Resolute, Consistent Solutions to Boost Public Investment

In 2021, with many strong measures of the Government and active participation of central and local agencies, public investment disbursement made much progress. However, as in previous years, the disbursement value could not reach the target. This is also the challenge for 2022.

Still low disbursement rate

In 2021, the total planned public investment (excluding VND16 trillion for national target programs yet to be allocated by the Prime Minister) was more than VND584 trillion (US$25.5 billion), including more than VND74 trillion rolled over from previous years to 2021 and more than VND510 trillion planned for 2021.

According to the General Statistics Office (GSO), for every 1% of public investment fund will help increase GDP by 0.06%. Therefore, the Prime Minister regularly directs and requests central and local agencies to disburse public investment capital at the beginning of the year. In November 2021, the Government established six working groups to inspect, press and remove difficulties and obstacles to accelerate public investment disbursement in 2021 in ministries, central agencies and localities with the disbursement rate of below 60% of the planned value by October 31, 2021, showing strong determination to speed up public investment disbursement. However, the outcome was still not as good as expected.

Specifically, according to the report of the Ministry of Finance, public investment disbursement from January to November was estimated to meet 63.85% of the full-year plan assigned by the Prime Minister (equivalent to over VND294,589 billion), lower than the rate in the same period in 2020 (71.22%). Of the sum, domestic capital was over 69% (versus 75% in the same period in 2020) and foreign fund was above 21% (versus over 40%).

Some ministries and localities reported the disbursement rate of over 70%, including the Vietnam Journalists Association (100%), the Vietnam Fatherland Front Central Committee (92.04%), the Office of the National Assembly (nearly 90%), the Vietnam Development Bank (85.39%), Hai Duong (84.46%), Thanh Hoa (84.44%), Ha Tinh (83.3%), and the Ministry of Finance (over 80%). Most ministries, central agencies and localities had low disbursement rates. 18 out of 63 provinces and cities spent less than 55%, two localities expended less than 30%, and three ministries and central agencies failed to meet their expenditure plans. Low disbursement rate reduced the effect of public investment, wasted resources, affected economic growth, and fiscal and monetary policies, especially when the economy was hit by the COVID-19 pandemic.

However, according to economic experts, despite being impossibly completing the plan, in 2021, investment became more effective. Investment projects produced certain effects, gave new impetuses to the economy, and became a driving force in the fight against the Covid-19 epidemic, featured by important national projects, inter-regional projects, highways, coastal roads, projects on digital transformation, digital economy, digital society, science and technology development, and human resources training.

Optimistically, many localities are trying their best to achieve the highest possible disbursement rates (by the end of January 2022). Ho Chi Minh City targeted at 70% of the 2021 plan; Binh Duong province, 75.6%; and Khanh Hoa province, 96-100%.

2022: Resolute, consistent at the earliest

Incomplete public investment disbursement is not a new but recurrent story. In 2021, apart from negative epidemic impacts, social distancing had to be adopted, input and equipment transportation was interrupted by an increase in input material prices and inconsistent approaches to the epidemic prevention from locality to locality.

Besides, 2021 was the first year to carry out the public investment plan for the 2021-2025 period. In the first year of enforcing the Public Investment Law of 2019, more focus had been placed on the regulatory transition, resulting in a certain slowness of projects prepared for 2022.

According to the report released by the government, the need for public investment in 2022 will be VND611,367 billion (US$26.5 billion), including VND 304,504 billion from the central budget and VND306,863 billion from the local budget. The government also aims to accelerate public investment spending and strive to achieve a disbursement rate of over 90% in 2022.

With experience and lessons learned from 2021, many ministries, sectors and localities have scheduled and taken actions to urgently complete projects in 2021 and prepare for public investment disbursement plans in 2022. They have actively worked out public investment plans relatively close to the affordability of the State budget.

Additionally, given the failure in completing the disbursement plan in 2021, many ministries, branches and localities have asked for investment rollover to 2022. However, Deputy Minister of Planning and Investment Nguyen Thi Bich Ngoc said, "The rollover of investment fund from 2021 to 2022 must be consistent with the Law on Public Investment and the Law on State Budget. In case of force majeure, the Government must report to the National Assembly’s Standing Committee for consideration and decision.”

At an online meeting to inspect, urge and remove difficulties and obstacles, and speed up public investment disbursement for some ministries, agencies and localities, Deputy Prime Minister Le Van Thanh, Head of the Workgroup No. 3 that probed into three ministries, five agencies and four localities: Ho Chi Minh City, Dong Nai, Binh Duong and Khanh Hoa, affirmed that, drawing lessons in 2021 and previous years, it is necessary to have well-prepared projects. This is very important for launching projects. Besides, selecting contractors, inspecting progress and handling contract violations need more resolute settlement.

Determining that public investment disbursement is particularly important, given its support for economic growth, Deputy Prime Minister Le Van Thanh said that ministries, branches and localities must actively complete investment procedures according to regulations, and at the same time, handle over expenditure details soon, speed up disbursement for projects to avoid failed spending as in 2021 and previous years. Priority will be given to key projects, consistent with medium-term public investment plan, arranged in order of priority, associated with local socioeconomic development goals and strategies.

Agreeing on this point of view, with experience drawn from 2021, Deputy Minister of Planning and Investment Tran Quoc Phuong said that localities must also pay attention to making plans for 2022, avoid making them beyond their disbursement capacity. In 2022, the Government's public investment administration will be very resolute and the accountability will be very clear, especially to investment body leaders.

By Ha Linh (Vietnam Business Forum)