The National Assembly (NA) on November 29 approved the revised Law on Public Investment, set to take effect on January 1 next year.

A key highlight of the new law is the transfer of authority over investment decisions for state-funded projects in localities from people’s councils at all levels to people’s committees, also at all levels.

Vietnam wants to attain as many of its 2021-2025 socioeconomic goals as possible, Photo: Le Toan

These projects are categorised as Group B (valued between $10 million and below $191.6 million) and Group C (valued between $3.75 million and below $10 million) and are managed by provinces and cities. The classification is based on factors such as importance, funding costs, and operational sectors.

The projects span various sectors, including transport; irrigation; water provision and waste treatment; electrical technique; post and telecommunication; agro-forestry-fishery production; new urban areas’ infrastructure; health care, society, information, and education; and tourism and sports; among others.

Clause 8 of Article 18 specifies, “The people’s committees at all levels shall decide on investment policies for projects in groups B and C, which are funded by their budgets, including capital supplemented by higher-level coffers and other legal capital sources under their management.”

These committees must also report such investment policies to people’s councils at the same level.

A major transformation

This decentralisation of decision-making from people’s councils to people’s committees marks a significant change, according to the government.

People’s councils typically convene only a few times a year, requiring extensive discussions and input from hundreds of deputies before finalising decisions. The procedures are often cumbersome, taking at least a year to complete.

By contrast, delegating investment decisions to people’s committees shortens timelines, streamlines procedures, reduces costs, and accelerates project implementation.

“For instance, in the central province of Nghe An, some people’s council deputies live in districts over 300 kilometres from the provincial centre, making it challenging to convene meetings,” said NA deputy Tran Nhat Minh representing Nghe An. “This reform allows people’s committees to act promptly, tailoring investment policies to local conditions. It also clarifies accountability for decision-makers once projects are realised.”

The Ministry of Planning and Investment (MPI), which drafted the law’s amendments, noted that since 2021, 43 provincial and municipal people’s councils have already delegated investment policy decisions for state-funded projects to the respective people’s committees. A recent government survey of all 63 provinces and cities revealed unanimous support for assigning this authority to people’s committees.

Another significant amendment in the revised law allows site clearance for state-funded projects in groups B and C to be handled as separate projects, independent of the main venture.

In addition, the law further decentralises authority, enabling localities to utilise central budget allocations for their projects and permitting one locality to invest its funds in projects located in another locality.

With seven chapters and 103 articles, the revised law provides regulations on state management of public investment; the management and use of public investment capital; the rights, obligations, and responsibilities of agencies, units, organisations, and individuals involved in public investment activities.

The law also stipulates major principles for public investment management, while prohibiting investment policies or adjustments to investment policies that fail to align with approved strategies and plans, and those that fail to identify capital sources or balance capital.

Furthermore, it prohibits the abuse of positions and powers to misappropriate, exploit, or engage in corruption in the management and use of public investment capital; offering, receiving, or brokering bribes; falsifying or distorting information, records, and documents related to investment decisions; and using public investment capital for ill purposes, for the wrong beneficiaries, or beyond standards and norms

Key driver of growth

These provisions aim to accelerate public investment disbursement, which has remained sluggish in recent years. In the first 11 months of this year, disbursement of public investment reached approximately $17.12 billion, or 60.43 per cent of the target assigned by the prime minister – lower than the 65.1 per cent recorded during the same period last year.

This amount is also well below the $20.6 billion disbursed during the corresponding period in 2022.

For 2024, the total public investment budget was set at $33.6 billion, including $11.67 billion from the central coffers and $21.93 billion from local budgets. The government aims to disburse 95 per cent of the total allocation by year-end.

The MPI estimates that a 1 per cent increase in public investment disbursement contributes an additional 0.058 per cent to GDP growth. Moreover, every $1 of public investment capital disbursed is expected to stimulate $1.61 of investment from the non-state sector.

Last week, the government Office released a conclusion from Deputy Prime Minister Bui Thanh Son following his meeting on removing obstructions and boosting public investment at ministries, agencies, and localties.

“This year is of special importance as progress must be sped up to accomplish all tasks assigned by the 13th National Party Congress and the country’s Socioeconomic Development Plan for 2021-2025, in which public investment has been considered a pivotal task,” the conclusion stated. “Since early this year, the government and the prime minister have enacted many documents on directing the acceleration of public investment disbursement.”

The government noted that besides positive outcomes, many ministries, agencies, and localities in the country have had very low rate of public investment disbursement as compared to the average rate [of 50 per cent] of the whole country.

At present, 18 ministries and central agencies, and 40 localities have hit a disbursement rate higher than the average rate nationwide, topped by Vietnam Television and the Bank for Social Policies at 100 per cent, and followed by the State Bank of Vietnam, Central Party Office, Voice of Vietnam, and Ministry of Transport; and the provinces of Long An at 80.03 per cent, followed by Thai Binh, Tien Giang, Ninh Thuan, and Hoa Binh.

However, 28 ministries and central agencies, and 23 localities, have reported a very low disbursement rate, such as the Vietnam Fatherland Front Central Committee at 2.1 per cent, below the Committee for Ethnic Minority Affairs, the Vietnam National Universities in both Ho Chi Minh City and Hanoi; and the provinces of Phu Yen (30.78 per cent), Bac Ninh, and Kien Giang.

The government has pointed out the main causes behind such slow-paced disbursement so far this year.

“Many authorities have failed to study and use the legal policies and regulations in an effective manner. In addition, the management of projects and investors’ capacity remain limited in completing investment procedures under the provisions of the law. Moreover, there has been long delay in compensation, site clearance, and resettlement, as well as difficulties in identifying land origin and land prices,” read the conclusion from the meeting.

For example, the component 4 project, which is part of the $16.03 billion Long Thanh International Airport in the southern province of Dong Nai, is being implemented at a slow pace.

Component 4 involves construction of land-surface service facilities connecting roads with the airport.

The Ministry of Transport (MoT) has directed the Civil Aviation Authority of Vietnam to conduct bidding and evaluate bids for urgent projects under component 4 that need to be implemented immediately to ensure services when the airport is put into operation in phase 1. This includes aircraft cleaning and maintenance, aviation catering, and aircraft maintenance and repair.

The MoT is required by Deputy Prime Minister Tran Hong Ha at a meeting on the issue on December 12 to review all bidding documents for works and items in component 4, and clearly identify the items that the MoT will implement and the projects to be assigned to capable enterprises for implementation.

The government has also ordered people’s committees of provinces and cities to focus on accelerating site clearance, and prioritising the allocation of sufficient funds to carry out compensation and site clearance for areas that meet the conditions.

“A situation in which a number of projects have to wait for site clearance, especially important national projects, is banned,” the conclusion continued. “A focus must also be placed on removing difficulties related to licensing of mines, and exploitation of rock, sand, and ground materials in service of projects. Furthermore, it is mandatory to publicise prices of construction materials according to authority and regulations of law.”

Meanwhile, the government last week required ministries and provinces to establish suitable working groups to push contractors and consultants to speed up the implementation of state-funded projects.

The working groups are also asked to strengthen on-site inspections and supervision, and review and transfer capital according to authorities between slow-disbursed projects to those with better disbursement capacity and lacking capital.