Localities place focus on public investment

Localities place focus on public investment, Illustration photo

Following the prime minister’s drastic instructions in recent weeks on 2021’s public investment disbursement, numerous ministries, agencies, and localities have built their plans and crafted measures to attempt to accomplish the yearly plan set forth.

Chairman of Ha Tinh People’s Committee Vo Trong Hai last week signed a document to accelerate public investment projects in the province, as well as establish a task force to strengthen disbursement. He emphasised that this in combination with improving the efficiency of public investment is a key political task.

“We will complete the disbursement plan on time (before January 31, 2022). The result of public investment disbursement is considered as one of the important criteria to evaluate the completion of the tasks in 2021 of relevant organisations and individuals in the province,” Hai said.

At present, some key projects with large investment capital but disbursed at a low rate in the province are in infrastructure for the comprehensive development of the central province of Ha Tinh with the investment of $19.6 million and disbursed $2 million, equivalent to 0.98 per cent; land and database management scheme capitalised at $6.8 million; the integrated initiative of dynamic cities (urban sub-project of Ky Anh town, borrowed from the World Bank) at $7.46 million in capital and $69.6 million disbursed; and hundreds of poor-performing ventures.

For behind-schedule projects like these in the Central Highlands province of Lam Dong, the local Department of Planning and Investment will propose the provincial people’s committee not to allocate capital next year. In addition to Ha Tinh and Lam Dong, the determination of carrying out the assigned schemes on schedule has been spreading and are the focus of implementation for all ministries, agencies, and localities.

The poor performance of disbursement has been blamed partly on the pandemic, which has caused challenges in transport, clearance, providing construction materials, and increased prices by up to 60 per cent over the beginning of the year.

Particularly, in July, disbursement has slowed and numerous projects have halted entirely. According to the General Statistics Office (GSO), the disbursement of the state budget investment of 19 southern cities and provinces, mostly in lock down since early July, was estimated at $509 million, capturing just over 30 per cent of total investment and down 26.6 per cent on-year.

Ho Chi Minh City was allocated $1.5 billion this year, accounting for 7.51 per cent of the country’s total. However, the pandemic dropped disbursement there in July by 67.5 per cent on-year, equivalent to 3.2 per cent of the city’s yearly plan.

An expert from Bao Viet Securities JSC said that the disbursement of public investment is often on a sharp increasing trend from the end of the second quarter in recent years. Moreover, it is also one of the most important measures to recover the economy after the crisis. “So it will sharply soar in the last months of the year,” said the expert.

In late June, the government issued Resolution No.63/NQ-CP on the major tasks to accelerate economic growth, speed up public funding, and promote sustainable exports in the closing months of 2021 and early months of 2022. The disbursement rate of public investment is expected to be at least 60 per cent of the plan by the end of the third quarter and 95-100 per cent for the full year.

GSO director-general Nguyen Thi Huong said, “The realised investment demonstrated the effectiveness of solutions to speed up disbursement of public funding, the government’s policies to support enterprises as well as measures to receive the foreign direct investment inflow was triggering a global production shift. However, the current outbreak of the pandemic may hit performance significantly.”

In some areas not as affected by the pandemic, public investment projects are being boosted to accomplish the full plan. The Ministry of Transport asked to urgently complete the dossiers of provincial approvals by December at the latest, and investors must ensure disbursement of at least 90 per cent of the plan until the end of the year as well as finalise all ventures with capital sources from 2020. The Ministry of Construction also requested to accelerate implementation and disbursement of the 2021 plan, with the goal of 100 per cent allocated capital.

To achieve the goals, the government asked relevant ministries and localities to enhance the discipline and accountability of the leaders. Besides that, the plan for different projects must be reviewed to ensure the implementation progress and ensure that funding goes to key and feasible initiatives.

In the first seven of the year, the trade deficit was at $2.41 billion, which will challenge the economic growth for the remaining months of 2021 and the year as a whole. Consumption is also being hit by complex fluctuations and mass infection across numerous provinces and cities. Thereby, until a large number of people in the country are vaccinated against COVID-19, public investment will be the driving force for economic growth, especially as other driving forces remain weak, according to the latest monthly report from Agribank Securities JSC.

The GSO calculates that if public investment disbursement increases by 1 per cent, GDP will rise by 0.058 per cent. In the period 2021-2025, if VND1 in state-budget investment is disbursed, it can help mobilise VND1.61 in non-state funding, higher than in the previous term at VND1.42. In the mid-term of 2021-2025, total projects developing is estimated at 5,000 with average investment of $9.13 million each, 2.4-fold over the previous period. Meanwhile, the public investment disbursement plan for the term is $125 billion, 40 per cent higher than the realised capital across the 2016-2020 period.