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The Hanoitimes – Amid a slowdown in private investments and consumption, expert suggested public spending is essential to spur economic growth and ensure decent living standards for the people.

Due to growing impacts of the Covid-19 pandemic, an increase in public spending with a focus on greater disbursement of public investment is a key measure to help Vietnam’s economy recover in the post-pandemic period, local economists have said.

Illustrative photo.

In the first quarter, total investment capital of the economy stood at VND367 trillion (US$15.73 billion), up 2.2% year-on-year, or 31% of the nation’s GDP.

Upon breaking down, investment capital from the private sector accounted for 45.2%, up 4.2% year-on-year, and foreign invested capital made up 24.3%, representing a decline of 5.4%. Meanwhile, public investment recorded the highest growth rate of 5.8% among economic players, contributing 30.5% of the total.

As the pandemic is slowing trade and services, an acceleration of public investment would help boost aggregate demand and motivate enterprises to resume operations.

Moreover, investments in basic infrastructure via public spending would set the stage for long-term development by exerting a positive spill-over effect.

Amid a slowdown in private investments and consumption, expert suggested public spending is essential to spur economic growth and ensure decent living standards for the people.

In a recent cabinet meeting, Prime Minister Nguyen Xuan Phuc requested government agencies to accelerate public investment in various fields of the economy.

Do Thien Anh Tuan, lecturer at Fulbright University Vietnam said public investment not only helps offset declining investment capital from the private sector in the short term, but also create a foundation for economic recovery once the pandemic is contained, in turn enhancing competitiveness of the economy.

Tuan suggested in the time of crisis and with limited funding, the government should focus on projects with high spillover effects while requesting government agencies, provinces to focus on disbursement plans with the same intensity as in the fight against the coronavirus.

As of February 29, disbursement of public investment reached 7.38% of the target set by the National Assembly at VND34.74 trillion (US$1.47 billion), nearly doubling the rate of 3.89% recorded in the same period last year,

The rate, however, remains low compared to this year’s plan, which is, according to financial expert Can Van Luc, attributable to inefficient legal framework and the lack of responsibilities from government agencies.

Among measures to speed up disbursement of public investment, Luc said, it is important to simplify investment procedures and ensure efficient decentralization between various levels of government agencies in implementing state budget-sourced projects.

According to Luc, leaders of ministries, cities and provinces should be more responsible in this regard. A higher disbursement rate should be considered a task for each individual, ministry, province and city.

At an online national conference held on April 10, both Minister of Finance Dinh Tien Dung and Minister of Planning and Investment Nguyen Chi Dung agreed more urgency is needed to realize this year’s disbursement target of VND700 trillion (US$30 billion), more than double the actual amount in 2019 at VND312 trillion (US$13.4 billion), in a bid to maintain economic growth and stimulate social investment.

The Hanoitimes – Hanoi will not allocate funds for fields and projects subject for the participation of private sector.

Members of Hanoi People’s Council on December 7 approved the mid-term public investment plan for the 2021-25 period.

Director of Hanoi’s Department of Planning and Investment Nguyen Manh Quyen at the session.

“In the next five year, Hanoi is set to allocate VND206.75 trillion (US$8.93 billion) for public investment,” said Director of the Hanoi Department of Planning and Investment Nguyen Manh Quyen before the voting.

“During this period, the city expects to ensure greater efficiency in the use of public fund for economic development, focusing on upgrading essential socio-economic infrastructure systems,” stated Mr. Quyen.

This is especially important for projects with high spill-over effects for socio-economic development in 11 priorities areas that the city has identified as the focus of investment in 2021-25, he noted.

“Hanoi will not allocate funds for fields and projects subject for the participation of private sector, while pushing for greater mobilization of investment capital from other economic components,” stressed Mr. Quyen.

In the first 11 months of this year, Hanoi’s  progress of public fund disbursement reached an all-time high of 89% of the target for this year or VND40.4 trillion (US$1.74 billion).

Seen as Hanoi’s top priority to ensure economic recovery in the post Covid-19 pandemic era, the city aims to disburse 100% of the target amount this year.

