Public investment is a fundamental part of investment and plays an important role in the economy. In the coming period, Vietnam needs to continue to accelerate the implementation of the tasks of restructuring public investment, speeding up the disbursement speed, and improving the efficiency of public investment, considering this a necessary condition to promptly take advantage of public investment opportunities, creating a premise for economic development, more clearly transforming the growth model, bringing the country to a new development ladder. Let’s find out with LawyerX about the issue “The current state of public investment in Vietnam” through the following article:
Legal grounds
Law on Public Investment 2019
Status of public investment in Vietnam
Public investment is the use of State capital (including state budget capital, state credit capital, and capital of state enterprises) to invest in non-profit programs and projects; and (or) no direct possibility of return.
According to the Law on Public Investment 2019, Public investment is the State’s investment in programs and projects to build socio-economic infrastructure and investment in programs and projects for the economic development of society.
Public investment activities include the whole process:
– Investment preparation: Formulating and approving public investment plans and projects.
– Investment implementation: Deploy the implementation plan and schedule, deploy and build, evaluate, accept, and hand over.
– Operation of investment results
The state capital in public investment includes:
– State budget capital: revenue from taxes, fees, sale of natural resources, sale or lease of state-owned properties, etc., is spent on development investment according to the provisions of the State Budget Law.
– Sources of credit for development investment by the State: the State borrows capital from the domestic population or the international credit market.
– Capital sources of state-owned enterprises: mainly from the depreciation of fixed assets and retained earnings at state-owned enterprises.
Public investment aims to create, upgrade and strengthen the operational capacity of the economy by increasing the value of public assets. Through public investment activities, the service capacity of the economic and social infrastructure system in the form of public ownership will be improved and increased. Public investment activities contribute to the realization of a number of social goals in the socio-economic development strategies of the country, regional and local sectors, and at the same time, contribute to the regulation of the economy by influencing directly to the aggregate demand of the economy.
Current status of public investment in Vietnam
On the basis of principles and criteria approved by the National Assembly, the Government has assigned medium-term public investment plans to ministries, branches and localities to reach VND 1,815,556 billion, equaling 90.8% of the total amount set by the National Council approved for 11,000 projects (halved in 2011-2015 period).
In which, the number of completed projects is 7,354 projects, equal to 66.2% of the total number of projects (The number of transitional projects from the period 2011-2015 completed in the period 2016-2020 is 4,547 projects, projects started New construction completed in the period 2016-2020 is 2,807 projects), 4,208 new projects started.
Towards the goal of rapid and sustainable development, industrialization, and modernization of the country, public investment in recent years has been focused on investment in economic infrastructure projects associations, essential works of the economy, key traffic works such as roads, airports, ports, railways; upgrading and constructing irrigation works; focus on building electricity and communication works; renovate and build the new infrastructure of urban areas, industrial parks, hospitals, schools, cultural works; invest heavily in national target programs. That has created favorable conditions for natural development, promoting economic growth; at the same time contributing to improving and raising the living standard of the people.
Regarding the allocation of four state budgets to regions, four state budget investments have been prioritized for mountainous areas, border areas, islands, ethnic minority communities, mountainous regions, mountainous areas, and mountainous areas often victims of natural disasters, storms and floods and those with extremely difficult socio-economic conditions; the tasks of responding to climate change, preventing, combating and overcoming drought and saltwater intrusion in the Mekong Delta provinces, environmental pollution incidents in 4 central provinces; Prioritize the arrangement of four important, urgent, shared, and pervasive projects, creating a driving force to attract private investment and promote socio-economic development.
The effective implementation of public investment in recent years has brought many results, creating positive and pervasive effects in the economy. Specifically:
- The socio-economic efficiency of investment in general and public investment, in particular, has been improved. Vietnam’s Investment Ratio (ICOR) has gradually decreased; ICOR for the period 2016-2019 (Excluding 2020 which is a special year, due to the impact of the COVID-19 epidemic, GDP growth dropped sharply and the ICOR index did not fully reflect investment efficiency) was 6.1 low. higher than the level of nearly 6.3 in the period 2011-2015. The total investment for social development in the 2016-2020 period is about VND 9.2 billion, equal to 33.7% of GDP, reaching the 5-year average target (32-34%) and higher than the period 2011- 2015 (31.7% of GDP).
- Public investment continues to act as a source of four primers, leading other economic sectors to participate in the investment. The structure of four investments in the total investment of the whole society has shifted positively in the direction of gradually reducing the proportion of four investments from the state sector (from an average of 39.04% in the period 2011-2015 to 34.34%. period 2016-2020), increasing the proportion of four investments from the non-state sector, from 38.26% in the 2011-2015 period to 42.7% in the 2016-2020 period. This has led to a positive shift in the economic structure in the direction of faster growth of the private sector, specifically, the average period 2011-2015 reached 6.14% but in the period 2016-2019 increased. the average level of 6.7% and improve the proportion of contribution to GDP…
- The strengthening of measures to promote the disbursement of four public investments has brought positive results for long-term economic growth. In the 2016-2020 period, the annual disbursement rate of four public investments will reach about 83.4% of the plan assigned by the Prime Minister, of which in 2016 it will reach 88.27%; 2017 reached 81.69%; 2018 reached 71.69%; 2019 reached 78.68%; in 2020 alone, the disbursement rate reached the highest rate of over 97.46%. According to the General Statistics Office in the period 2016-2020, if public investment disbursement increases by 1%, GDP growth will increase by 0.058%, and disbursing 1 dong of public investment will lead to 1.61 dongs. investment of the non-state sector, 1.42 dong higher than the previous period, showing an improvement in the spread of public investment.
- Public investment is focused on developing the socio-economic infrastructure system, thereby contributing to solving urgent requirements in socio-economic life, improving people’s living standards, improving the quality of life improving the business environment, and improving the competitiveness of the economy.
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Frequently asked questions
Public investment project is an investment project using State capital to realize socio-economic development goals that is not capable of direct return of capital. Including Projects on the development of technical, economic, social, environmental, defense, and security infrastructure; Investment projects without socialization conditions; The project serves the activities of state agencies, non-business units, political organizations, and socio-political organizations; Investment projects of the community and organizations are supported from the State capital according to the provisions of law.
The investor of public projects is in principle the State. However, to ensure the correct implementation of the process and clear responsibilities, the State appoints investors in public investment projects. The investor must have legal status and meet all conditions prescribed by the Government to be assigned to manage and use state capital. The person competent to decide on investment considers the investor’s decision and takes responsibility for his/her decision.
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