Prime Minister Pham Minh Chinh addresses the meeting (Photo: VNA)

Prime Minister Pham Minh Chinh last week issued tasks to boost growth, inflation control, and macroeconomic stabilisation, in which speeding up public investment disbursement and continued support for businesses and individuals are considered the largest missions. Public investment disbursement has to be further accelerated and act as a primer to woo more private investment and boost the public-private partnership.

PM Chinh ordered the government’s members to organise their working groups and plans for boosting public investment disbursement, which the government has determined to be “a pivotal political task”. At present, there are five task forces of the PM and another 26 of government members, and all are responsible for speeding up public investment disbursement.

“Capital from all projects unable to meet disbursement conditions have to be transferred to feasible projects and tasks,” the PM stressed. “Preparations for new projects to be constructed have to be expedited, with all obstacles to be removed as soon as possible. Any cases with delayed progress and disbursement, corruption, negative performance, and extravagance have to be sanctioned.”

The Ministry of Finance (MoF) last week reported that the total sum for 2024 assigned by the prime minister and transferred from previous years is estimated to reach nearly $32.3 billion. Nevertheless, it is estimated that total disbursement in the first seven months of this year hit 34.68 per cent of of the plan allocated by the government.

The ministries of transport, industry and trade, and construction along with the Ministry of Planning and Investment (MPI) are requested to speed up the construction of some important projects, especially the 500kV transmission line project from Quang Trach to Pho Noi must be put into operation in early September.

This project will cost about $916.6 million invested by National Power Transmission Corporation under Vietnam Electricity. It has a scale of two circuits of 500kV transmission line, about 519km long. The starting point is the 500kV Quang Trach switchyard in the central province of Quang Binh, and the ending point is the 500kV Pho Noi substation in the northern province of Hung Yen.

According to the Asian Development Bank (ADB), accelerated public investment and improved business conditions can spur private investment in 2024. “Public investment is a critical engine of economic growth, but plans must be implemented for this engine to provide power,” the ADB said. “Fiscal measures for supporting growth and public investment would ultimately become the key policy options to reignite growth.”

The ADB offers some analysis on impediments for speeding up public investment disbursement (see box).

The MPI calculated that an increase of 1 per cent in public investment disbursement corresponds to a 0.058 per cent increase in GDP growth. In addition, every $1 of disbursed public investment capital can stimulate $1.61 of investment capital from the non-state sector.

The government has implemented various policy measures to expedite disbursement of public investment and enhance effective execution. However, according to experts, in order to sustain progress, more systematic measures are required to improve the legal and regulatory processes for successful implementation. By proactively addressing these obstacles in an integrated manner throughout the project cycle, Vietnam can unlock the full potential of its public investment initiatives, driving sustainable economic growth and development.

The government has requested the MPI to research the continued amendments to the laws on public investment, bidding, public-private partnership investment, and enterprises, and regulations that are no longer suitable. They will be combined into a law on revising many laws hosted by the Ministry of Justice.

According to international organisations, Vietnam’s infrastructure quality lags that of many Asian countries and could impact its attractiveness as a foreign direct investment destination and potential growth in the long term. The Global Quality Infrastructure Index 2023 ranked Vietnam 52nd out of 185 economies, far below Indonesia, Thailand, Singapore, and Malaysia.

One example of infrastructure quality is the expressway density, which is one of the lowest in the region, while road transport costs are the highest regionally. The infrastructure investment gap constrains Vietnam’s ability to attract and retain overseas funding. Vietnam currently has 47 seaports of all sizes, but 95 per cent of cargo goes through three ports in Haiphong city in the north and Ho Chi Minh City and Ba Ria-Vung Tau province in the south. The remaining 44 ports account for only 5 per cent of cargo volume.