Reigns tightening on disbursement of public investment capital

Assoc. Prof.Dr. Dinh Trong Thinh

Currently, the disbursal rate of public investment is still quite low, especially when there are only a few days left until the end of 2021. But what is the cause of this situation?

In 2021, the disbursal of public investment capital has been strongly affected by the Covid-19 pandemic due to its effects on raw materials and labor.

Moreover, although inflation in Vietnam seems to be "a bit far away", the "spectre" of inflation is increasing more seriously in the world. Vietnam has not been the only one to focus on promoting public investment to stimulate the economy, many countries have also chosen this direction, so the scarcity of raw materials will also increase. Production stagnates when inflation is high and this is expected to be a common problem that the world has to cope with. Considering Vietnamese products have to depend on importing material from aboard, for both infrastructure projects and production of the private and public sectors, this should be taken into account to cope with escalating prices. This has affected the disbursal rate of investment capital in the past.

In fact, some localities with low disbursal rates are asking to return capital or move capital to 2022 for further implementation. But is this reasonable?

In fact, public investment activities have many unreasonable and careless problems. Many localities, departments and sectors have established projects and developed programs to make investments based on their feelings and limit ed scientific and practical knowledge. As a consequence, project formulation is sketchy.

The fluctuation of raw material prices also caused the stagnation of some projects due to fear of loss of capital. The problem is working out how to get the trans-shipment capital of projects accrued in previous years to "cover" a new sudden increase in price, so as not to be forced to calculate excessive capital, as has been seen in the slow progress of previous public investment projects. This requires ministries, sectors and local governments to carefully calculate as soon as they receive the capital allocation plan.

How can the disbursal of public investment capital in 2022 reduce difficulties and problems that arose in the past?

In the near future, we need to limit  the spread of investment and consider cutting unnecessary projects to focus investment capital on a number of important projects. We will need to deploy operations quickly, promoting efficiency for the economy. Along with that, it is necessary to control the number of investment projects. When launching any project, that project must be really essential and have a long-term positive impact. In order to solve these inadequacies, we must tighten the discipline of building investment projects and set up a preliminary project. The preliminary project must then be strictly inspected and supervised. State management agencies must check, monitor and balance the economy's resources with the needs and capabilities of investment activities.

To promote disbursal results, it is necessary to coordinate with many sectors. Accordingly, we need to quickly shorten unnecessary procedures using the funding allotted, and improve the role of management agencies in bidding activities, to avoid the situation of impractical implementation.

In addition, the responsibility and role of heads of authorities and sectors must be made clear from the planning stages to inspection, supervision and assessment. At the same time, we must clearly define the responsibilities of local governments, ministries and sectors so that agencies can coordinate with each other closely, helping investors and contractors to carry out their plans.