Low disbursement rate reduces efficiency of public investment capital

Due to the impact of the pandemic, the realized investment capital of Ho Chi Minh City in July 2021 was estimated at 3.2% compared to the 2021 plan, down 67.5% year on year. Photo: Internet.

Referring to the cause of the delay in disbursement of public investment capital, the General Statistics Office revealed that under social distancing, many projects had to suspend operations due to unsafe health conditions for workers in disease prevention as well as must implement social distancing on the construction site. This is considered the main reason affecting the implementation progress of public investment projects in July 2021.

Specifically, investment capital made from the state budget of 19 southern localities implementing social distancing in July 2021 was estimated at VND11.7 trillion, accounting for 30.6% of total capital and down 26.6 % over the same period last year (July 2020 reached nearly VND16 trillion, accounting for 30.6% of total capital).

In particular, the investment capital plan from the allocated state budget of Ho Chi Minh City in 2021 reached VND35.7 trillion, accounting for 7.51% of the country's capital plan. However, due to the impact of the pandemic, the realized investment capital of Ho Chi Minh City in July 2021 was estimated at 3.2% compared to the plan in 2021, down 67.5% compared to the same period last year.

In addition, there are still a number of shortcomings, limit  ations and subjective points that cannot be completely overcome such as: site clearance, quality of planning, preparation of public investment projects, and choice of contractors, completing investment procedures, capacity in appraisal, inspection, supervision and construction.

Moreover, legal institutions on public investment and construction have not been adjusted to keep up with practical requirements and regulations. The decision on ODA capital source must also depend on the donor's regulations, causing delays in the implementation and disbursement of this capital.

Especially, the sudden increase in the price of construction materials in recent years also affects the implementation progress of public investment capital.

Soon complete legal framework

According to economic expert Le Dang Doanh, in the current context, public investment still plays an important role in economic growth, so more attention must be paid to speeding up of public investment disbursement. However, to achieve the stated goal, a series of measures must be rolled out which especially focus on the improvement of the legal framework related to the Land Law and the Law on Public Investment related to land. Because if there are too many gaps between the land prices of the State and the market price, it will hinder site clearance and completion of public investment projects on schedule. In particular, the lack of a legal framework will also make it difficult to attract potential investors to participate in public investment projects.

“Therefore, it is necessary to soon complete the legal framework related to land, in order to overcome the risks for public investment projects related to land. In addition, it is high time to review and complete the Law on Public Investment to adapt to the rapid and strong development of the Industrial Revolution 4.0 with the rise of the digital economy, e-commerce, and online payment. All of that requires the legal framework on public investment to be clear, transperant and synchronized to attract investors,” Dr. Le Dang Doanh said.

Regarding this issue, Deputy Minister of Planning and Investment Tran Quoc Phuong said that in August 2021, the Ministry has received proposals from a number of ministries, sectors and localities on the plan and will synthesize and report to the Prime Minister. By September 30, the Ministry will complete an overall report for the Government and the Prime Minister on the disbursement results. At the same time, the Ministry also makes adjustments to relocate the capital in accordance with the needs and conditions in different localities and then report to the Minister.

Accordingly, localities and branches with additional demands will be considered based on the number with no needs or lower capital demands. This year, this adjustment must be reported to the National Assembly Standing Committee which depends heavily on high rate disbursing units, and will have to be considered in practice in order to issue a harmonious and timely adjustment.