Infrastructure Construction: Hardest Access to Investment Fund

 

In fact, although there are positive progresses in construction investment, slow clearance remains slow, investing procedures are time-consuming, and capacities of investors and authorities remain weak. These reasons have affected the capital disbursement speed, construction schedule and project quality. Take Hanoi for example, the year 2009 was the first year the city implemented the plan for infrastructure construction after it expanded the administrative area and prepared for the Grand Anniversary of 1,000-year Thang Long - Hanoi. However, Hanoi Mayor Nguyen The Thao said, the hardest problem in infrastructure construction investment in Hanoi is the site clearance. The Decree 69 of the Government provided that when agricultural land is reclaimed, the affected persons will be compensated with service land but projects in the downtown of Hanoi do not have the service land and affected people take money. In reality, Hanoi is entangled in many projects that require large land areas such as Nhat Tan Bridge, Terminal T2 - Noi Bai Airport, National Road 32, Ha Noi - Thai Nguyen Highway, Noi Bai - Vinh Phuc Highway to create a strong premise for developing urban infrastructure of the capital city. In 2009, among 511 construction projects licensed by the municipal authorities, 140 projects were completed and put into use, accounting for 59.6 % of implemented projects.

 

According to the Hanoi Authority for Planning and Investment, as of January 31, 2010, the capital disbursement for investment reached 92 % of the plan. However, the enactment of new laws relating to the State-funded construction in Hanoi encountered problems due to limited development investment budget. Particularly, the west of Hanoi actually lacks construction planning for the formulation and implementation of construction investment projects. Many State-funded projects are progressing at snail’s pace while many others need adjusting during the process of construction. In 2010, total investment capital for basic construction in Hanoi is VND14,081 billion (excluding development capital from national and municipal target programmes), of which the domestic capital is VND13,831 billion and foreign-funded official development assistance (ODA) is VND250 billion. The city-funded capital for infrastructure construction is VND6,734 billion, allocated to 558 projects. Hanoi has 32 projects implemented in the form of build - transfer (BT), with a total planned spending of VND3,000 billion in 2010.

In order to implement infrastructure construction works effectively, a lot of old problems need to be healed to avoid become a worsening ‘chronic disease.” Prime Minister Nguyen Tan Dung stressed that, in infrastructure construction investment, funding is the hardest matter but the existing shortcoming of many projects is the failure to get disbursed. Investment in some localities is ineffective or illegal or wasteful. These limitations and weaknesses need to be addressed. Therefore, the Prime Minister requested ministries, branches and localities to continue creating favourable conditions to encourage economic sectors to invest in infrastructure construction, facilitate investors and contractor access credit sources, specially small and medium business entities, guarantee lending for companies, both State-owned and non-State ones.

 

According to the Ministry of Planning and Investment, infrastructure construction investment in 2010 will have more investment channels such as BOT (Build - operate - transfer), BT (build - transfer) and PPP (public private partnership) to mobilise capital sources of the entire society. According to the ministry, in 2010, the total social investment development capital is estimated at VND791 trillion, up 12.3 % compared with 2009 and equal to 41 % of GDP.

 

According to reports from the ministries, branches and localities, to date, investment capital has been allocated and assigned to expected addresses. The plan to raise funds via government bond issue has been soon deployed, such as transport sector project (VND28,800 billion), the Ministry of Defence (VND3,200 billion), localities (VND13.3 trillion), irrigation sector (VND13.6 trillion), the Ministry of Agriculture and Development Rural (VND4,000 billion), localities (VND9,600 billion), Son La hydropower resettlement project (VND1,500 billion), health sector (VND5,600 billion), education sector (VND6,500 billion) - VND4,500 billion for building schools and classrooms and VND2,000 billion for building dormitories. However, the State Budget-funded capital will account for about 15.9 %, government bond proceeds, 7.1 %, and State investment credit, 7 %, much lower than in 2009. Other capital sources sourced from the society will make up about 70 %.

 

In 2009, the State Budget allocated a record of VND257 trillion and disbursed VND161 trillion.