Boosting public investment to stimulate growth

10:53 | 26/09/2016 Economy

(VEN) - General Statistics Office of Vietnam (GSO)’s data showed that, in the first eight months of 2016, state budget capital disbursement was tardier than expected, with capital already invested reaching VND155.3 trillion, accounting for 60.1 percent of the year’s target and up 12.9 percent from the same time in 2015. Without urgent measures to promote the progress of the disbursement, the economy might fail to reach its 2016 growth target.

Boosting public investment to stimulate growth

Accelerating the pace of state capital disbursement is to stimulate economic growth

From the National Assembly’s warning...

At the National Assembly Executive Committee’s second session in mid-August, the National Assembly Finance and Budget Committee warned that state budget capital for development investment was low and came to only VND82.2 trillion in the first half of 2016, representing 32.2 percent of the target, up 4.6 percent from the same period last year.

That was attributed to improper regulations of the Public Investment Law, such as impractical public investment assessment regulations, complicated  administrative procedures for basic construction related to national target programs for new rural area development and sustainable poverty reduction programs, among others, while these programs are huge in quantity and have many subprojects in all ministries, sectors and localities.

Besides, the fact that projects were enabled to change sources of capital during a long time without following approved schedules, even until the projects expired, led to a problem that project developers and investors didn’t proceed investment or disbursement on time and/or on a serious basis.

Another major reason was found in management. Specifically, 2016 investment capital announcements were tardy in most locally and centrally-governed ministries and sectors. The government didn’t decide to allocate VND251.4 trillion (including VND203.4 trillion of domestic capital and VND47.9 trillion of foreign capital) until May 12, 2016. Meanwhile, many other capital sources haven’t been announced.

Furthermore, ministries, central and local authorities were slow in directing disbursement of investment capital for major construction projects, leading to capital distribution and construction at snail’s pace.

…to the government’s positive actions

To achieve the economic growth target at 7.6 percent in the last months of the year and 6.7 percent in the whole year, while stimulating further growth, economists proposed that the Government accelerate the pace of capital disbursement.

With that in mind, Prime Minister Nguyen Xuan Phuc asked to establish a public investment capital disbursement team at the end of May, led by Deputy Prime Minister Vuong Dinh Hue. Since then, the team has organized many conferences to discuss breakthrough measures.

After that, on July 8, the Prime Minister issued Resolution 60/NQ-CP on accelerating the pace of public investment capital disbursement until the end of the year.

Meanwhile, related ministries and agencies have been active in amending their guidance circulars related to procedures for investment in and management of construction projects, in order to accelerate the pace of disbursement and ensure the quality of construction projects.

According to Deputy Prime Minister Vuong Dinh Hue, the Ministry of Planning and Investment has sent three workgroups to localities to learn about their difficulties and then make reports to the government for resolution, with the final goal of realizing the state capital disbursement plan  for the year.  

 

Hoang Chau

Theo ven.vn