Public investment is expected to flourish in 4Q21

Vinh Long has 12 undisbursed projects under transitional capital; 18 projects disbursed less than 30%; 5 projects disbursed less than 40%; ODA projects disbursed only 6%. 

Currently, the situation of the Covid-19 epidemic in Vietnam has been basically controlled nationwide. Provinces, cities have actively implemented Resolution No. 128/NQ-CP dated October 11 2021 by the Government on the promulgation of the temporary regulation "Safely responding, flexibly, and effectively controlling the Covid-19 epidemic".

However, the socio-economic situation by the end of 2021 still faces many difficulties and challenges, requiring all sectors to achieve the highest socio-economic development targets. The 4th Plenum of the 13th Party Central Committee has determined that one of the key tasks and solutions in the last months of 2021 is to boost the disbursement of public investment.

It is estimated that by the end of October 2021, the disbursement of public investment is expected to reach only about 55.8% of the 2021 plan assigned by the Prime Minister, lower than the same period in 2020 (67.2%). To strive for the highest disbursement of public investment in 2021, Deputy Prime Minister Le Minh Khai asked Ministers, Heads of ministerial-level agencies, government agencies, and chairmen of the People's Committees of provinces and centrally-run cities to focus on seriously, drastically, and effectively implementing the Government's Resolutions: No. 01/NQ - CP dated January 1, 2021, No. 45/NQ-CP dated April 5, 2021, No. 63/NQ-CP dated June 29, 2021; Resolutions of the regular Government meeting; Telegram No.1082/CD-TTg dated August 16, 2021 by the Prime Minister, Notice No. 262/TB - VPCP dated October 5, 2021 of the Office of the Government and instructions of the Government's leaders on promoting disbursement of public investment in 2021…

Besides, they have to further enhance the sense of responsibility, the role of the leaders in leading, directing, urging, and inspecting; to urgently review and immediately handle difficulties and bottlenecks in public investment disbursement at their ministries, agencies, and localities. In particular, disbursement promotion must go hand in hand with ensuring the quality of the works, strengthening discipline, and fighting negativity and waste.

KB Securities expected the Government would accelerate the disbursement of public investment in 4Q21 for some reasons. 

First, exports and domestic consumption should be the main forces of economic development, because these factors are currently growing slowly due to the pandemic. In that context, promoting public investment is the fastest and most feasible way to boost economic recovery. The General Statistics Office said if the public investment increased by 1% YoY, GDP would rise 0.058%. 

Second, easing restrictions on activities and social distancing help transportation be more convenient and promote backlogged projects. 

Third, construction material costs should cool down after the importation and exportation regain the balance. In 2020, social investment only reached VND2,164.5 trillion (5.7% YoY – the lowest level during 2011-2020), with a sharp fall in both private investment (VND972.2 trillion, 3.1% YoY) and FDI (VND463.3 trillion, -1.3% YoY). The Government had to take drastic measures to promote public investment in 2021 by issuing Resolution No. 63/NQ-CP dated June 29, 2021 to overcome obstacles related to public investment, and the Telegram No. 1082/CD-TTg dated August 16, 2021 to speed up the disbursement of the 2021 social investment.

“The public investment is expected to be boosted in 4Q, which helps promote the recovery of the stock market through indirect impacts (stimulating aggregate demand, boosting GDP growth, restoring business operations) and directly affects beneficiary businesses and sectors, namely real estate, infrastructure, construction, and materials”, KB Securities said.