Drastic changes needed to boost disbursement of public investment capital

August, 02/2022 - 08:26
By July, the disbursement progress of the country's public investment capital had significantly improved. However, it is still low, even down slightly compared to the same period in 2021. Hoàng Văn Cường, member of the National Assembly's Finance and Budget Committee, talks to Việt Nam Financial Times (Thời báo tài chính Việt Nam) about the matter.
Hoàng Văn Cường, member of the National Assembly's Finance and Budget Committee. Photo vneconomy.vn

By July, the disbursement progress of the country's public investment capital had significantly improved. However, it is still low, even down slightly compared to the same period in 2021. Hoàng Văn Cường, member of the National Assembly's Finance and Budget Committee, talks to Việt Nam Financial Times (Thời báo tài chính Việt Nam) about the matter.

Disbursement of investment capital in the first seven months of the year was still low. In particular, there are hindrances that have been raised for many years but have not been completely resolved. Is there a problem with our mechanism or policy?

There are many reasons for the delay in disbursement that have been pointed out for many years, such as: site clearance, investment preparation. We must frankly admit that solutions to overcome these shortcomings have not been implemented effectively.

For example, site clearance progress is slow because we are currently doing two things at the same time: project construction and site clearance. Obviously, we have seen this problem before, but there is no solution to fix it. In addition, the current policies in land clearance compensation have many shortcomings such as determining the land price, determining the price of the recovered property, etc., which do not satisfy the needs of the people, so the people do not agree with the compensation rate.

The procedures for approving investment projects to qualify for capital allocation or approving the adjustment process are also time-consuming. In particular, the assignment of rights and assignment of responsibilities in each relevant agency or unit is sometimes very general. So, if one unit finds some procedures difficult, they can transfer such responsibility to another unit, or to the upper management unit.

To speed up the disbursement progress, Government has established interdisciplinary working groups with many participating agencies, so that when the projects have problems, these agencies will sit together and come up with solutions immediately. This is a measure for agencies, departments and sectors to work well together.

But in reality, the work of coordination and resolution is still very slow, and not really effective. This proves that the mechanisms in the management of the approval procedures for investment projects are still binding to create safety for authorised individuals and organisations instead of pointing out clear responsibility as well as the right of individuals and organisations.

There is also another reason for slow implementation, which is the lack of capacity of contractors.

In order for these shortcomings and problems not to become a bottleneck when it comes to disbursing public investment capital, what should we do?

Many solutions have been implemented such as assigning responsibility to the head of the unit to be responsible for the disbursement progress. If the management unit of one project does not manage to make disbursement at an expected rate, in the following year, the capital for the project will be either cut or transferred to another project. The Government has also set up inspection teams to detect which units do not strictly comply to hand down proper settlements. However, the disbursement is still slow and so far, no individuals or units have been handled, and no funding for any projects has been cut or transferred.

There are two reasons, the first is that the authorities themselves are not tough enough. The second is that the slow disbursement is difficult to attribute to a specific individual or a specific unit. For example, a project needs adjustment, but the adjustment involves many ministries and branches. Then, the conditions for adjustment may be missing a certain step that is not important but is required according to regulations. The agency implementing the project adjustment will use that reason to not implement the adjustment. Invisibly, the progress of the project will be slowed down, but this delay is “in accordance with the process, regulations and for objective reasons”, so no one is responsible.

I think the current fundamental solution is that we have to change the management method and correct the policy mechanism. We should not attach importance to how the involved units follow the process and regulations, but should focus on the end result. Units must find a solution to achieve that result.

While performing, units may skip a few steps, ones which are not important. As long as these steps and stages must not affect the output results and do not adversely affect society and are not for personal motivation, the final results are still acceptable. But to do this well and to prove that the unit or individual is not self-seeking and does not cause damage to the budget, that unit or individual must publicise the implementation process.

Another measure that I think is very practical today is that the management agency must announce the price of construction materials (the Ministry of Construction or the People's Committees of the provinces and cities). On a monthly or semi-monthly basis, these agencies must immediately announce to the contractor the fluctuations in the price of raw materials for proactive implementation.

In particular, the stage of approving the completed volume/work must be carried out in a very timely manner every month. Until now, there is still a situation where the construction is completed until the end of the year before the approval of the volume and payment. But now in this context, agencies, departments and sectors must do it very promptly to avoid the situation of contractors waiting for price adjustment to increase; or having completed a certain work volume (at a low price) but waiting for the price to increase, then calculate the volume to adjust the total cost.

This year, the disbursement of public investment capital is even a bigger workload because in addition to the assigned capital plan, we have to complete the disbursement of the socio-economic recovery and development programme. With the current disbursement progress, what are your expectations about completing the disbursement of the capital plan at the end of the budget year?

This year, it is very heavy duty, with double responsibility. In addition, this year has seen a considerable fluctuation in the price of materials. These are the difficulties and challenges that need to be overcome.

But this year we can take advantage of the fact that most of the public investment capital is spent on large and key projects. Capital consumption capacity of these projects is very large.

The Government has shown its determination by already establishing working groups. This is also a factor promoting the disbursement of public investment capital faster.

In particular, recently, in addition to promulgating a resolution on economic recovery, the National Assembly has created mechanisms for a number of public investment projects to speed up progress such as allowing mining materials without spending time to ask for permission; allowing the appointment of contractor.

With these advantages, we expect the disbursement progress to be higher in the last months of the year. But to achieve the goal of disbursing 100 per cent of the capital plan, it is extremely difficult if we do not really have breakthrough, drastic solutions and determination. — VNS