Public investment a locomotive for economic growth: Experts

Hanoi – Public investment is expected to be an engine for Vietnam’s economic growth in the context that global headwinds may challenge the country’s growth target of 6.5 per cent, according to experts.

General Director of the General Statistics Office (GSO) Nguyen Thi Huong said that the Government, ministries, sectors and localities are striving to push the disbursement of public investment to fuel the development of construction, transport and building materials.

To the end of this year, the Government will prioritise capital for large-scale projects, and those which are nearly completed so as to maintain and expand enterprises’ production and business capacity, she said, adding the implementation of public-invested projects will be accelerated to boost aggregate demand.

Huong described those as bold steps to promote settlement of site clearance issue, as well as encourage businesses to enter the market, ensuring that there is sufficient supply of materials for investment.

The GSO suggested stakeholders promote investment-trade activities effectively while improving business climate towards liberalisation, facilitation, socialisation, and reduction of business costs for companies.

Besides, tariff cut policies, and increases of credit guarantee for small- and medium-sized enterprises are necessary to support businesses, Huong said, highlighting the Government should promote the equitisation of State-owned enterprsies.

Meanwhile, economist Vu Dinh Anh said the Prime Minister’s resolve to disburse at least 95 per cent of the public investment budget, or over 675 trillion VND (27.4 billion USD), is feasible if such barriers as complicated regulations on the public investment law, and bottlenecks in project implementation are removed.

Anh blamed the slow disbursement of public investment to complex administrative procedures, sluggish site clearance, and poor sense of responsibility from officials in many localities.

Besides, highly fluctuating raw material costs are another factor that hinders the progress of public investment projects, he said, adding it is necessary to improve bidding procedures to avoid overruns caused by huge delays.

With the concerted efforts from the whole political system, the Government’s resolve and officials’ innovation and high sense of responsibility, Vietnam will realise the target set for disbursement of public investment, Anh affirmed.

VNDirect Securities Corporation expected disbursement of public capital in 2023 to grow 20-25 per cent against the previous year, relishing prospects on infrastructure development in the coming years thanks to the settlement of raw material supply shortage and increasing material costs.

General Director of Vietnam Report JSC Vu Dang Vinh said that 2023 is a tough year, and public investment is an important factor for the economy and the construction sector in particular.

To achieve the goal of having about 3,000km of expressways in the country by 2025, the National Assembly and the government have approved many projects, prioritising the use of public investment capital from the Programme on Socioeconomic Recovery and Development, while assigning the Ministry of Transport (MoT) and localities to be the investors of a number of projects with massive capital scale.

Vietnam’s maintaining the momentum of public investment will be crucial because it will rejuvenate economic activities, generate employment, and enhance domestic consumption, said ADB Country Director for Vietnam Shantanu Chakraborty.