a push to GDP growth.
The halving in number of projects and the twofold increase in capital of each project shows that public investment has become less fragmented.
|MPI estimated that in 2020 every one percent in increase of public investment disbursement led to a 0.06 percent GDP growth rate over the previous year. As such, increased public investment capital in the next five years is expected to give a push to GDP growth.|
Prime Minister Pham Minh Chinh on April 15, during his first cabinet meeting ordered to boost public investment disbursement as one of the key solutions to stimulate national economic growth.
MPI on April 20 sent a document to ministries, agencies, and localities asking them to report barriers involving disbursement of state budget capital.
Speeding up disbursement is one of the biggest issues. Slow disbursement was seen in 2016-2019, especially in 2018 and 2019 with disbursement rates of 71.69 and 78.68 percent, respectively.
The Government then had to propose to the National Assembly an unprecedented solution to speed up disbursement – allowing the Government to adjust the investment plan with the central budget capital among ministries, central agencies and localities.
Four Government resolutions were released, and six conferences and seven government working delegations were organized in an effort to speed up disbursement.
Thanks to a series of drastic measures, the disbursement in 2020 reached its highest ever rate.
The Ministry of Finance (MOF) has warned that the slow disbursement may come back. The disbursement rate by April 30, 2021 was only 16.66 percent.
The ministry reported that in the first four months of the year, five ministries and 10 localities had disbursement rates of over 20 percent of the plans. Localities with high disbursement rates included Thai Binh (76.74 percent), Ha Nam (50.57 percent), Hung Yen (43.21 percent), Thanh Hoa (42.39 percent) and Quang Ninh (39.62 percent).
Meanwhile, 41 out of 50 ministries and 26 out of 60 localities had disbursement rates of below 15 percent. Seventeen ministries have not made disbursements.
Vietnam plans to outlay 2.87 quadrillion VND (124.5 billion USD) on public investment in the 2021-2025 period, up 120 trillion VND compared to the previous estimate.
The disbursement of public investment was estimated at VND398 trillion as of the end of December, meeting 82.8 per cent of the Government’s plan – the highest rate in the 2016-20 period, according to the Ministry of Planning and Investment.