Tackling slowing public investment for good of nation

May 26, 2022 | 09:00
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A large proportion of public investment capital in the first four months of this year has not yet been assigned following detailed plans. The capital is aggregated from the central and local budgets and its assignment falls under the responsibility of ministries, sectors, and localities. However, the relatively slow disbursement was caused by poor forecasting and planning.
Tackling slowing public investment for good of nation
Tran Quoc Phuong-Deputy Minister of Planning and Investment

When planning for 2022, the Ministry of Planning and Investment (MPI) and other ministries, agencies, and localities estimated that several projects could complete investment procedures in the first quarter, and after completing these, capital would be delivered immediately.

However, due to the pandemic, many projects have not yet been approved for investment decisions by the end of the first quarter and could not allocate capital, affecting disbursement activities.

Moreover, 2022 is a year with many new construction projects. When a new project was started last year, following the Law on Construction enacted in 2021, the disbursements must proceed this year.

The National Assembly (NA) has approved the medium-term public investment plan (MTIP), but it can take another 6-7 months to complete the procedures for investment decisions and contractor selections.

The flexible adjustment of public investment capital will be implemented in 2022 and 2023. According to the provisions of the Law on Public Investment, there are two steps for each project’s approval: The first step is to approve the investment policy. Afterwards, it will be eligible to submit to the NA for consideration and assignment of a MTIP.

However, in order for the project to be allocated capital for implementation and disbursement, it must have one more step to approve the investment decision.

According to the Law on Construction, for large projects, this is the pre-feasibility approval. This does not face any legal problems, but the preparation work of ministries, sectors, and localities must be implemented very early to see what must be carried out when there is an investment capital plan with high potential that could qualify immediately.

However, the investment preparation to approve such decision remain slow. Although it is expected that it may take six months, when actually implementing the decision, it may take longer than six months.

Resolution No.43/2022/QH15 on fiscal and monetary policies to support the NA’s Socioeconomic Development and Recovery Programme has allowed for the addition of the 2022-2023 estimate to be disbursed in advance for projects with MTIPs.

The MPI has asked the government to propose to the National Assembly Standing Committee to supplement the 2022 estimate for the first phase after carefully calculating the economy’s ability to absorb capital in 2022.

This first phase is based on reviewing various projects that can be absorbed immediately so that, after handing over the set plan, it can be deployed and disbursed immediately.

In the second phase, the implementation of a number of projects of a special nature, such as some of the government’s own projects, will be allowed. For example, the expressway projects are all major projects featuring enormous capital requirements.

In 2023, because the estimate has not yet been calculated, the NA assigned the government to direct the MPI and the Ministry of Finance to calculate the capital portion of the Socioeconomic Recovery and Development Programme together with the state budget.

At the same time, the two ministries will also have to pay attention to thorough analysis to determine the programme’s budget as well as monitor and report to the National Assembly.

By Tran Quoc Phuong

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