Actions to spur on economic growth providing momentum
Vietnam’s efforts to accelerate public investment have gained strong momentum, laying firm groundwork for the country to boost economic growth.
|Vietnam is investing massive sums into several vital infrastructure schemes Photo: Le Toan|
The National Assembly’s (NA) Standing Committee last week decided that three out of eight expressway projects, which are parts of the Eastern Cluster of the North-South Expressway initiative, will be funded from state coffers. They are the Mai Son-National Highway No.45 (63.4km), Vinh Hao-Phan Thiet (106km), and Phan Thiet-Dau Giay (98km). The state will pour an additional VND23.46 trillion (over $1 billion) into constructing these projects.
According to the committee, these three ventures are of great importance and urgency for investment due to rising demand for traffic. All of them were originally planned for investment under the public-private partnership (PPP) form.
The Phan Thiet-Dau Giay section running through the south-central province of Binh Thuan and the southern province of Dong Nai is to cost over VND14.36 trillion ($624.35 million) for the first stage. It has been assigned to be invested under the build-operate-transfer (BOT) format, one of the PPP types.
Of the capital, state-funded capital is VND2.48 trillion ($107.8 million) under the prime minister’s approval. The project is expected to be constructed within 36 months. Some contractors involved include Castalia Ltd., of New Zealand, Ernst & Young Solutions LLP of Singapore, and PriceWaterhouseCoopers Pte., Ltd. of India.
Meanwhile, the Mai Son-National Highway No.45 section running through the northern province of Ninh Binh to the north-central province of Thanh Hoa got attention from seven local and overseas investors who wanted to implement it under the BOT format. Its total capital is estimated to be over VND12.9 trillion ($560.87 million), including VND3.17 trillion ($137.8 million) worth of government bonds and the rest funded by investors. It is expected the project will begin construction this year and become operational in 2021.
The activities are part of government plans to boost public investment amid low economic growth caused by weak production and exports. In Resolution No.84/NQ-CP released over a week ago, Prime Minister Nguyen Xuan Phuc underlined a strong boost for public investment as a key measure to spur on economic growth, which was only 3.82 per cent in the first quarter.
“Efforts must be made to disburse public investment, and this must be considered an important political task to stimulate production and business, and consumption, create jobs, and ensure social security,” the resolution read. “It will also help attract investment from other sources.”
Deputy Minister of Planning and Investment Tran Quoc Phuong said that amid existing difficulties caused by COVID-19, boosting public investment “will be among the best solutions to fuel the economy and it will have great impacts on the country attracting more private sectors.”
According to the Ministry of Finance, total available public capital for 2020 is about VND700 trillion ($30.4 billion), which is 2.2 times higher than VND312 trillion ($13.56 billion) of last year. About VND31.1 trillion ($1.35 billion) was disbursed in May, up 17.5 per cent on-year. In the first five months, the figure was VND116.3 trillion (over $5 billion), up 15.6 per cent on-year. The government ordered that the VND700 trillion must be disbursed completely within the year.
Two weeks ago, Hanoi People’s Committee adopted a resolution on using VND34.64 trillion ($150.6 million) to invest into constructing six large-scale flyovers in the inner city, within 2021-2022. The investment capital comes from the municipal budget.
The committee also decided to invest into another four transport and technical infrastructure projects, with total capital of VND713.3 billion ($31 million). In 2020, the city will also earmark VND37-40 trillion ($1.6-1.74 billion) for public investment. Under the 2016-2020 medium-term plan, the city has VND107.3 trillion ($4.66 billion).
From now until the year’s end, the city will also invest into boosting the construction of another five key projects, including the Vinh Tuy Bridge second phase and a project to build a concentrated wastewater treatment system for the city’s industrial clusters.
According to Resolution 84, in order for public investment to go smoothly, frequent inspections will be organised at related projects and plans.
“Strict punishment will be imposed on any organisations, individuals, leaders, cadres, and officers who violate the law and intentionally cause difficulties and delay to the speed of public investment disbursement and construction of projects,” the resolution stated.
The Government should tax all rice exports instead of issuing quotas to stabilise domestic rice prices during the COVID-19 pandemic.
Sticky projected prospects caused by the global health crisis among Vietnam’s key trading partners are expected to hit the domestic economy this year with the manufacturing and processing sector, one of the key growth pillars, to be hit hardest.