VCN – According to Dr Nguyen Dinh Cung, former director of the Central Institute for Economic Management (CIEM), amid the downtrend of many of Vietnam’s economic growth drivers, public investment is still expected to be the main driver for economic growth recovery in 2023.
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| Dr. Nguyen Dinh Cung |
As the General Statistics Office pointed out, the 10% increase in public investment is equivalent to a 0.065% rise in GDP growth. So how do you rate this number?
Public investment has been a driving force for economic growth and has widely affected life, the economy and society in the short, medium and long term. In the short term, public investment meets the “demand” factor of the economy, which is prescriptive for development.
Chairman of Ho Chi Minh City People’s Committee Phan Van Mai: In 2023, Ho Chi Minh City was allocated 70,000 billion VND, nearly doubled compared to 2022. In which, 16,500 billion VND of capital was allocated from the central government and 55,200 billion VND of local capital. Up to now, Ho Chi Minh City has allocated 100% of the central capital; Local capital is still 26,000 billion VND, of which eligible ones were allocated 14,000 billion VND, and 4 others with a total capital of 12,000 billion VND will be urgently completed by Ho Chi Minh City by the end of March. In 2023, the People’s Council of Ho Chi Minh City will have a special session to allocate 100% of the local capital. (Speaking at the National Online Conference on urging the disbursement of public investment capital in 2023 and the implementation of the Socio-economic Recovery and Development Program, February 21, 2023).. |
In the medium term, public investment creates important works and infrastructure to help connect trade, create new investment opportunities for other regions and economic sectors, and provide more employment.
Nowadays, public investment disbursement not only has a positive impact on the real sector of the economy but also results in liquidity upgrade and facilitate capital flows in the economy. Besides, the disbursed investment capital will reduce pressure on liquidity and cash flow in the money market.
In your opinion, what is the reason for the slow disbursement of public investment capital in recent years?
There are 4 main groups of causes as follows:
Firstly, disqualified projects due to cursory preparations.
Secondly, due to such weaknesses, it takes a lot of continuous adjustments in terms of investment capital and other contents while the administrative procedures last for years, leading to delays in progress and escalating capital expenditure
Thirdly, not until the investment decision is adjusted does it no longer suits the actual conditions, while the high price of input materials causes the contractors to make more and more losses and have to do drip to wait for a certain time to be adjusted further, plus the contractor’s poor capacity.
Fourth, the most challenging factor is overlapping and unclear regulations, which cannot be fulfilled consistently, hindering businesses from implementing their plans. Currently, some projects are called dead points of the decision-making process and cannot be set up because it is unclear who has the authority and responsibility to solve the problem and promote the disbursement of investment capital on each specific project.
What solutions do we need to implement from the above problems, sir?
We have to group the problems to make clear what to be promised to deal with in the short and medium term and what can be solved in a more fundamental, long-term way. In the context of overlapping rules, it is unclear how to approach the problem.
The longer disbursement lasts, the more capital expenditure the business spends, even at several times higher, which can be wasteful and inefficient, especially for key national projects. Key projects such as Ring 3 Project, Belt 4 Project, Tan Son Nhat Airport Project, Long Thanh Airport Project, must be ignored every formality but focus on capital, and resources and deploy as quickly as possible, especially putting efficiency first.
In the coming time, it is necessary to focus resources on capital, project implementation capacity, and contractors and solve procedural problems to promote the disbursement of public investment capital. Specifically, due to the escalation of input material prices, the State and relevant agencies must immediately decide on the adjustment of the total investment for the winning projects, and the adjustment must be high and reasonable enough to cover such extra expenses so that contractors at least do not suffer losses in project implementation
In addition, the disbursement of investment capital must be accelerated, in which the investor and the Treasury must coordinate with each other so that contractors are disbursed capital sufficiently and timely with the volume of work they have performed. Therefore, it is necessary to redefine the specific conditions, detailed documents and relevant procedures to boost the disbursement as soon as possible.
Thank you very much!
By Xuan Thao (recorded)/ Thu Phuong