Prime Minister Nguyen Xuan Phuc in a government meeting late August urged local authorities to realize their disbursement targets for this year, otherwise they would face strict punishment.

This year, the government aims to disburse the full amount of VND470.6 trillion (US$20.32 billion) to aid economic recovery, and the progress as of October met 68.3% of the target, or VND321.5 trillion (US$13.8 billion).

The Hanoitimes – To ensure the dual target of containing the pandemic and simultaneously boosting economic growth, Hanoi remains steadfast in disbursing 100% of the target amount of public funds.

A high disbursement rate of public investment capital is essential to boost Hanoi’s economic growth, especially in the current Covid-19 crisis, according to Phung Thi Hong Ha, vice chairwoman of the municipal People’s Council.

Overview of the meeting. Photo: Thanh Hai.

For many years, Hanoi has identified public investment a key source for the capital city’s socio-economic development, which in turn lays a solid foundation to attract social investment capital, Ms. Ha said at a meeting discussing the disbursement progress for public projects in Hanoi in the 2016 – 2020 period on August 31.

During the five-year period, total social investment capital was estimated at VND1,740 trillion (US$75 billion), 1.65 times as much as that in 2011 – 2015 and equal to 43.9% of the city’s gross regional domestic product (GRDP).

Public projects after completion have timely addressed social issues, traffic congestion and gradually modernized urban and rural infrastructure, especially roads connecting Hanoi with other provinces and cities.

In 2020, Hanoi allocated VND28 trillion (US$1.2 billion) for 581 projects. To ensure the dual target of both containing the pandemic and boosting economic growth, Hanoi remains steadfast in disbursing 100% of the target amount, in turn boosting socio-economic development, Ms. Ha stressed.

At the meeting, Vice Chairman of the Hanoi People’s Committee Le Hong Son informed as of the end of July, Hanoi had disbursed VND14.64 trillion (US$631.26 million), or 36% of the target set by Prime Minister Nguyen Xuan Phuc.

By the end of this year, the city is expected to complete 546 out of 551 construction projects at city-level, and 851 out of 856 at district-level.

In the first seven months of this year, the Vietnamese government disbursed VND203 trillion (US$8.83 billion) worth of public investment, equivalent to 42.7% of the year’s target and up 27.7% year-on-year.

This year, Vietnam is expected to disburse VND700 trillion (US$30 billion), more than double the actual amount in 2019 of VND312 trillion (US$13.4 billion).

The Hanoitimes – The Vietnamese government remains steadfast in disbursing the full target amount of VND630 trillion (US$27.26 billion) to aid economic recovery.

Officials would face disciplinary actions if their ministries and localities fail to realize their respective disbursement targets of public investment funds for this year, Prime Minister Nguyen Xuan Phuc has warned.

The government remains steadfast in disbursing the full target amount of VND630 trillion (US$27.26 billion).

The government remains steadfast in disbursing the full target amount of VND630 trillion (US$27.26 billion) to aid economic recovery, and this requires the active participation of the entire political system, Mr. Phuc said at a government meeting today [August 21].

Priority should be given to major infrastructure projects to avoid any delay, including the North-South Expressway, Long Thanh International Airport, and My Thuan – Can Tho expressway, among others, Mr. Phuc stressed.

Minister of Planning and Investment Nguyen Chi Dung said the most challenging issue in public disbursement is the site clearance process, including the verification of the origin of land and the compensation for affected households.

Mr. Dung pointed to the site clearance as a major obstacle for the Eastern North-South expressway project in the 2017 – 2020 period, in which 13 provinces and cities are involved.

As of July 31, the disbursement amount stood at VND193.04 trillion (US$8.32 billion) or 40.98% of the government’s target. The figure is estimated to reach VND221.76 trillion (US$9.56 billion) or 47% of the total estimate by August 31, higher than the 41.39% recorded in the same period last year.

To date, 39 ministries, ministerial-level agencies and six provinces have disbursed 35% of plans or less, with 15 agencies and one province disbursing even less than 15%.