Public investment is a lever for the country's development, Tran Van, Deputy Chairman of the National Assembly Committee on Financial and Budgetary Affairs, told Thoi bao Ngan hang (Banking Times) newspaper.
Public investment plays a pivotal role in the nation's economic development. But in the current downturn, could the increase in public investment weaken Viet Nam's financial security?
It is undeniable that public investment is a driver in the country's economic development. As we all know, the biggest share of investment goes to socio-economic projects. Theseprojects are often non-profit or take a long time to produce returns. Consequently, they are often shunned by the private sector.
Public investment achievements in the transport sector are striking. In the period 2006-12, almost 5,500km of road, 132.4km of rail line and 141.8km of bridges were built, while 1,360km of waterways were rehabilitated and eight new airports were built.
Although social investment has been slashed in recent years, the government is now considering issuing government bonds to fund National Highway No 1 and National Highway No 14 - a portion of the Ho Chi Minh Highway running through Tay Nguyen (Central Highlands).
In addition, the government also plans to use bonds to provide additional funding for current projects, key to the national economy to ensure they are completed by 2015 as scheduled.I strongly believe that when these projects are commissioned, they will provide much-needed impetus to the national economy.
Some public investment projects have been postponed or delayed due to the government's efficiency drive to restructure public investment. Could such decisions lead to public money being wasted?
Yes, some of the project implementation has been postponed or delayed following the year 2015. This is something the government doesn't want to, but budget overspends and the cap imposed by the National Assembly on the issuance of the government bonds between 2011-15 have forced the Prime Minister to tighten the nation's belt, particularly in terms of public spending and investment.
After reviewing all the approved projects for the five year plan (2011-15), the government decided to postpone or delay those which had received less than 20 per cent of their approved budget and focus solely on those which can be completed by 2015.
This is the cost we have to pay for restructuring public investment!
To avoid fragmented investment and increase efficiency, the government has developed a plan to arrange medium term (from 1-5 years) and short term (less than 12 months) budgets. Is this measure realistic?
The National Assembly has green lighted the government's plan to use the four year public bond sales revenue (2012-15) to help local governments fund their infrastructure projects. With this model, local authorities will know how much money that are available and can plan to make best use of it.
In the near future, the same formula will be applied to programmes funded by the public budget. For example, each national programme will be advised how much money it will receive over five years, instead of the current one year basis.
As far as I know, a government Decree on the medium term investment plan is being drafted. Once completed, it will become an effective tool in guiding the public investment restructuring process and holding to account agencies involved in writing project proposals and approvals.
I believe the Decree will ensure investment capital is used more efficiently, particularly for major national projects such as transport, irrigation, healthcare and education.
Other measures introduced by the government include seekinginvestment from non-governmental resources to complete ongoing projects. What are your thoughts on this?
When the government's fiscal policy prioritises inflation control and macro economic stabilisation while ensuring social security and reforming the growth model, mobilising capital resources from society is of great importance, particularly through public private partnership or build-operate and transfer (BOT) models.
I can safely say the BOT model has become rather familiar in our country, particularly for transport projects.
A total of VND42.5 trillion ($2.1 billion) has been invested by private companies in rehabilitating 562km of road on National Highway No 1 running from north to south.
This is a demonstration of the government's successful policy for investment restructuring.
In addition, the Law on Public Investment is being drafted. I'm sure when the law is enacted it will further complete the legal system on investment in Viet Nam and bring our law into line with international practices. — VNS