A part of the Metro Line No.1 in HCM City, linking Bến Thành Market in District 1 with Suối Tiên Tourism Park in District 9. A lack of investment capital has caused problems and delays with the construction process. — VNA/VNS Photo Tiến Lực

The Ministry of Planning and Investment (MPI) must review obstacles in disbursing public investment as well as accelerate the speed of capital allocation, especially Government bonds and official development aid (ODA).

The statement was made by Deputy Prime Minister Vuong Dinh Hue at the MPI’s conference held in Ha Noi on Thursday.

In the first six months of 2019, the estimated disbursement of ODA reached VND4.1 trillion (US$ 176.2 million), equivalent to 6.9 per cent of the National Assembly’s plan and 12.7 per cent of the plan assigned by the Prime Minister.

Accordingly, eight of 59 localities had a disbursement rate of over 30 per cent (Hai Phong, Ninh Binh, Phu Yen, Thanh pho Ho Chi Minh, Binh Duong, Tra Vinh, Kien Giang and Bac Lieu); 11 ministries and departments disbursed below 30 per cent; and 28 localities disbursed no ODA.

Explaining the cause of slow disbursement of ODA, the MPI said that the lack of counterpart funds made it unable to absorb foreign capital. Meanwhile, some projects have not completed investment procedures and are still in the process of adjusting total investment or extending loan agreements – typically urban railway projects, like Metro Line No.1 in HCM City, linking Ben Thanh Market in District 1 with Suoi Tien Tourism Park in District 9. The route is the first of eight metro lines planned in the southern metropolis, with a total length of 220km and accumulated funding of nearly VND25 trillion ($1.07 billion).

Many projects are arranged with enough capital but cannot be disbursed due to problems in site clearance and resettlement.

Some other projects have to adjust total investment, extend agreements, delay approval of basic design, or delay bidding, for example, the project to expand Hoa Binh Province General Hospital; Hai Phong Urban Transport Development Project; the project to upgrade Can Tho University and build Cho Ray Hospital; the Greater Mekong Subregion Tourism Infrastructure for Inclusive Growth Project; the sub-project to repair and improve dam-safety in Yen Bai Province; improvement of Highway No. 217 in Thanh Hoa Province.

In addition, disbursements for the first six months are often low due to the donors, the MPI said.

Speaking at the conference, Minister of Planning and Investment Nguyen Chi Dung said in order to promote the progress of public investment capital disbursement, the ministry has established of a number of working missions in key areas in the north, central and south, to supervise and urge localities which have low disbursement rates and propose solutions to boost the process.

The MPI is accelerating the compilation of a draft law on investment in the public-private partnership format and another to amend and supplement the Law on Investment and the Law on Enterprises.

These are two important draft laws which are more difficult than the Law on Public Investment since they will feature many new points and cover both the State and private sectors.

They are significant to economic restructuring and mobilisation of investment capital from the whole economy, especially from the domestic private sector and other countries, Minister Dung said.

The work on the draft laws is being accelerated so that they can be submitted for discussion at the National Assembly’s eighth session, slated for this October, he said, noting that the MPI hopes to receive close coordination from other ministries, central agencies and localities to perfect these drafts.

At the meeting, Dung said another focal task of the ministry for the rest of 2019 is harnessing every resource and working closely with relevant parties to build and amend the Government’s decrees guiding the enforcement of laws so that decrees will be issued in tandem with law implementation.

Growth drivers

According to Deputy PM Hue, the domestic and global economic situation in the last six months of this year is forecast to be difficult and unpredictable.

The aggregate demand of the global economy will decline due to geopolitical tensions and the trade war between the US and China. World trade growth in 2019 is forecast to reach only 2.6 per cent, only half of 2018, and the lowest level since the global economic crisis.

The Deputy PM stressed that Viet Nam's economy has great openness so all fluctuations can affect the country.

In the country, many problems have accumulated over a long time, such as losses of State-owned enterprises or reducing excess production capacity. The advantages from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will not be available immediately, while the EU-Viet Nam Free Trade Agreement (EVFTA) has to wait for approval from the European Parliament and Viet Nam’s National Assembly, he added.

Hue requested the MPI to be more proactive in consulting the Government to figure out growth drivers in the last six months of 2019.

“MPI is the chief of staff of the economy, which needs to be more active in advising on fiscal, monetary and trade policies. Especially, the MPI must provide timely analysis and evaluation, advising the Government on fundamental solutions,” Hue said.

He also asked the ministry to become a centre of innovation for the whole country, taking the lead in institutional reform and State management.

The Deputy PM suggested the MPI should set up a reform committee, then help the Government list problems in institutions and policies and propose solutions to overcome them. That is the top priority to unleash potentials and create momentum for sustainable growth. — VNS