|Vietnamese enterprises need timely support policies to overcome difficulties and maintain production and business. Photo: H.Diu
Depends on breakthrough in three areas
Assessing Vietnam’s economic situation in 2023, Andrew Jeffries, ADB’s Country Director for Vietnam, said that Vietnam’s economic growth in 2023 would be limited due to the world economic recession, continued tightening of monetary policy in developed countries, and spillover effects from global geopolitical tensions.
“However, the policy of supporting growth through monetary easing and a large amount of public investment expected to be disbursed in 2023, along with the reopening of the Chinese market will help Vietnam cope with these disadvantages,” said ADB Country Director for Vietnam.
According to Andrew Jeffries, public investment will be a key driver of economic recovery and growth in 2023 and 2024, boosting the construction industry and other related economic activities. Along with the rapid shift to the loosening monetary policy in March, public investment disbursement is expected to bring multi-dimensional impacts, creating a strong growth engine for the economy.
Economist Nguyen Minh Cuong said that growth depended on three pillars. The first lies in public investment, so Vietnam needs a breakthrough to reach the target of 6.5% growth this year.
“The volume of public investment to be disbursed in 2023 is large, nearly US$30 billion. If Vietnam fully disburses, public investment will create a strong breakthrough for economic growth. Otherwise, the growth rate of 6.5% will be difficult to achieve,” said Cuong.
Besides, policy shift is also an important factor that strongly supports growth. Recently, in less than a month, the State Bank lowered interest rates twice. Vietnam is the first economy in Asia to shift monetary policy from tightening to loosening. This is also the regional trend when in the first quarter, 65% of central banks in Asia kept their monetary policy unchanged, and only 35% of countries had related policies to raise interest rates. Meanwhile, in the same period in 2022, more than 50% of countries in the region have monetary policies related to raising interest rates. According to Cuong, room for Vietnam to shift monetary policy is reduced inflation and reduced exchange rate pressure. The redirection of Vietnam’s monetary policy is right. The final breakthrough that drives Vietnam’s economic growth is the opening of China.
How to effectively exploit the momentum of public investment?
To disburse public investment in the most effective way, Phi Thi Huong Nga, Director of the Department of Industry and Construction Statistics (General Statistics Office), said that the State needed to focus on perfecting the legal system governing the entire operation of public investment projects from investment preparation, project implementation, to completion, settlement, handover, and put into use.
“Because a slow stage will affect the whole project, affect investment efficiency, and reduce the growth motivation,” Nga said.
Additionally, ministries, branches, and chairmen of People’s Committees of provinces and cities should closely monitor and properly assess the situation, improve the quality of investment and project preparation; be proactive and flexible in removing difficulties and obstacles in project implementation, preparing clean ground for construction. If it is beyond their competence, it is necessary to summarize and report it immediately for consideration and early settlement. Focus on immediately implementing the projects that have been assigned capital plans, speeding up the implementation and disbursement of investment capital for transitional projects and works. Focus on speeding up progress, and completing important and urgent projects that are in progress; construction projects are likely to be completed in 2023.
“Simultaneously, the capital harmonization between the Socio-Economic Recovery Program and the five-year medium-term public investment plan 2021-2025 will be implemented to ensure the implementation of the entire capital of the Socio-Economic Development Restoration Program in 2023. The People’s Committees of the provinces/cities directly under the Central Government need to implement measures to control the price and quality of construction materials for public investment projects; update, adjust, and announce the monthly price of construction materials, ensuring compliance with the provisions of the Construction Law as the basis for adjusting the bidding package, the total investment of the project, and ensuring the legitimate interests of investors and construction contractors,” said Nga.
In fact, the Government always closely follows and grasps the situation, proactively urges, and directs units and focal points to focus on a series of related work, from project preparation to implementation and disbursement of this important capital. Recently, Prime Minister Pham Minh Chinh signed and promulgated Directive No. 08/CT-TTg dated March 23, 2023, of the Prime Minister on key tasks and solutions to promote allocation and disbursement of public investment capital, three national target programs in 2023, and implementing the program of socio-economic recovery and development. The directive clearly states that the disbursement rate of investment capital from the state budget in 2023 will reach more than 95% of the plan assigned by the Prime Minister.
The Prime Minister also established five working groups to inspect, urge, and remove difficulties and obstacles, and accelerate the disbursement of public investment capital in 2023 at ministries, central agencies, and localities (in case ministries, central agencies, and localities have disbursement rates below the national average). At the same time, it is required that ministries, central, and local agencies urgently allocate in detail the entire capital investment plan in 2023 assigned by the Prime Minister.
On the local side, a series of provinces and cities also participated synchronously. As one of the two main economic “powerhouses” of the country, the Hanoi People’s Committee has issued Plan No. 94/KH-UBND to implement and disburse the public investment plan for the first six months of 2023; set a target by the end of the first six months to reach the disbursement rate of 40-45%, strive to reach 95% to 100% by the end of 2023. Hanoi also requires departments, agencies, sectors, localities, and investors to take measures to disburse capital plans according to the established roadmap; focus on solving difficulties and obstacles of projects, completing this task in the first six months of 2023. Units and investors carefully review project implementation capabilities to propose appropriate capital plans; overcome the situation of not being able to fully disburse the capital plan due to unreasonable calculations and proposals. The disbursement rate until the end of the 2023 budget year does not reach at least 90% of the assigned plan, which is one of the criteria for considering, evaluating, and classifying the completion of tasks of cadres and civil servants.
Promoting public investment is also considered the top solution for HCM City to revive its economy after the “unexpectedly low” growth in the first quarter. To promote investment, focus on public investment as well as remove obstacles to attracting non-budget investment, the Chairman of the People’s Committee of HCM City requested that the committees account for a large proportion of public investment, key projects, and investors need to regularly update progress and urge them to resolve. For key projects, it is necessary to have weekly or even daily meetings at specific times to update difficulties and problems, thereby coordinating to solve them.