Humble disbursement can turn the corner

Vietnam wants to get public investment disbursement back on track in order to kick-start infrastructure projects. Photo:Le Toan

National Assembly (NA) Chairman Vuong Dinh Hue told the legislature last week that the economy may grow 2.5-3 per cent this year, lower than the target of 6 per cent earlier set by the NA one year ago.

It is also expected that the rate for 2022 will be 6-6.5 per cent if the health crisis is brought under control nationwide, especially in key economic hubs of the country.

The General Statistics Office (GSO) has released two scenarios for 2021 economic growth, based on the 9-month economic growth of only 1.42 per cent.

Under the first scenario, Q4 growth must reach 5.3 per cent if the whole-year growth is 2.5 per cent. Under the second scenario, it must increase 7.1 per cent if the entire-year growth is 3 per cent.

“In this socioeconomic situation, I believe that the first scenario is more feasible,” said Nguyen Trung Hieu, director of the GSO’s National Account Department. “The government has eased social distancing, making it favourable for domestic production to recover.”

The NA was told by Prime Minister Pham Minh Chinh that to reach economic growth goals for Q4 and 2022, numerous solutions are to be used, including two crucial ones on supporting enterprises and accelerating public investment, in addition to focusing on curbing the pandemic with the quickening of vaccination.

These two solutions are part of the government’s hallmark programme on economic recovery and development, which is under discussion now and will be enacted in November.

The fourth session of the 13th Party Central Committee which concluded on October 7 determined that one of the key solutions for boosting economic growth in the remaining months of 2021 is to “drastically boost the disbursement of public investment.”

Last week, the Government Office urged ministers, heads of ministerial-level agencies, and chairpersons of cities and provinces to accelerate disbursement of public investment for 2021, which remains humble so far.

The government’s statistics showed that by late October, disbursement of public investment is estimated to reach 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.

“Thus accelerating public investment disbursement must be one of the most important tasks in the remaining months of this year,” said Deputy Prime Minister Le Minh Khai. “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 due to COVID-19; 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 instance, 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, promoting tourism, and facilitating trade activities. However, the bigger the project is, the more difficulties developers are facing.

This project’s site clearance project requires $993.7 million, but accumulated disbursement since 2018 has only reached $465 million. The airport project’s total investment capital is estimated to be $16.06 billion, including $5.45 billion for the first phase running to 2025.

According to NA Chairman Hue, in addition to public investment, the legislature and the government will increase policy and financial support for struggling enterprises and individuals as part of efforts to recover economic growth.

For example, there will be a reduction of 30 per cent of corporate income tax in 2021 for businesses with total revenue in 2021 of not exceeding $8.7 million, and this sum is down from that in 2020.

In addition, there will also be an exemption of personal income tax, VAT, and other taxes arising from business and production activities in the third and fourth quarters of 2021 for all business households and individuals in all sectors and geographical areas, with all forms and methods of tax declaration and payment.

According to a government report, the total value of all fiscal solutions that have and will be enacted by the NA Standing Committee and the government in 2021 will be about $6.08 billion.

“Some supply chains have been disrupted and enterprises have had to stop operations or go bankrupt, especially those in commerce, services, and industry in Ho Chi Minh City and key economic hubs,” Hue stated.

According to the GSO, up to 94 per cent of businesses nationwide are bogged down in difficulties. In 19 southern provinces and cities which create 44.4 per cent of national GDP, up to 98 per cent of businesses are suffering from heavy losses. In the south-eastern and Mekong Delta regions, enterprises are now operating at only 5-10 per cent of capacity.