VietNamNet Bridge – Economists have warned that Vietnam’s public debts would be no longer within the safety line after 2015, when it has to reserve 1/3 of the annual budget to pay debts.

The Dung Quat oil refinery, Ho Chi Minh Trail, Son La hydropower plant have been called “super projects,” because the smallest project – Son La plant – also has the huge investment capital of VND60 trillion, or $3 billion.

There are numerous mammoth projects like that. Despite the scanty income, Vietnam still has been making heavy public investments. As a result, the state budget has suffered the overspending in the last many years. Tran Du Lich, a well-known economist, National Assembly’s Deputy, described the current status of the state budget as “robbing Peter to pay Paul.”

In fact, the announced investment capital of public investment project is just the initially planned capital. In most cases, their actual investment capital is much higher, which means that the state budget has to spend more money than forecast.

The National Assembly ongoing session, for example, is discussing on whether to approve the government’s proposal to budget tens of trillions of dong for the Ho Chi Minh Trail project.

The government has proposed to invest VND24 trillion more in the project, while the capital would be sourced from the government bonds. If the government gets the nod from the National Assembly, the total investment capital of the project would be VND103 trillion, which is triple than the estimates figured out in 2007.

Prior to that, the National Assembly once approved the government’s proposal on raising the investment capital for the Son La hydropower project by VND14 trillion, an increase of 39 percent from the initial estimates.

The Dung Quat Oil Refinery project was started with the expected investment capital of $1.5 billion. But the actual capital poured into it was $3 billion.

Investors have cited a lot of reasons to prove that it is necessary to increase the investment capital. However, analysts believe that they deliberately planned the projects with initial low capital to prove the high feasibility of the projects, which helps them easily get the approval from competent agencies. Later, they ask for the permission to raise the investment capital to cover the high expenses and spend more money.

No one has conducted surveys to find out if it is really necessary to increase the investment capital of the projects, and if the projects are feasible and useful with such high investments.

However, it is undeniable that public investments are always less effective than the other investment sources. In other words, public investments “gobble up” much money of the scanty budget.

One year ago, the Ministry of Finance once stirred up the public when proposing to delay the implementation of the plan on increasing minimum wage, because the state budget was tight.

Minister of Finance Dinh Tien Dung has recently warned that the state budget would see a shortfall of VND63 trillion this year.

In order to arrange money to fulfill the multi-trillion dong projects, National Assembly’s Deputies have to ratify the government’s bond issuance plan, with big worries. If VND170 trillion worth of bonds is issued, the total bond value to be issued by 2014 would be VND400 trillion.

US$1 = VND21,000.

Mai Thanh