Key project headway to boost growth

Prime Minister Pham Minh Chinh officially reported to the National Assembly (NA) last week that after the economy grew by 6.82 per cent in the first nine months of the year, it is expected to reach 6.8-7 per cent for the whole year, which will surpass the NA’s original target of 6-6.5 per cent.

The government has identified areas for boosting investment, Photo: Le Toan

“This will help position Vietnam among the countries with the highest economic growth in the region and globally,” PM Chinh said. “Vietnam’s economic potential and outlook are highly regarded by many leading international organisations.”

For example, while the World Bank forecasts Vietnam’s economy to grow by 6.1 per cent this year, it projects lower growth rates for other regional nations, such as Singapore 3 per cent, Thailand 2.4 per cent, Malaysia 4.9 per cent, and Indonesia 5 per cent, according to the government’s report submitted to the NA on the country’s economic performance.

In addition, Fitch Ratings recently upgraded Vietnam’s credit rating to BB+ from BB with a “Stable” outlook, while Moody’s has rated Vietnam at Ba2 with a “Stable” outlook, and S&P has also ranked the country at BB+ with a “Stable” outlook.

Other organisations have also made positive predictions for Vietnam’s economic growth this year, including HSBC 6.5 per cent, the Asian Development Bank 6 per cent, the International Monetary Fund 6.1 per cent, and FocusEconomics (6.3 per cent).

In 2024, it is estimated that 14 out of 15 economic targets will be met or surpassed (see Table). Per capita GDP is projected to reach $4,647 if GDP growth exceeds 7 per cent.

PM Chinh also reported that in 2025, the government aims for GDP growth of 6.5-7 per cent, with efforts to achieve a higher rate of 7-7.5 per cent. The consumer price index is expected to rise by around 4.5 per cent.

The government has identified boosting the disbursement of public investment and construction of infrastructure projects as one of the key solutions to achieving higher economic growth this year and next.

“Disbursement of public investment and national infrastructure projects must be accelerated,” PM Chinh said. “These will act as a catalyst to attract more investment, improve living standards, and make it easier for businesses to transport goods, reducing costs and time.”

Future directions

The Ministry of Finance estimates that the total sum for public investment in 2024, including funds transferred from previous years, will reach nearly $32.3 billion. However, in the first nine months of this year, public investment disbursement hit only 47.3 per cent of the initial plan, lower than the 51.38 per cent recorded in the same period last year.

Two weeks ago, PM Chinh issued a public directive to expedite public investment disbursement in the remaining months of the year. While praising 13 ministries and 40 localities for exceeding the national average disbursement level, he criticised 31 ministries and central agencies for falling short. The government has set a target to achieve at least 95 per cent of the disbursement plan in this year.

According to the Ministry of Planning and Investment (MPI), a 1 per cent increase in public investment disbursement corresponds to a 0.058 per cent increase in GDP growth. Furthermore, every $1 of public investment disbursed is estimated to stimulate $1.61 of investment from the non-state sector.

The government has also directed that in 2025, public investment disbursement must be kicked off right from the beginning of the year, particularly for programmes, projects, and works of national importance – including national target programmes and projects connecting localities and regions, and those of national and international connectivity.

“The government will concentrate more on completing the nation’s key infrastructure systems of national importance, especially strategic projects involving transport infrastructure, energy, and response to climate change,” PM Chinh stated.

Key infrastructure projects to be improved and completed next year include upgrades and expansions of several expressways, the opening of Terminal 3 at Tan Son Nhat International Airport in Ho Chi Minh City, and Terminal 2 at Noi Bai International Airport in Hanoi.

The main projects of Long Thanh International Airport in the southern province of Dong Nai are also set for completion.

Moreover, the government has tasked the completion of 3,000 kilometres of expressways and the start of construction on the Lao Cai - Hanoi - Haiphong railway. Investment procedures for the high-speed North-South railway project, with an estimated initial cost of $67.34 billion, are to be completed in 2025.

Projects of importance

In August, the 500kV transmission line project from Quang Trach to Pho Noi was inaugurated and put into operation. This project has total investment capital of about $916.6 million invested by National Power Transmission Corporation under Vietnam Electricity.

It has a scale of two circuits of 500kV transmission line, about 519km long. The starting point is 500kV Quang Trach switchyard in the central province of Quang Binh, and the ending point is 500kV Pho Noi substation in the northern province of Hung Yen. This project is of strategic importance to national energy security, contributing to help reduce power shortage in the northern region of the country.

The government has implemented many policy measures to expedite disbursement of public investment and enhance effective execution.

However, experts have suggested that in order to sustain progress, more systematic steps are needed to improve legal and regulatory processes for successful implementation. Addressing these issues proactively throughout the project cycle could unlock Vietnam’s full public investment potential, driving sustainable economic growth and development.

The government has also tasked the MPI with researching amendments to key laws on public investment, investment, bidding, public-private partnerships, and enterprises, as well as regulations that are no longer suitable to reality. These amendments will be compiled into a multi-law revision proposal led by the Ministry of Justice.

Concerted efforts towards public investment acceleration Despite concerted efforts made by the government, the outcomes of public investment disbursement in July were still below expectations. Tran Manh Ha, director of the Department of Expenditure Control under the State Treasury, elaborates with VIR's Manh Bon on the challenges behind and recommends measures to troubleshoot the bottleneck

Tra Vinh efficient in propelling public investment Leveraging diverse measures, Tra Vinh province has seen inspiring results with public investment disbursement in the year to date, and hopes to achieve more than 95 per cent of the government-assigned plan.

PM urges speeding up disbursement of public investment Prime Minister Pham Minh Chinh on October 8 signed an official dispatch, urging relevant authorities to accelerate the disbursement of public investment in the remaining months of this year.