State’s money scattered and wasted
Dr Kim Van Chinh, a lecturer of the Ho Chi Minh National Academy of Politics and Public Administration, has a special habit: he has collected nearly 100 pictures of the markets which have been built and left idle nationwide over the last 10 years. Every time when Chinh gives lectures about public investment, he shows the pictures he has collected to learners.
“The waste in public investment has become a burning issue,” he said.
Building markets and then leaving them idle is just a part of the panorama of Vietnam’s public investment in recent years. Chair of the National Assembly’s Economics Committee Nguyen Van Giau pointed out that the waste of the public investment has been reflected in a series of seaports, airports, economic zones and border gate economic zones which have not been fully occupied.
A committee’s report shows that there are 266 seaports in 24 coastal provinces and cities, while only nine of them can be upgraded to be capable to receive 50,000 DWT ships – the middle size ships in the world.
There are 22 operational airports, including 6 in the north, 7 in the central region and 9 in the south. There are 15 economic zones, 28 border economic zones which cover the total land and water surface area of 1,162,249 hectares.
The report reviewing the latest government term shows that the total capital of the society mobilized in the last five years was 2.5 times higher than that in the 2001-2005 period, about 42.7 percent of GDP, while the total public investment accounted for 43.5 percent of the total investment capital of the whole society.
A recent survey has pointed out that the government of Vietnam proves to be the biggest investor in the region, which spends 50 percent higher than other governments, if calculating the investment in the comparison with the GDP.
The figure would even be higher if counting on the money mobilized from the government bonds and ODA capital.
When reviewing the public investment in the last five years, the government has pointed out a lot of problems. Vietnam has been relying on loans for the investment and development, while the investment efficiency is low with the ICOR index much higher than that of other regional countries. The fiscal policy has been unceasingly expanding, while the investment efficiency is low, which should be seen as one of the main factors that put Vietnam into the macroeconomic uncertainties.
Restructuring public investment – how?
One day after taking office as the Minister of Planning and Investment (MPI), Bui Quang Vinh told local press that his priority task is to drive the macro economy in accordance with economic laws, so as to create sustainable and long term development.
The idea can be seen in the economic development strategy of the new cabinet, in which Vinh said that the total investment capital of the society’s would decrease to 33.5-35 percent of GDP, a sharp decrease from the 42.7 percent of GDP level in the last government’s term.
Of this amount, the investment from the state budget is expected to account for 18 percent, the investment from the money raised from government bond issuance 3.9-4.1 percent, the investment from the state credit sources 5.3-5.5 percent, and the investment of state owned enterprises 10-10.6 percent.
Especially, the state budget overspending is expected to decrease to 4.5 percent of GDP by 2015 from the last 5-year period’s level of 5.5 percent.
Meanwhile, Giau and the members of the National Assembly’s Economics Committee have proposed to amend the State Budget Law so as to allow Vietnam to calculate the budget overspending in accordance with international practice. Giau believes that Vietnam should strive to obtain the budget overspending of less than 5 percent by 2015 in accordance with international practice.
Source: TBKTSG
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