Unleashing Public Investment: A New Approach to Unblocking Vietnam’s Economic Forum 2024 – Third Session.

MR. NGUYEN DUC LENH, Deputy Director of the State Bank – Ho Chi Minh City Branch:

Banks are meeting capital needs

Major projects and infrastructure such as transportation, energy and electricity, roads, schools, and health stations have benefited from bank credit. This capital has been and continues to be effective, contributing to economic growth while positively impacting credit growth.

From a macroeconomic perspective, when public investment projects are implemented, capital is absorbed, and cash flow is established, which is significant for channeling intermediary funds into the market. Banks are fully capable of meeting the credit needs of contractors and construction companies involved in public investment projects.

MR. NGUYEN NGOC HOA – Chairman of Ho Chi Minh City Business Association, Chairman of the Board of Directors of Ho Chi Minh City State Financial Investment Company:

There is a need to socialize public investment projects

Currently, public investment projects are implemented by the state or project management boards. There is a situation of excess funds but disbursement bottlenecks due to mechanism, procedure, and process constraints, which require a holistic approach. Agencies, sectors, and branches need to boldly change their approach to project implementation.

The business community is anxious about the quick disbursement of funds for public investment projects to create jobs. Businesses are willing to provide guarantees with their equity capital but also need support from banks through non-guaranteed working capital financing, with the right to recover construction costs as collateral.

MR. NGUYEN NGOC NGHIEM, Director of Corporate Banking Division – Ban Viet Commercial Joint Stock Bank (BVBank):

Comprehensive financial solutions

In the field of public investment, BVBank provides credit limits based on a comprehensive assessment of customers’ plans and cash flow, with a financing ratio of up to 80% of the construction contract value. BVBank offers fixed interest rates from 5.5%/year, helping public investment projects easily manage cash flow and minimize interest rate risks. The bank is also willing to accept the right to claim from construction contracts as collateral, with a financing ratio of up to 70%. In addition, there is a policy of issuing guarantees with a deposit ratio of 0% and an unsecured loan ratio of up to 100%…

MR. LE BACH CUONG, Head of the Southern Construction Investment Management Department, under the Construction Investment Management Department – Ministry of Transport:

Researching alternative materials

Projects in the Central and Northern regions basically do not lack construction materials, but the Southeast and Southwest regions face some difficulties, especially with the Ho Chi Minh City Ring Road 3 project.

To address this, the Ministry of Transport has worked with the Ministry of Natural Resources and Environment to propose assigning targets to localities to prepare construction materials for projects. It is expected that in September 2024, the source of sand material in the Southwest region will be resolved. The Ministry of Transport, along with other ministries, has also researched and implemented alternative materials, including a pilot scheme to use marine sand for expansion.

M.A. CAO MINH NGHIA, Deputy Head of the Economic Development Research Department – Ho Chi Minh City Development Research Institute:

Removing obstacles for the Development Investment Fund

There are two solutions to the issue of the transport infrastructure fund: utilizing the local development investment funds and establishing a new fund. Utilizing the old funds has the advantage of speed but presents legal obstacles. Establishing a new fund would allow for the application of new regulations, but it would be cumbersome and require complex procedures.

Resolution 98/2023 of the National Assembly allows Ho Chi Minh City to use the local budget for key inter-provincial transport projects, but only for a few projects, and there is no general formula yet.

MS. TRUONG NGUYEN HIEU, Head of Public Investment Management Department – Tay Ninh Provincial Planning and Investment Department:

In April 2025, the site will be handed over for the Hochiminh City – Moc Bai Highway

Regarding the Hochiminh City – Moc Bai Highway project, the Tay Ninh Provincial People’s Committee has assigned the Project Management Board for Transport Construction Investment as the investor of Package 4 for site clearance in Tay Ninh.

Tay Ninh has allocated capital for the project and is preparing the necessary procedures to implement the site clearance with a total capital of over VND 1,500 billion. It is expected that by April 30, 2025, Tay Ninh Province will hand over the entire site for the project.

Journalist – Dr. TO DINH TUAN, Editor-in-Chief of Nhan Dan Newspaper:

Refer to good practices from other countries

As analyzed by experts and investors, there are currently bottlenecks in public investment disbursement. Therefore, Nhan Dan Newspaper decided to choose this topic for the third session of the Vietnam Economic Forum 2024.

It is necessary to recognize that in public investment, the story of “complaining about a lack of funds when there are funds available but unable to spend them” is illogical. The problem lies in the mechanism and approach, which need to be addressed to promote economic development, especially in the context of the global economy and geopolitical factors that have external impacts. At the same time, it is essential to mobilize all social resources. We can refer to good practices from other countries and draw lessons applicable to the Vietnamese context.

With the determination and dedication of Ho Chi Minh City’s leaders to promote public investment, it is hoped that from now until the end of the year, this field will grow stronger, contributing to the country’s public investment and creating a positive spillover effect on the economy.