08:51 | 11/10/2016 Investment
(VEN) - While public investment management policies have shown positive progress, efficiency in practice has been lower than expected. Therefore, linking policies to practices is one of solutions to improve public investment efficiency in the coming time.
The Ministry of Planning and Investment’s Central Institute for Economic Management Director Nguyen Dinh Cung said that public investment policies in Vietnam have made positive changes in recent years. Together with Prime Ministerial Instruction 1792/CT-TTg dated October 15, 2011 on strengthening investment management of state budget and government bonds, public investment has been tightened. In addition to building medium-term investment plans with the policy of heightening responsibility of each inpidual, Instruction 1792/CT-TTg has created new changes in terms of public investment, contributing to overcoming inefficient investment.
After long preparations, the Public Investment Law was passed in November 2014 by the National Assembly and took effect on July 1, 2015, creating legal foundation for public investment and capital management activities from the state budget. The Public Investment Law and decrees guiding the implementation have contributed to preventing arbitrariness in investment decisions.
The government issued Decree 15/2015/ND-CP on public-private partnership investments replacing Decision 71/2010/QD-TTg on February 2015 and Decree 30/2015/ND-CP on detailing the implementation of some articles of the Bidding Law in terms of investment selection on March 2015. These documents have made major changes in attracting private investment at home and abroad in infrastructure construction in a context where Vietnam lacks capital to meet the increasing demand for infrastructure development.
Professor Glenn P. Jenkins from the World Bank said that the introduction of the Public Investment Law and relevant decrees has been considered an important step forward to make public investment more efficient. The law also provides a basis for a comprehensive reform of public investment in the coming time.
Putting into practice
According to the Q1 economic report announced by the Central Institute for Economic Management, economic growth showed signs of slowdown. To complete the gross domestic product (GDP) growth target of 6.7 percent this year, Vietnam needs to improve the management of public investment projects. The country should focus on effective projects that bring positive effects for the economy.
Vietnam has made important progress in the management and supervision of public investment thanks to the introduction of a series of legal documents related to investment activities, the World Bank said. However efficiency in practice has not achieved results as expected. Vietnam annually spends a large amount of money for public investment activities, equal to around 17-20 percent of GDP, while this figure is under five percent in regional countries such as China with 3.5 percent and Indonesia with 1.6 percent.
According to Professor Glenn P. Jenkins, thinking and awareness in terms of public investment need to change. Vietnam needs the public investment management system with eight steps including strategic guiding and project screening, official appraisal, examining the results of appraisal, project selection and budget estimates, implementation, adjustment, service providing and assessment.
Public investment projects in Vietnam must ensure economic, social and environmental objectives. However all tasks are difficult to meet together. Therefore, Vietnam needs to change thinking about assessment of public investment projects. Central Institute for Economic Management Deputy Director Tran Kim Chung said that when it comes to the order of priority in public investment projects, economic task must be placed on top, followed by social and environmental tasks.
Some opinions made by the public show that many issues need to be adjusted in applying public investment policies in practice.
Central Institute for Economic Management’s Head of Investment Policy Department Dinh Trong Thang:
Quality and efficiency of public investment depends on management activities.