Public Investment Plan for the Long Run Needed

9:58:25 AM | 30/12/2020

Seen as one of five growth drivers that need to be strengthened in order to spur the post-Covid-19 economic recovery, public investment is being aggressively disbursed by central and local agencies to reach the finish line on time.

Strongest growth in a decade

Public investment disbursement has never been as important as in 2020, as this is a growth driver. Right from the beginning of 2020, disbursing all public investment as planned is a major and important goal as expressed in resolutions and directives of the Government and the Prime Minister. In addition, with the firm and close direction of the Government and the Prime Minister during online cabinet meetings and the pressing actions required by working delegations led by the Prime Minister, the Deputy Prime Ministers and the Ministers, the disbursement from the end of July to the end of November made considerable progress.

According to the report by the Ministry of Planning and Investment, the disbursed public investment fund reached VND406.8 trillion (US$17.7 billion) in the first 11 months of 2020, equal to 79.3% of the full-year plan and 34% higher than a year-ago period (compared to 79.2% and 7% in the same period of 2019, respectively). Specifically, disbursed central funding was VND73.1 trillion (US$3.2 billion), equal 79.5% of the yearly plan and up 64.9% year on year, and disbursed local funding was VND333.7 trillion (US$14.5 billion), equaling 79.3% and increasing by 28.7%. By the end of November 2020, 15 central agencies and 18 localities reportedly disbursed over 75% of the planned spending, with nine central agencies and seven localities spent over 85%.

Regarding the disbursement of some major national projects, a total of VND7,864,712 billion out of VND10,828,276 billion planned for 2020 was disbursed for 11 component projects of the Eastern North-South Expressway, reaching 72.6% of the plan. My Thuan - Can Tho City Expressway Project got VND634 billion or 68% of the yearly plan.

Speaking at the regular cabinet meeting in early December, Prime Minister Nguyen Xuan Phuc said public investment disbursement continued to be strongly improved in November and the first 11 months of the year, reportedly the highest in value in many years. This is an extremely important driving force to achieve the GDP growth target in 2020. However important promoting good disbursement is, ensuring project quality must be serious, not superficial and wasteful,” he said.

Clearing obstacles

Despite impressively rapid growth, the disbursement speed was even among ministries, branches and localities. Specifically, up to 18 central agencies six localities disbursed less than 45%, with eight central agencies and one locality using less than 20% of their planned budget.

This was attributed to bad investment budget planning made by central authorities, weak response of central and local authorities and slow selection of contractors by investors.

Besides, site clearance is always the thorniest “bottleneck” in public investment disbursement. As one of slowest-moving spenders of public investment, the Dong Nai Provincial People’s Committee said that the province is facing some difficulties carrying out projects. Specifically, as the shape of the land plot is different from the description in the application file for the land-use right certification and the current status has changed, the actual area of the land plot increased or decreased when measured. In some cases, the boundaries of the land in use cannot be defined, measurement agencies lack proof to issue technical records of the land. Besides, many land parcels lack ownership information or address.

In addition, bad weather, rains and floods significantly affected construction progress, especially traffic or irrigation projects.

To achieve the public investment disbursement goals in 2020, bottlenecks from project preparation, investment capital allocation, site clearance, contractor capacity building must be quickly removed.

Currently, central and local agencies are making efforts to “speed up” to reach the destination on time. They are focusing on careful review of investment project portfolio, grasping project situations in order to take specific measures to speed up project progress or transfer the fund to projects. Other quickly disbursed projects need additional capital.

Contractors focused on construction, prepared documents and procedures for payment, settlement and disbursement of the remaining planned funding. Payment-related agencies are ready to ensure the swift, timely and accurate implementation progress, enabling investors to settle payment. As the biggest recipient of investment funds, the transport sector committed to disburse 100% for transport projects. Chairman of Hanoi People’s Committee Chu Ngoc Anh also pledged to disburse nearly 100% for the transport sector. Some slow-disbursing localities also pledged to complete their land compensation, resettlement and disbursement plans in 2020.

However, according to economic experts, public investment disbursement is not only a story on how to disburse all planned capital this year, but also on continuing efforts in the following years so as to spend the investment budget rather than let it be idle in coffers, thus wasting resources and wasting opportunities for economic growth and development. For that reason, there is a need for longer budget allocation plans and public investment plans for 2021-2025.

By Ha Thu, Vietnam Business Forum