Accelerating Public Investment Disbursement

If VND700 trillion (US$29.8 billion) of public investment is disbursed efficiently and timely, it will significantly contribute to stimulating social investment and maintaining economic growth momentum. Accelerating the disbursement of this investment capital is an order and one of the goals that ministries, branches and localities are aggressively implementing.

Many positive signals

In 2020, according to a report by the Ministry of Finance, the total permitted public investment capital from the State budget is nearly VND700 trillion, 2.2 times the actual disbursed capital in 2019 (VND312 trillion). At many meetings, Prime Minister Nguyen Xuan Phuc has requested ministries, sectors and localities to disburse 100% of the remaining public investment capital in 2019 and in 2020.

Implementing that order, ministries, branches and localities are taking the initiative in seeking solutions to accelerate the disbursement of public investment. According to the Ministry of Finance, the disbursement of public investment plans of ministries, sectors and localities in the first quarter of 2020 reached more than VND61,591 billion, equal to 13.09% of the plan (in the same period in 2019, it was equal to 11.21% of the plan). In which, there are 8 ministries, branches and 34 localities with disbursement amounts of over 15%. There are 3 ministries, branches and 6 localities with the disbursement rate of over 25% including: Development Bank (31.13%); Government Inspectorate (27.60%); Hoa Lac Hi-Tech Park Authority (26.31%); Ninh Binh (47.75%); Nam Dinh (32.78%); Binh Thuan (29.32%); Thai Binh (27.13%); Lang Son (26.16%); and Soc Trang (25.62%). So far almost all localities have disbursed part of their capital.

Hanoi Department of Planning and Investment said that in the first three months of 2020, investors and contractors completed 18.8% of the volume of public investment works and the disbursement rate was 9.8%, while the rate of the same period last year was 7.2%. Although affected by the disease, Hanoi will not adjust its target of disbursing VND37 trillion of public investment this year. In addition to ongoing projects that must be completed in the last year of the 2016-2020 medium term, the city has also started 30 projects and strives to speed up investment procedures to continue building other projects in the second quarter.

In Ho Chi Minh City, a number of key investment projects are focused on implementation including the Ben Thanh - Suoi Tien Metro Line 1. The city also handed over the ground for the commencement of railway No. 2 (Ben Thanh - Tham Luong) in which basic compensation, support, resettlement and site clearance have been completed. In addition, also in the first quarter of 2020, the Project Management Board invested in constructing the city's transport works. Ho Chi Minh City has started 10 new projects including building My Thuy 3 Bridge (under the project of building My Thuy intersection phase 2), building a tunnel system and bridges in front of the new Eastern bus station area, constructing infrastructure of nine land lots in Thu Thiem, constructing An Phu Dong steel bridge, and dredging Soai Rap channel (phase 2).

Other localities such as Quang Ninh, Vinh Phuc or Da Nang are also aggressively promoting disbursement of investment capital. Specifically, as for Da Nang, the disbursement of public investment in the first quarter of 2020 in Da Nang is 3.3 times that of the same period in 2019; 4.2 times higher than in 2018. Quang Ninh, as of March 31, 2020, disbursed public investment capital of VND1,846 billion, equaling 11.3% of the plan, 8% higher than the same period.

In the context of the Covid-19 pandemic, promoting disbursement of public investment is considered an effective solution to support growth from now to the end of the year and the coming period.

More consistent and drastic solutions needed

In Directive 11/CT-TTg on urgent tasks and solutions to remove difficulties for production and business, and ensure social security in response to Covid-19, Prime Minister Nguyen Xuan Phuc has requested ministries, branches, localities and State corporations to regularly check and take measures to remove difficulties and obstacles to ensure the progress, volume and quality of work. The Prime Minister has assigned the Ministry of Transport to urgently complete procedures and promote disbursement and implementation of large-scale and important public investment projects that have spillover effects and create motivation for socio-economic development. In particular, it is necessary to study and propose the conversion from investment in the form of public-private partnership (PPP) to public investment for key infrastructure projects such as: My Thuan - Can Tho Expressway Project, component investment projects of the North-South expressway construction project in the period 2017-2020. Recently, the Prime Minister directly inspected the construction progress of Trung Luong - My Thuan Expressway in Tien Giang province.

In addition, to accelerate the disbursement of public investment capital as a driving force for economic development, on April 6, 2020, the Prime Minister also signed the issuance of Decree 40/2020/ND-CP, detailing the implementation of a number of articles of the Law on Public Investment. In particular, sanctions should be imposed on organizations and individuals delaying the disbursement of public investment. In particular, agencies that do not fully allocate assigned capital will also be considered for withdrawal and transfer capital to other units in need before June 30 every year.

According to Minister of Planning and Investment Nguyen Chi Dung, ministries, branches and units have been actively involved in the development process to find solutions to increase the speed of disbursement of public investment. For example, in the second quarter of 2020, three component projects under the North-South Expressway Project in the east, including Mai Son - Highway 45, Highway 45 - Nghi Son and Phan Thiet - Dau Giay are converted from public-private partnership (PPP) investment to public investment.

In addition, a number of projects have been named by the Prime Minister, and projects that have spillover effects on the economy, are also being reviewed. Local authorities also proposed specific solutions for each project, based on the principle of entanglements and regulations for each project. Hanoi will set up a steering committee and a task force to review and remove bottlenecks, quickly implement public investment. The city proposes a number of other solutions to remove obstacles and accelerate the implementation of projects. In the coming time, Ho Chi Minh City will also issue a process to manage annual public investment plans, proposing the Government promulgate a resolution on "specific" mechanisms and processes to shorten the time for compensation, support, resettlement and handover of ground as a basis for speeding up the implementation progress of projects. At the same time, the city will disseminate and thoroughly grasp the provisions of the Law on Public Investment and the related decrees and documents, ensuring strict observance of the provisions of the law on public investment.

In fact, in recent years, Vietnam has never fully disbursed public investment under its annual plan. Disbursed capital in the following year even tends to decrease year on year. Specifically, in 2016, 97.8% of the plan was disbursed, only 94.4% in 2017; in 2018 it was 92.3% and in 2019 it was 89.5%. Therefore, to complete the plan of 100% disbursement of public investment capital in 2020, it is necessary to take fierce action of ministries, branches and localities. Accordingly, each investor also needs to develop a detailed monthly disbursement plan, which serves as a basis for operating the disbursement plan.

By Thu Ha, Vietnam Business Forum