Public investment is expected to be one of the most important drivers of economic growth in the time of the pandemic, but after the first five months of the year, disbursement of public investment capital reached one fifth of the annual plan. This fact has raised many concerns for Vietnam’s growth this year.
Focusing on "steel-fist" projects
The Ministry of Planning and Investment has submitted to the Government the medium-term public investment plan for the period 2021-2025. Under this plan, the total state budget capital for the medium-term public investment plan for the 2021-2025 period is VND2,870 trillion, including VND1,380 trillion from the central budget capital (VND1,080 trillion of domestic capital and VND300 trillion of foreign capital), VND1,370 trillion from the local budget, and VND120 billion transferred from savings to public investment.
It is planned that 10% of the capital from the central state budget will be left in reserve, and the rest of about VND2,700 trillion will be allocated to ministries, agencies and provinces to implement the medium-term public investment plan in the period 2021-2025.
Public investment in this period will focus on important and key industries and sectors of the economy, of which economic sectors account for more than 71% (over 68% of this goes to traffic infrastructure).
Specific objectives of medium-term public investment in this period are: 1,700 km of coastal roads from Quang Ninh province in the north to Kien Giang province in the south will be completed during 2021-2025; the east segment of the North-South Expressway will be completed in 2025; the construction of important irrigation works and reservoirs in the Central Highlands and the Mekong Delta will be also completed in this period. The construction of the North-South expressway from Lang Son to Ca Mau will be implemented during this time.
“Investment capital from the state budget will be invested in projects of natural significance, inter-regional projects, highways, coastal roads, projects to promote digital transformation, digital economy, digital society, science and technology, human resource training... in order to create new driving force and new space for national development", Minister of Investment and Planning Nguyen Chi Dung said.
Strengthening supervision by the Government, National Assembly
Ha Long - Van Don Highway. Photo: Le Anh Dung
According to experts, the slow and low disbursement of public investment, if not handled soon, will definitely have a negative impact on economic growth. At the regular cabinet meeting in May, the Government also pointed out: "Disbursement of public investment is still slow, has not fully promoted its role in stimulating demand, promoting growth and leading private investment" and therefore, it is necessary to focus on drastically promoting disbursement of public investment capital in the coming time.
Experts believe that drastic measures should be taken to remove obstacles related to the law on public investment, strictly implement the solutions set out in the Resolutions as well as the directions given by the Prime Minister. Along with this process is strengthening the monitor of implementation.
Dr. Nguyen Tri Hieu - a well known financial expert - acknowledged that public investment is clearly showing signs of slowing down and there are only slightly more than 6 months left to see if public investment will support Vietnam’s economic growth this year. He proposed strengthening the supervision of the Government and the National Assembly in the implementation of projects invested by public investment capital. Local authorities where public capital-invested projects are implemented slowly must take the responsibility.
In the short term, according to experts, besides the permanent task of fighting the Covid-19 epidemic, in economic terms, drastically removing and promoting public investment in the second half of the year should become a key priority, so that along with the recovery of exports and domestic consumption, the economy will rebound in the third and the fourth quarter.
In the medium and long term, the Government's promulgation of Directive No. 13/CT-TT is timely and necessary, with the goal that the total number of projects invested with public funds from the central budget in the 2021-2025 period will be reduced to just over 5,000 projects. In particular, it is required to resolutely cut off projects that are not really necessary, are inefficient, and projects that are newly launched.
After 30 years of development, South Korea has had hundreds of large-sized corporations, while most Vietnamese businesses are small and medium-sized after three decades of Doi Moi (reform).
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.