Changing Public Investment Mechanisms (30/11)
30/11/2011 - 12 Lượt xem
Large-scale and unfocused investment
The Development Strategy Institute under the Ministry of Planning and Investment said that in recent years, public investment in Vietnam was maintained continuously at a high level. From 2001-2005, public investment accounted for 23 percent of total investment in development; from 2006-2010, that was 24 percent.
The amount of public investment increased continuously. In 2000, total investment in development was VND115 trillion and that increased 3.2 times to VND371 trillion in 2009. In 2008, due to high inflation, the State decided to cut public investment but it was just a little lower than that of 2007 and increased again in 2009. Last year, total investment in development amounted to VND400 trillion, up 7.8 percent compared with 2009.
Increases in public investment in the recent period were attributed to the lack of focus in investment. Dr. Phan Thanh Ha, the deputy director of the Finance and Monetary Department of the Ministry of Planning and Investment, said that this is a 'chronic disease' of pubic investment in Vietnam, which is reflected by the fact that the country has 166 seaports which include 20 international ports, 22 airports which include eight international airports, 15 economic zones and 28 border-crossing economic zones, 260 industrial zones and 650 industrial parks for small and medium enterprises.
Sharing the above opinion, Dr. Vu Anh Tuan, the deputy secretary general of the Vietnam Economic Association, said that in Vietnam, each locality looks like a kingdom with a range of facilities such as airports, seaports, universities and golf-course. This will make the Vietnamese economy unstable.
Some economists said that public investment has a relation with inflation and can cause a monetary crisis. High and ineffective public investment in circumstances when the country's savings have decreased will require the State to borrow more loans. This is one of the main reasons leading to high interest rates, the depreciation of the Vietnamese dong and high inflation, said a representative of the Vietnam Institute of Economics.
Solutions
At a workshop which was held in Hanoi recently to discuss measures to renovate institutions, mechanisms and improve, restructure public investment for the next several years, participants shared the opinion that public investment in Vietnam remains high due to unsuitable decentralization of the authority to make investment decisions, which makes it impossible for the Government to coordinate investments in localities. Moreover, due to low-quality planning, public investment is still unfocused and many projects are inconclusive. Outdated technology is still applied; the implementation of public investment projects is still poorly managed; construction is slow and causes losses.
To deal with the above problems, Dr. Vu Anh Tuan said that it is necessary to identify the fields on which public investment must be focused as well as specific projects which must be prioritized in order to prevent unfocused investment and ensure effective investment.
In addition, it is necessary to change public investment institutions towards assuring the consistency of national development strategies. To do this, Vietnam must concentrate on making long-term strategic development plans, improve the quality of planning and ensure publicity and transparence of public investment decisions.
Public investment must have good socioeconomic effects and contribute to environmental protection. To achieve this, it is necessary to eliminate the subsidy mechanism under which State-owned businesses are granted budgetary allowances. A law on public investment must be promulgated as soon as possible and legal standards must be set to ensure the effectiveness of public investment. The administration of public investment must be renovated through activities such as tendering, reviewing and auditing. It is necessary to eliminate the 'asking-giving' mechanism in public investment./.
Source: VEN
