Let public investment capital flow quickly into the economy

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Obstacles in site clearance are "barriers" in many projects using public investment capital. Photo: S.T

According to the latest report from the Ministry of Finance, the country's cumulative public investment capital payment from the beginning of the year to August 31, 2023 is more than 300.3 trillion VND, reaching 39.47% of the plan. Estimated payment by the end of September 2023 is more than 363.3 trillion VND, reaching 47.75% of the plan, reaching 51.38% of the plan assigned by the Prime Minister. This number increased compared to the same period in the same 9 months of 2022 when reaching 42.16% of the plan and 46.7% of the plan assigned by the Prime Minister.

The Ministry of Finance said that 12/52 ministries, central agencies and 30/63 localities have an estimated disbursement rate of over 50%. But there are still 29 ministries and 3 localities that have disbursed less than 30% of the capital plan.

The Ministry of Finance said that although the disbursement rate is higher than the same period last year, based on the recent Working Group meeting (Working Group No. 3 headed by Deputy Prime Minister Tran Luu Quang; Working Group No. 2 headed by Deputy Prime Minister Tran Hong Ha) and compiled according to 8-month reports of ministries, central agencies and localities, the disbursement of public investment capital still has some problems such as land allocation, compensation policies, support and resettlement, etc.

It can be seen that although the disbursement rate of public investment capital in 2023 has many positive signs, this is still a work with many bottlenecks. If resolved, it will clear the way for economic development.

According to World Bank (WB) experts, Vietnam is in the process of seeking to become an upper middle income country by 2030 and a high income country by 2045. To complete this development goal, The Government is expected to maintain annual gross domestic product (GDP) growth at 7% during the period 2021-2030 and from 6.5 to 7.5% during the period from 2031-2050. Vietnam must also ensure that total social investment of all economic sectors reaches an average of 32 to 35% of GDP in the period from 2021 to 2030, including public investment at an average of 7.3% of GDP each year to support infrastructure construction in the above period.

Therefore, with the level of disbursement of public investment capital over recent years, the economy is still relatively lacking in investment capital. Data on investment capital utilization efficiency (ICOR) from the General Statistics Office shows that ICOR for the period 2011-2015 is 6.25, ICOR for the period 2016–2019 is 6.13 and ICOR for the period 2016–2020 is 7.04 because 2020 is an exceptional year due to the Covid-19 pandemic. According to the World Bank, Vietnam's investment efficiency in generating growth is lower than that of China, Malaysia, South Korea, Singapore and Thailand at a time when they have the same level of Per Capita Income and the same level of development.

Therefore, improving the efficiency of public spending is always recognized as having an impact on total productivity growth and GDP size. Maintaining sustainable levels of public investment plays an important role in ensuring social and production infrastructure, creating favorable conditions for the private sector to boost investment.

To bring public investment capital to flow faster into the economy, according to Prof.Dr. To Trung Thanh, Head of Scientific Management Department, National Economics University, there needs to be solutions to amend and improve legal regulations in the direction of reducing problems in all stages of project management, from standard planning and implementation, as further research on cases where investors can proactively use some legal funds outside of the medium-term public investment plan (including regular capital sources) to set up projects, prepare to invest in advance instead of having to wait for synthesis or addition to the medium-term public investment plan. In addition, it is necessary to add additional regulations on conditions for allocating annual capital plans for preparation and planning tasks to create conditions for investors to access capital for task preparation and proactively make investment plans.

In particular, a difficulty that is mentioned a lot is site clearance. WB experts believe that, because the cost/time norms for site clearance and resettlement are often not fully estimated, this leads to delays in disbursement progress, and even the need to adjust plans and project's capital flow. In addition, there are also reasons such as land policies and laws on compensation, support and resettlement that frequently change, causing many disagreements among the people; Many projects do not have available resettlement land funds. When cleared, they cannot proactively arrange resettlement and residential land needs. In particular, land management is still not strict and has not been handled resolutely and promptly, leading to land encroachment, change of purpose, transfer, and illegal construction, when the State recovers land without compensation so they did not comply with the handover of the premises, etc.

Therefore, to facilitate the disbursement of public investment capital, according to the Ministry of Finance, ministries, branches and localities need to pay more attention to site clearance work.

Regarding this issue, experts have recommended that when developing investment plans, it is necessary to clearly identify resettlement land funds, develop infrastructure and essential services, ensuring people's quality of life; Along with that, it is necessary to strengthen the review and management of land use in the area. In particular, households who use it illegally or for the wrong purpose can be applied coercive measures when not complying with the handover of the premises.