Directions Of Restructuring Public Investment In Vietnam

• Contents related to restructuring public investment restructure in Master Plan for Economic restructuring associated to growth model shift in the direction of improving quality, effi

DIRECTIONS OF RESTRUCTURING PUBLIC INVESTMENT IN VIETNAM

Dr Pham Lan Huong

Presentation for training course

Capacity building program to improve public investment project

appraisal in Vietnam

Nha Trang, 30/9-2/10, 2013

• Contents related to restructuring public investment

restructure in Master Plan for Economic restructuring associated to growth model shift in the direction of

improving quality, efficiency and competitiveness in the

period 2013-2020 (Decision No 339/QĐ-TTg dated feb,

19th, 2013)

– Objectives

– Resolutions

• Preliminary assessment on public investment

restructure.

CONTENTS OF RESTRUCTURING

PUBLIC INVESTMENT

Specific objectives of investment restructuring,

focusing on public investment

• Sensibly mobilise resources for development investment; assure total social investment at 30-35%GDP; maintain major balances at reasonable rate, that including saving, investment and consumption, state budget, trade balance, balance of payment, public debt and sovereignty debt

• Maintain state investment at sensible rate of 35-40% total

investment; increase investment based on saving; allow for 20-25% budget expenditure on development investment Basically change the mechanism of capital allocation and management; limit the

spread, diverse and wasteful projects, improve state investment

efficiency

• Expand the sphere and opportunities for private investment,

focusing on domestic sector Encourage and facilitate private

investment in infrastructure development, advantage and potential industries and products as well as dynamic regions

Resolutions – responsibilities of MPI

• Restructuring drastically and efficiently

• Responsibilities of MPI

– Review and complete laws and policies on decentralizing and managing public investment Develop and propose

Law on Public investment that unites management of all types of state investment, enhance regulations,

transparency and explanation responsibility related to state investment; strictly controls public debt in prudential limit and maintains national financial security.

Resolutions – responsibilities of MPI (2)

– Drastically and consistently implement medium-term investment plan, focusing on budget capital for national key projects; spend significant parts of budget for public-private cooperation projects, ODA counterpart funds and cost of land clearance For national projects that have high efficiency and significant impact on

socio-economic deveopment in regions or inter-region,

encourage the public-private cooperation or bond issue,

strengthen capital mobilization and ensure capital account

balance

Resolutions – responsibilities of MPI(3)

– Refraing from allocating and investing in industries and

sectors that private capital is available, such as

commercial services, hotels and restaurants, real estate, construction material an others.

– Develop and apply reasonable, effective and and strict

process of identifying, assessing, selecting and allocating capital as well as implementing state projects, which meet socio-economic standards; distribute capital to

implementing key and urgent projects, limit the spread,

diverse, inconsistent and ineffective projects.

Resolutions – responsibilities of MPI(4)

– Publicize and ensure transparency of information; enhance assignment and capacity of monitoring system; encourage and facilitate community monitoring on public investment project and activities Strengthen legal and policy

enforcement, increase responsibility in monitor and

inspection.

Resolutions – responsibilities of MoT

and others

• Ministry of Transport takes charge of reviewing, selecting and allocating adequate and in-time capital for the

implementation of prioritized transportation projects; in case of lack of required capital, mobilize capital through public-private cooperation or bond issue; review,

decrease and delay projects that lack of capital or can not be transformed.

• Ministries and regions review all projects under their

management assigment, strictly control sphere and

scope of projects in terms of approved objectives and

programmes; decide to invest in projects that rightly

selected and priorized, with identified capital sources

and capacity of distributing capital.

Preliminary assessment on

public investment restructuring

Targeted investment ratio (30-35% GDP)

Targeted share of state investment

(35-40% of total investment)

Assessment of implementation of quantitative

targets

• In 2011-2012, investment/GDP ratio sharply declined to objective rate.

– Public investment decreased most sharply in 2012-2013 (3.3 percentage point), reflecting efforts to actively

decrease public investment However state credit

increased rapidly.

– FDI inflows was higher than other emerged economies in Asia-Pacific region.

• Share of public investment in total investment declined

to 38-39%

Improved macro balances

• Saving-investment gap declined from 13-14% GDP in 2007-08 to 7% GDP and 1.5% GDP in 2010 and 2012 respectively.

• Trade balance and current balance have been improved significantly

Innovate investment distribution mechanism,

management and avoid excessive and

extravagant investment

• Unimproved investment on infrastructure of economic zones and industrial zones

– Many zones can not access to national infrastructure

– Lack of clear strategy to adjust EZ and IZ development plan or key plans on infrastructure development

• Inadequate investment on infrastructure of new urban residential

areas

– Excessive development of new urban residence areas in

contrast with capital scarcity

– Real demand of people on low-cost housing, trade services,

social infrastructure can not be statisfied

• Sea-ports

– Excessive capacity of new ports

– Supporting infrastructure is not completed

– Guidelines/policies are not properly obeyed (i.e the removal of HCMC port)

THANK YOU!