Huge public investment in industries and regions
According to the public investment plan in the period 2021-2025, the total state budget capital allocated for this period is VND2.87 quadrillion, not VND2,750 trillion as being reported to the 10th session of the 14th National Assembly.
According to the report on the implementation of medium-term public investment plan for the 2016-2020 period and the plan for the 2021-2025 period, about 4,979 projects will be carried out in the 2021-2025 period, a reduction of more than half compared to the number in the 2016-2020 period, including 2,236 projects to be newly launched.
5 years without any major projects completed
According to the report, the central budget deployed in the 2016-2020 period invested capital to about 11,100 projects, down half compared to the 2011-2015 period, of which 7,354 projects were completed, equal to 66.2% of the total number of projects.
The average annual disbursement rate was about 83.4% of the plan assigned by the Prime Minister. In particular, in 2020, the disbursement rate reached the highest, over 97.46%.
However, the Government said that the implementation of projects, especially important ones that did not meet requirements, were wasteful, and behind schedule. There were still problems with land policy, site clearance, PPP projects...
In the period, no key projects were completed because the time of submission, approval, and kick-off of major projects was at the end of the planning period, specifically:
The Eastern part of the North-South Expressway Project was approved by the National Assembly until the end of 2017 and the investment decision on it was issued by the Prime Minister at the end of 2018. After that, the National Assembly’s permission was required to change the investment form from PPP to public investment for some segments. By the third quarter of 2019 a number of component projects kicked off but they have not been completed.
The project on land acquisition, compensation, support and resettlement to prepare for the construction of the Long Thanh International Airport in Dong Nai province was approved by the National Assembly in late 2017 and the Prime Minister approved the investment decision at the end of 2018.
Fourteen road and railway projects of the Ministry of Transport were approved by the National Assembly Standing Committee in Resolution No. 556/NQ-UBTVQH14 dated July 31, 2018, and the investment procedures for it were completed in 2019.
The Government also assessed that the mechanism to attract investment in the form of PPP (public-private partnership) did not yet meet practical requirements, and some PPP projects on transportation such as the North-South Expressway in the East have to be changed to state budget investment, which enhances pressure on budget balance.
Many infrastructure projects implemented in the form of BT (build - transfer) revealed some shortcomings and limitations. Most of the BT projects were allocated land before the completion of the works, so the price of land at the time of land allocation was much lower than the price of land at the time of handing over the works.
"This makes the payment not ensure the principle of parity, benefiting investors and causing damage to the state budget," the Government pointed out. "A number of BT investment projects failed to repay their due debts, so the debts were extended, frozen or switched to state investment or use of sources from the accumulation fund for debt repayment."
More than VND2.8 quadrillion in public investment
According to the public investment plan in the period 2021-2025, the total state budget capital allocated for this period is VND2.87 quadrillion, not VND2,750 trillion as being reported to the National Assembly at the 10th session of the 14th National Assembly.
“The reason is that the 2020 state budget revenue is higher than the assessment made in October 2020, leading to an increase in state budget revenue for the period 2021-2025, while the Government's policy is to reduce the proportion of recurrent expenditure, and increase the proportion of recurrent investment," the Government explained.
Transport will be the top priority for the 2021-2025 period, accounting for 52.3% of the central budget capital and 68.8% of the planned capital allocated for economic activities in the same period.
The total amount of state budget capital allocated to localities will be VND1.68 quadrillion, with the highest proportion for the Red River Delta: 28% (over VND471 trillion); Southeast region: 19.37% (nearly VND326 trillion); North Central and Central Coast regions: 18.74% (over VND315 trillion); the Mekong Delta: 15.76% (over VND265 trillion); Northern mountainous region: 12.64% (VND212 trillion) and the Central Highlands: 5.5% (VND92.5 trillion).
The Government believed that resource mobilization is quite possible when public debt and Government debt compared to GDP decreases, and the potential for economic growth and state budget revenue is still quite large. The results achieved in 2020 in terms of macroeconomics are the foundation for achieving the economic growth target of 6.5-7% in 2021.
Besides mobilizing resources, accelerating the disbursement of public investment is important. This worry is well-founded when the first half of 2021 recorded very slow disbursement of public investment.
The Economic Committee of the National Assembly noted that the disbursement of investment capital from the central budget in the first six months of 2021 was still slow, and ODA disbursement was also very low. The committee asked to clarify the causes, both objective and subjective.
Along with the disbursement progress, the effective use of capital must also be ensured.