In addition to the capital allocation assigned by the Prime Minister, local governments increased their balanced local budget investment plans for 2026 by nearly 13.3 trillion VND (504 million USD) above the level allocated by the Government leader. Furthermore, about 80.03 trillion VND (3.03 billion USD) in capital from previous years has been permitted to carry over into 2026. As a result, the total public investment plan for 2026 has reached 1.106 quadrillion VND (42.06 billion USD).

The continuously expanding scale of capital shows that public investment is still expected to serve as a key driver of economic growth.

Contributing 1.5-2 percentage points to GDP growth

According to Dr Chu Thanh Tuan, Deputy Head of the Bachelor of Business programme at RMIT University Viet Nam, given its enormous scale, public investment could contribute around 1.5-2 percentage points to GDP growth in 2026.

However, the ultimate effectiveness will depend heavily on project quality and implementation speed. In the past, there were periods when public investment increased sharply, but its spillover effects remained limited due to slow disbursement or fragmented investment allocation.

If state capital is concentrated on transport infrastructure, energy and strategic projects, logistics costs will decline, regional connectivity will improve, and the investment environment will become more favourable. This would enhance capital efficiency in the private sector and help improve total factor productivity (TFP). International experience shows that in many emerging economies, one unit of public infrastructure investment can mobilise more than one unit of private investment.

The Government has set a target for the 2026-2030 period to limit the number of state-funded projects to no more than 3,000, a sharp reduction compared with previous periods. The shift from a model of “numerous small and scattered projects” towards concentrating on large-scale projects is expected to improve capital efficiency and increase growth impact per unit of investment.

A major infrastructure project not only creates jobs for construction contractors, but also stimulates demand for credit, materials, logistics and industrial investment in benefiting areas.

Together with legal amendments relating to investment, public investment, land, construction and planning, as well as stronger decentralisation allowing localities to proactively reallocate capital, the institutional environment has become more favourable for public investment to translate into genuine productivity gains rather than merely short-term stimulus.

Public investment also creates a strong “demand anchor” for businesses and the banking system. In 2026, credit institutions forecast credit growth of around 18.1%, with borrowing demand from businesses — especially those linked to infrastructure, construction and manufacturing — expected to lead the way. If public projects are implemented effectively, they will generate stable orders for construction materials, machinery and services, while also stimulating related private-sector investment.

Barriers caused by fear of responsibility

According to a report from the Ministry of Finance, by April 30, total disbursed capital had reached 144.283 trillion VND (5.5 billion USD), equivalent to 14.2% of the plan assigned by the Prime Minister. Of this amount, disbursement from the central budget reached 38.803 trillion VND (1.48 billion USD), or 10.7%, while local budget disbursement stood at 105.48 trillion VND (4.02 billion USD), equivalent to 16.2%.

Compared with the same period last year, the disbursed amount increased by 12.616 trillion VND (481 million USD), but the implementation rate fell by 1.7 percentage points.

According to Dr Nguyen Quoc Viet, Head of the Macroeconomic Research Group at the VNU University of Economics and Business under Viet Nam National University, Ha Noi, besides objective difficulties relating to procedures, site clearance and legal requirements, fear of responsibility and fear of making mistakes during implementation have become major obstacles.

In terms of performance, eight ministries and central agencies, together with 16 localities, achieved or exceeded the national average disbursement rate. Meanwhile, 27 ministries and agencies and 18 localities remained below the national average, including 14 units that had barely begun disbursement or recorded rates below 1%.

In some localities and agencies, implementing officials have shown excessive caution when processing documents, approving procedures or making decisions related to bidding, capital adjustment, land clearance and contractor selection. This has prolonged many processes, reduced initiative and slowed project implementation, particularly for large-scale projects involving numerous legal procedures and inter-agency coordination.

Lengthy delays also increase investment costs due to fluctuations in raw material prices, adjustments to total investment capital and reduced efficiency in the use of state funds. Some unfinished projects that have dragged on for years have become bottlenecks to socio-economic development, obstructing transport, affecting living conditions and business activities, and undermining public and investor confidence.

The cost of a wrong decision can often be attributed very clearly to individual responsibility, while the benefits of accelerating project progress are collective and difficult to quantify directly. As a result, delaying decisions or “following procedures rather than acting quickly” has become increasingly common. In an environment where personal legal risks are more visible than rewards linked to project efficiency, delaying decisions has effectively become the safer choice for many officials.

“In a context where many new mechanisms and policies on public investment, bidding and decentralisation have been revised in a more open direction, the key issue now lies not only in improving institutions but also in implementation,” Dr Viet stressed. “If fear of responsibility and lack of initiative within the implementing apparatus are not addressed, the enormous disbursement pressure in 2026 will be difficult to transform into genuine growth momentum for the economy.”

Clarifying responsibility at every stage

Drawing from these realities, Dr Nguyen Quoc Viet argued that the entire process — from project design and planning to implementation — must be comprehensively reviewed. Accountability should be clearly defined from the outset based on the principle of “three clarities”: clear individuals, clear tasks and clear responsibilities at every stage of a project.

Providing full and timely public disclosure of information relating to public investment projects before, during and after implementation would help improve transparency, thereby generating public support and participation and contributing to project progress and effectiveness.

There is also a need to upgrade public investment project management capacity in a modern direction, applying advanced governance methods and risk assessment tools in line with international practices. During implementation, investors and contractors should be granted greater flexibility within permitted limits to resolve emerging issues promptly. As legal frameworks for public investment and bidding become more open, implementation will become the decisive factor.

According to Dr Chu Thanh Tuan, improving public investment efficiency requires strong institutional and procedural reforms from the project preparation stage, including completing feasibility studies, land, environmental and planning procedures before capital allocation.

At the same time, amendments to the Law on Investment, the Law on Public Investment and related legislation should be implemented effectively to reduce overlapping procedures and allow local authorities to proactively reallocate capital from delayed projects to those progressing more effectively.

The expert also stressed the need to concentrate resources on major projects with high spillover effects, prioritising the completion of ongoing key projects rather than spreading capital too thinly across too many new initiatives.

Now that public investment has reached record levels, the question is no longer simply “how much money is available”, but whether the implementing apparatus has sufficient capacity and motivation to transform that capital flow into genuine growth.

“If these solutions are implemented seriously, Viet Nam can transform its record capital plan and huge disbursement pressure in 2026 from a risk into an opportunity. Public investment would then not only provide short-term demand stimulus, but also help upgrade infrastructure, attract private investment and build a stronger foundation for productivity-driven growth during the 2026-2030 period,” Dr Tuan said.