Calls made to scale up vital public investment

Calls made to scale up vital public investment

According to the General Statistics Office (GSO), the Vietnamese economy is expected to grow 2-3 per cent in Q4, lifting the growth rate for the whole year to about 1.6-2.1 per cent.

The economy grew 1.42 per cent in the first nine months, with 4.48 per cent in Q1, 6.61 per cent in Q2, and -6.17 per cent in Q3.

“The economy is gradually recovering, laying the groundwork for higher growth in 2022,” said Nguyen Bich Lam, former general director of the GSO. “Since early this year, enterprises and households, as well as other economic organisations, have weathered difficulties to create brighter colours in the economic picture. However, they need more support, and besides more assistance solutions for them, it is necessary to boost disbursement of public investment, which is considered a big driver of economic growth.”

It is calculated by the Central Economic Committee that the pandemic has caused a loss of $37 billion since it appeared in Vietnam in early 2020, including $7 billion last year and $30 billion expected for 2021.

Meanwhile, the International Monetary Fund (IMF) in Vietnam more optimistically forecast that the economy’s growth this year may be 2-2.5 per cent, and 6.6 per cent for 2022.

“Public investment in needed physical, digital, and green infrastructure could be scaled up to bolster demand and growth potential but improving public investment efficiency will be key to reducing implementation lags and increasing the beneficial impact on the economy,” Francois Painchaud, resident representative of the IMF Vietnam, told VIR.

In October, the Government Office sent Official Telegram No.7776/CD-VPCP to ministers, heads of ministerial-level agencies, and chairpersons of provinces and cities, urging them to accelerate the disbursement of public investment for 2021, which remains humble.

The government’s statistics showed that by late October, disbursement of public investment was estimated to have reached 55.8 per cent of the yearly plan assigned by the prime minister, lower than that of 67.2 per cent in the same period last year.

Last week, Deputy Minister Pham Binh Minh met with leaders of some ministries and agencies on accelerating disbursement of public investment. He ordered such leaders to quicken the state funding for the projects managed by them, and they must be fully responsible for slowness in the disbursement.

Figures from the Ministry of Finance showed that by November 30, the nation’s total disbursed sum was $122.82 billion, reaching 63.86 per cent of the disbursement plan assigned by the government, in which disbursement of domestic capital hit 69.19 per cent, and that of foreign capital touched 21.51 per cent.

“Thus accelerating public investment disbursement must be one of the most important tasks from now until 2022,” Minh said. “All obstructions must be removed immediately. Boosted disbursement must be in line with ensuring works’ quality. Heads of units must be responsible for their units’ disbursement results.”

According to the Ministry of Planning and Investment, slow disbursement is ascribed to a series of reasons, such as social distancing; slow allocation of public investment among ministries, central agencies, and localities for 2021; failure in imposing punishments on units failing to boost investment; and slowness in site clearance and resettlement.

For example, the Long Thanh International Airport project in the southern province of Dong Nai is one of the most important transport projects for local and regional socioeconomic development. Site clearance has cost $993.7 million. However, accumulated disbursement since 2018 currently hit $529.3 million or 53.27 per cent of the assigned plan. In which the disbursement rate for 2021 alone has reached only 19.24 per cent of the assigned plan, or $39 million.

The airport project’s total investment capital is estimated to be $16.06 billion, including $5.45 billion for the first phase running from 2020 to 2025.

Expecting Vietnam to grow 2.5 per cent this year, global analysts FocusEconomics said that in addition to boosting disbursement of public investment, Vietnam’s authorities need to provide more fiscal and monetary support.

“GDP is set to grow at the fastest rate in the region in 2022, following this year’s projected solid expansion. An acceleration in consumer and capital spending, combined with a robust external sector, should boost growth next year,” FocusEconomics told VIR.

“However, the threat of further outbreaks and the risk of tougher restrictions being reimposed cloud the outlook. Our panellists expect GDP to expand 7.2 per cent in 2022, which is up 0.2 percentage points from last month’s forecast, and 6.8 per cent in 2023.”

The same analysts estimate that industrial output will grow 8 per cent in 2022, which is up 0.6 percentage points from last month’s forecast and expand 9.4 per cent in 2023.