Public investment, while widely seen as inefficient, has also slipped out of central agencies’ control due to the excessively decentralised mechanism, according to reports prepared for a seminar to be held in Hanoi on Thursday.
The country’s leading economic experts will gather at the seminar “Restructuring public investment and State-owned enterprises” in Hanoi to once again discuss the thorny issue of public investment and how to make remedial measures.
Public investment is now beyond the control of the State management agencies, causing waste of resources and distorting the economic structure, experts said in their reports prepared for the event held by the Vietnam Institute of Economics.
Vo Dai Luoc of the Institute of World Economics and Politics said there are 440 universities and colleges, 267 industrial parks, 18 coastal economic zones and 28 border gate economic zones covering millions of hectares.
He wondered where capital can be sourced from to efficiently utilise such a huge land fund.
Luoc ascribed such situation to Decree 16/2005/ND-CP, which allows ministerial and provincial authorities to assess and approve projects of Group A, worth over VND200 billion each, Group B, VND30-600 billion, and Group C, VND30 billion or below.
“Central agencies seem to supervise and inspect perfunctorily and not impose any strict disciplinary sanctions. Consequently, there are now 63 municipal-provincial economies and one national economy in Vietnam,” said Luoc in his report obtained by the Daily.
He added the decree has allowed for all-out delegation of power to provincial authorities in terms of public investment.
Economic expert Le Dang Doanh added there are 20 international seaports under development and 22 civil airports, including eight international ones, under construction or expansion across the country.
He quoted the Ministry of Planning and Investment as saying that more than 20,500 public invested projects got off the ground in 2011, worth over VND123 trillion.
“What matters is that the approval for investment is often based on socio-economic development requirements and capital mobilisation capability, whereas the efficiency standards of socio-economic investment are not strictly regulated,” Doanh underscored.
Vu Tuan Anh of the Economics Institute cited the international statistics saying that Vietnam’s government is the biggest investor in South Asia and Southeast Asia in terms of investment capital over gross domestic product (GDP).
Furthermore, the State holds the majority of social wealth and has greater control over social wealth than other governments in the region.
Anh stated the role of the planning ministry has been weakened to the extent that the ministry can no longer ensure the balance between investment demand and ability to satisfy the requirements on capital as well as materials, technology and technical manpower.
As a result, many operational projects have constantly run into capital shortage. Meanwhile, trade deficit shoots up due to import of materials and equipment for investment.
Expert Doanh noted public investment is a product of the ask-and-give mechanism, which has led to inefficient investment, with losses of 20-30 percent and expensive constructions that sometimes break down before they are put into service.
“It is obvious that the inefficiency of public investment takes root in the planning and approval process, meaning the institutional mechanism and the State apparatus. If no change is made, it will be hard to restructure public investment,” said Doanh.