Public investment hits forward motion
Public investment hits forward motion
Overcoming a number of socioeconomic difficulties, local public spending disbursement has been accelerating nationwide to ensure goals are reached.
to the Ministry of Planning and Investment at last week’s national conference on accelerating public investment disbursement, as of September, two central-run authorities and 10 localities reported the highest disbursement performance at over 70 per cent of the allocation plan.
A total of 39 of 51 ministries and agencies, and 22 of 63 localities reported the disbursement rate as lower than the country’s average (46.7 per cent), while 14 ministries and agencies and one locality reported the disbursement at less than 20 per cent.
Of these, Ho Chi Minh City and Hanoi are the two cities allocated more than VND100 trillion ($4.35 billion). However, they have both reported poor performance in disbursement and must find solutions to speed things up.
Phan Van Mai, Chairman of Ho Chi Minh City People’s Committee, said that the city had implemented $472.9 million of almost $1.65 billion allocated, about 25 per cent. The amount that the city was allocated has decreased by about $695.6 million compared to the plan early in the year.
One of the reasons for the slow spending is a struggle with site clearance. Several projects have been stuck for a decade, affecting investment and disbursement. However, recently, Ho Chi Minh City has carried out drastic solutions to restart the construction of traffic projects.
The committee has also established task forces on site clearance surrounding large and complex areas like Thu Duc city and other districts. “We expect to remove most of the issues to finish 90 per cent of site clearance next month to be ready for construction,” said Mai.
Other issues see contractors implementing work slowly. Mai highlighted the high costs of construction materials, labour, transport, and machines, while it takes time for projects to use official development assistance (ODA) to adjust, mobilise counterpart capital, and sign agreements. Leaders of the municipal government have met every contractor to solve the main problems.
“We are establishing working groups supporting large-scale projects, ODA projects, and site clearance to work with investors and contractors, strengthening disbursement in the next few months. It is possible for us to reach the target set for the year,” said Mai.
Meanwhile, public investment disbursement in Hanoi has fared a little better, hitting $746.5 million, about 33.6 per cent of the yearly plan. Ha Minh Hai, Vice Chairman of Hanoi People’s Committee, said they were struggling with several bottlenecks including site clearance, determining land origins and prices, fixing compensation plans, the price fluctuations of raw materials, implementing ODA projects, and slow investment procedures.
Hanoi People’s Committee requires investors, based on their capacity, to commit to quickening public spending. “Hanoi is striving for the disbursement rate to reach 93.2 per cent,” said Hai.
A project on decentralisation of state management and authorisation in the city has recently been approved, which is an important long-term strategic basis to increase initiative. In the last months of 2022, the project on decentralisation is expected to speed up spending.
In contrast with the two big cities, numerous localities have implemented public investment disbursement well. “Thanh Hoa assigned detailed plans early for every programme and project since the beginning of the year, so investors and contractors can actively implement the next steps,” said Thanh Hoa People’s Committee Chairman Do Minh Tuan.
“As of September 23, the disbursement in Thanh Hoa province reached 55 per cent. We set the timeline for completing disbursement of the capital plan in 2022 for all projects, as well as regularly reviewing and transferring capital from projects with slow disbursement to those with good progress.”
Chairman of Haiphong People’s Committee Nguyen Van Tung said that they usually spend all resources on 7-10 key projects based on allocating site clearance and construction costs.
In 2022, Haiphong was assigned a capital plan of $553 million. The disbursement estimate achieved over 70 per cent of the plan assigned by the prime minister. “At the end of the year, Haiphong will disburse all the assigned capital plan,” said Tung.
With a higher disbursement rate than the assigned capital (at 112.7 per cent), the leader of Quang Ngai People’s Committee said that since the beginning of the year, they have drastically directed and considered public investment disbursement as a key task.
The province assigned the capital plan right after the issuance of the prime minister’s decision, directing and approving the detailed disbursement plan for each project every month. A special working group on disbursement of public investment in the province usually conducts field inspections and promptly removes and handles related problems like adjusting flexibly capital plans, cutting the capital of poor-performance projects, and adding capital to speedier projects.
According to the International Monetary Fund (IMF), Vietnam’s medium-term public investment framework for the period of 2021-2025, approved by the National Assembly (NA) in July last year, has been introduced to improve the efficiency of public investment. Under the framework, total investment fund was envisaged at about 32-34 per cent of GDP in the 2021-2025 period, with the average disbursement rate of public investment funds reaching over 90 per cent of the plan assigned by the NA.
“Public investment would be targeted to key sectors, large and important national projects, regional and inter-regional connection projects, hence creating strong growth momentum,” said an IMF country report for Vietnam released in July.
