Government urges public investment disbursement

August 17, 2021 | 22:17
With snail-paced disbursement of public investment since the beginning of the year affecting the national socioeconomic development, the government has urged ministries and localities to greater efforts, warning that slow projects will have their capital transferred to more efficient ones, in addition to several sanctions for violators.

Prime Minister Pham Minh Chinh has just released a public telegram rolling out solutions to accelerate the disbursement of public investment capital in 2021. The telegram was sent to ministries, central agencies, and people’s committees of provinces and cities under central rule.

Government urges public investment disbursement
Faster disbursement of public investment will help create employment and spur on economic growth

In the telegram, PM Chinh stated that boosting the disbursement of public investment is one of the central political tasks this year, highlighting that the quality of projects and efficiency of public investment needs to be ensured. It is necessary to review the allocation of public investment capital to ensure that it goes to feasible projects.

The government will “set strict fines on investors, project management boards, individuals, and organisations deliberately obstructing progress on capital allocation and implementation,” said the telegram. “Incapable cadres and public officials and those committing wrongdoings will be replaced.”

The government requested ministries, central agencies, and people’s committees of provinces and cities to immediately set up special working groups led by ministers, heads of ministerial-level agencies, and chairpersons of provincial/municipal people’s committees to regularly inspect and remove obstacles related to the disbursement of public investment. It is also necessary to continue reviewing mechanisms, policies and regulations on public investment for timely amendments and supplementation.

Localities which are now under social distancing in accordance with the PM's Directive No.16/CT-TTg on social distancing must focus on completing investment procedures so that state-funded projects can start as soon as the social distancing period ends.

Slack disbursement

The government reported that in the first seven months of the year, total disbarment hit VND169.33 trillion($7.36 billion), or 36.71 per cent of the initial plan assigned by the PM, while it was 40.67 per cent in the same period last year. 40.38 per cent of registered domestic capital and 7.52 per cent of foreign capital were disbursed during the period.

Bodies and localities with high disbursement rates (above 50 per cent) include Quang Ninh (90.41 per cent), Haiphong (88.24 per cent), Binh Phuoc (79.22 per cent), Thai Binh (71 per cent), Hung Yen (65 per cent), Ha Nam (64.36 per cent), Thanh Hoa (61.59 per cent), Nam Dinh (58.01 per cent), Ha Tinh (55.49 per cent), Thai Nguyen (51.33 per cent), Vietnam Bank for Social Policies (67.27 per cent), and the National Assembly Office (52.9 per cent).

Meanwhile, many ministries, organisations, and localities reported low disbursement rates, such as the Ministry of Information and Communications (0.40 per cent); Vietnam National University Ho Chi Minh City (0.56 per cent); Management Board of Ethnic Villages (0.95 per cent), Vietnam Television (1.17 per cent), Vietnam News Agency (1.19 per cent), Ministry of Foreign Affairs (2.57 per cent), Vietnam Academy of Science and Technology (2.67 per cent), Vietnam Farmers’ Union (2.7 per cent), as well as Bac Kan (8.37 per cent), Quang Binh (15.46 per cent), Cao Bang (15.84 per cent), and Dak Lak (15.86 per cent) provinces.

Furthermore, seven ministries and central agencies have failed to disburse any capital, including the Vietnam Development Bank, the Vietnam Cooperative Alliance, and the Vietnam Union of Science and Technology Associations.

Many major public investment projects have also suffered from snail-paced disbursement.

For example, the Eastern Cluster of the North-South Expressway project has disbursed 46.4 per cent of the 2021 plan, or VND6.93 trillion ($301.3 million) of VND14.94 trillion ($649.57 million). This project includes eight state-funded sections and three sections to be implemented under the public-private partnership format.

Specifically, three of the eight state-funded sections, whose construction has been expedited, have reported slow disbursement. the sections include Mai Son-National Highway No.45 (63.4km), Vinh Hao-Phan Thiet (106km), and Phan Thiet-Dau Giay (98km). The delays stem from the sluggish implementation of bidding packages, falling behind the initial plan largely due to shortages of land.

Meanwhile, two other sections, National Road 45-Nghi Son (43km) and Nghi Son-Dien Chau (50km), were also held up by similar issues as investors have recently inked contracts with contractors, and the contractors are making on-site preparations.

Meanwhile, disbursement for the project on land withdrawal and resettlement for Long Thanh International Airport in Dong Nai province is also being delayed.

Specifically, nearly VND22.86 trillion ($993.9 million) of capital was allocated to this project form the central budget, including VND4.66 trillion ($202.6 million) for 2021. A total of VND10.69 trillion ($464.8 million) has been disbursed so far, equivalent to 46.77 per cent of the assigned plan, including VND835.67 billion ($36.3 million) or 17.93 per cent in the first seven months of 2021.

In addition, the disbursement rate of official development assistance (ODA) and concessional loans was only 7.52 per cent during the period.

High expectations

The government targets to increase the disbursement rate of public investment to at least 95 per cent this year, when the economy is expected to grow at 6-6.5 per cent.

The General Statistics Office estimates that for every 1 per cent increase in public investments, Vietnam’s GDP can rise 0.06 per cent.

In late 2020, the National Assembly allocated VND477.3 trillion ($20.75 billion) from the state budget for public investment in 2021.

VND16 trillion ($695.65 million) of this sum will be used for national target programmes, VND15.038 trillion ($653.82 million) for the project on constructing the North-South Expressway; VND4.66 trillion ($202.6 million) for the project on land compensation and resettlement for Long Thanh International Airport; VND2.8 trillion ($121.74 million) for developing coastal roads; and 4.7 trillion ($204.34 million) for supporting localities in implementing some key infrastructure projects.

The focus of public investments has been Vietnam’s transport infrastructure and addressing connectivity constraints. In the medium-term, foreign firms’ participation in public-private partnership projects, particularly in connectivity and infrastructure projects, is likely to rise.

According to the Ministry of Finance, last year, nearly VND390 trillion ($16.95 billion), equivalent to 82.8 per cent of the plan allocated, was disbursed. This is the highest ratio in 2016-2020 – with 80.3 per cent in 2016, 73.3 per cent in 2017, 66.87 per cent in 2018, and 67.46 per cent in 2019. Most of the capital has been invested in infrastructure works.

More than a fortnight ago, the National Assembly passed a resolution on public investment in 2021-2025, in which the total funds allocated from the state budget for investment will be at least VND2.87 quadrillion ($124.8 billion). This includes VND1.5 quadrillion ($65.2 billion) from the central budget, comprising of VND1.2 quadrillion ($52.17 billion) of domestic capital and VND300 trillion ($13 billion) from foreign sources, and VND1.37 quadrillion ($59.56 billion) from localities’ coffers.

By Thanh Thu

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional