Time for state investment rethink

Nguyen Dinh Cung

In doing that Vietnam must make some sacrifices, Central Institute for Economic Research and Management deputy director Nguyen Dinh Cung tells VIR.

Could you give us a glimpse into the economic restructuring and growth model transformation which is high on the government’s agenda today?

Restructuring the economy and renewing the growth model is aiming at boosting resources usage efficiency, particularly investment efficiency, and raising labour productivity to sharpen competitiveness.

When it comes to these issues, concrete action is needed, but not empty words. For instance, economic restructuring and growth model transformation should become the core which makes the socio-economic development plan for 2011-2015 different from others.

What should be the top development priority?

The top priority is restructuring and enhancing state investment efficiency.

First and foremost, it is important to reduce the state investment proportion in society’s total investment and narrowing the state’s investment scope. Particularly, state investment should not go into trading areas such as hotels and restaurants or areas which can be handled by the private sector.

More important is modifying state investment capital usage, management and distribution mechanisms. This means we must radically address chronic problems related to state investment capital sources such as un-focused investments.

To tackle this issue, we need to reconsider current investment decentralisation mechanism. Relative to central investment sources, the Ministry of Planning and Investment must do smart job with what, where and when to invest, while how to do it should be the responsibility of ministries, branches and local governments.

Setting an indicator system for state investment usage is also crucial. As regulated by the prime minister, state investment must be channeled into the most effective projects which can generate economic benefits in the shortest time. 

This fresh approach will entail radical changes to public investment. The scene of every locality pumping money into seaports, airports and economic zones must be erased.

Will localities’ interests be badly affected with this new approach?

We must accept it for the national interest. If not, that we can neither restructure the economy nor ameliorate state investment efficiency.

If the current growth model is not modified, Vietnam’s economy will grow merely 5.5-6 per cent per year within the next five years.

New state investment management decentralisation may entail radical changes to state investment. This requires strong determination by the state, understanding and sharing by ministries and local governments.

State investment should be prioritised to channel into addressing infrastructure woes in particular areas to help unblock and promote investment efficiency of other capital sources in these areas.