Public investment key to economy's competitiveness

August 26, 2021 - 08:21

Deputy Minister of Planning and Investment Trần Quốc Phương spoke with Vietnam News Agency Television about solutions to drive up public investment capital spending, and ensuring disbursement goals are met


Deputy Minister of Planning and Investment Trần Quốc Phương

In 2021, public investment will maintain a key role in supporting economic growth as manufacturing and service sectors are disrupted by the pandemic. With huge spillover effects on private and foreign direct investment, effective public investment is an important factor to improve the competitiveness of the economy.

Deputy Minister of Planning and Investment Trần Quốc Phương speaks with Vietnam News Agency Television about solutions to drive up public investment capital to ensure the disbursement rate goal of over 95 per cent set for the year.  

Could you give an update on the progress of disbursement of public investment capital this year?

The Ministry of Planning and Investment is the national advisory body on socioeconomic development and public investment plans, so it regularly synthesizes and reports to the Government on the implementation and disbursement of public investment capital so that the Government and the Prime Minister can give timely direction.

In the two latest documents, the Prime Minister set goals for 2021 and gave very specific instructions to ministries, ministry-level agencies and People’s Committees of provinces and cities.

We hope that they are all well aware of the importance of speeding up the progress of public investment this year and giving utmost efforts to attain these goals.

In fact, the pandemic has caused many difficulties and challenges for the economy, but we believe that with strong determination, we will find suitable times and solutions to speed up the progress of approved projects and improve disbursement progress.

We hope that localities less affected by the pandemic will strongly enhance the public investment disbursement. Provinces and cities that are in the heart of the pandemic such as HCM City, Bình Dương and Đồng Nai also need to choose the time and work that needs to be done to implement it, trying their best not to fall behind schedule.

How will the implementation of social distancing nationwide affect the disbursement progress?

Public investment is also an economic activity, so it has been affected by the pandemic like other sectors. Public investment also depends on the transport of materials and equipment for construction, and this has been disrupted, especially in provinces and cities implementing Directive 16.

In addition, people working in these projects, typically workers, experts and consultants, must adhere to social distancing policies. Some projects still practicing the “three on-site” policy have had a shortage of construction materials. Therefore, the disbursement rate of public investment capital is slower than in 2020.

Another big challenge is the dramatic increases in prices of construction materials, which has greatly impacted construction progress, especially the psychology of contractors, as contracts have been signed and increasing prices hurt financial plans for many projects.

Besides, the dispersal of forces, time and resources (which provinces and cities have spent fighting the disease) has also affected disbursement progress.

The MPI greatly appreciates the work of leaders of provinces and cities hit hard by the pandemic. However, we hope that localities still have an appropriate plan to implement public investment projects.

Could you share the role of public investment in the economy given the huge challenges posed by the pandemic?

We can see clearly the important role of public investment in supporting the whole economy in 2020 – the first year of the pandemic. Last year saw impressive results in disbursement of public investment capital, contributing to positive economic growth. The role continued this year when production and businesses were severely hurt by the pandemic.

However, 2021 has seen both advantages and disadvantages, so the disbursement rate in the first months of 2021 is lower than the same period of 2020. In the first seven months of the year, the disbursement rate reached more than 36 per cent, lower than the 40 per cent rate in 2020.

Every month, the MPI reports to the Government and the Prime Minister on the disbursement situation, difficulties and challenges and proposes solutions.

We will review the disbursement progress of provinces and cities by September 30 with the goal of executing at least 60 per cent of the target. The MPI hopes that ministries, central agencies and localities are aware of this and take drastic measures to attain the set goals.

Besides the pandemic impact, disbursement of public investment capital usually focuses in the last months of the year. What is the solution to this problem?

This problem has existed for a long time.

Last year was a special year when the implementation and disbursement of public investment capital did not follow the normal cycle. The disbursement rate in the first months was quite high compared to previous years. 2020 was the end year of the medium-term public investment plan, so investors and contractors wanted to conclude the period successfully to have good preparation for the next period.

2021 is the first year of a new five-year period so work mainly focuses on preparation for the new cycle and the first months are just transitional. Most new projects for 2021-25 must wait for National Assembly approval.

In the Resolution No. 63/NQ-CP dated June 29, 2021, the Prime Minister requested that by September 30, ministries, agencies and localities with a disbursement rate of less than 60 per cent will see capital transferred to other units. How will this be done?

In 2019, and especially in 2020, the policy is to a certain deadline, if the project is not disbursed, assigned capital will be transferred to other units.

Last year, a certain amount of capital was transferred and about VNĐ8 trillion (roughly US$348 million) of ODA capital was adjusted down compared to the plan. The units reviewed the situation and found that the disbursement rate could not meet the target, so they proposed to adjust down the plan.

When a unit adjusts down its plan, if another unit applies for an increase of capital there will be a capital transfer. If there is no unit receiving additional capital, it can only cancel the plan, not transfer it.

By September 30, the Ministry will report to the Government and Prime Minister on disbursement results, and notify ministries, branches and localities that if they need additional capital, and based on the summary of units with no demand or request/be forced to see a reduction in the plan, we will report to the Prime Minister to transfer it to other units.

This year, this adjustment must be reported to the National Assembly Standing Committee. Transfers depend largely on units which disburse well and can receive more capital.

In August, the Ministry received proposals from a number of ministries, sectors and localities to reduce their plans. We will summarise and report to the Prime Minister. — VNS