Slow disbursement due to avoidance and fear of mistakes
After 7 months of 2024, the disbursement rate of public investment capital reached an estimated VND 232,000 billion, lower than the same period last year. Notably, for key national transport projects, the disbursement rate was only 32.4% of the plan. The Ministry of Finance noted that as of July 31, there were 16 projects nationwide with a disbursement rate of less than 15% of the plan (including 3 projects with 0% disbursement).
Projects with 0% disbursement include the North-South Expressway in the East Phase 2021-2025; Hoa Binh – Moc Chau – Son La Expressway; and the headquarters of the customs agency at Long Thanh International Airport.
Lower public investment disbursement in the first 7 months of 2024 compared to 2023. Photo: Trong Tai
According to the Ministry of Planning and Investment (MPI), many projects were allocated large capital this year but had low disbursement rates, such as the Ring Road 3 in Ho Chi Minh City, Ring Road 4 in Hanoi Capital Region, Bien Hoa – Vung Tau Expressway, Khanh Hoa – Buon Ma Thuot Expressway, and Dong Dang – Tra Linh Expressway.
The MPI attributed the low disbursement rate in the early months to the nature of public investment (due to the reluctance to disburse multiple times and the reluctance to perform capital settlement procedures multiple times by both investors, project management units, and contractors). However, disbursement tends to improve towards the end of the year.
Nevertheless, the MPI also acknowledged that the slow disbursement was caused by organizational and implementation issues at ministries, sectors, and local authorities; and the avoidance, passing of responsibilities, fear of mistakes, and lack of initiative among officials, civil servants, and public employees (causing bottlenecks in the implementation and disbursement of public investment capital).
The Government leaders have repeatedly emphasized criticism and demanded accountability for the slow disbursement of public investment capital. The MPI has proposed transferring officials who are afraid to take responsibility as one of the solutions to accelerate disbursement. Some ministries, sectors, and localities have started to report cases of criticism for causing delays and wasting capital.
Criticism and warning only?
The People’s Committee of Nghe An Province has strictly criticized 9 districts, towns, and 26 investment project owners for slow disbursement of public investment capital. Four owners with 0% disbursement were particularly criticized, including the Vocational School of Economics – Technical Bac Nghe An, Vietnam-Korea Industrial College, Voluntary Drug Rehabilitation Center Phu Son, and Department of Natural Resources and Environment of Nghe An Province. Some units had completed the necessary procedures and faced no land clearance issues, yet their disbursement progress remained slow.
The People’s Committee of Quang Binh Province has named a series of units with 0% disbursement of public investment capital, warning their leaders to take responsibility before the Provincial Party Committee and People’s Committee. By December 31, if the projects do not disburse all the allocated capital and face retrieval, the owners must arrange their capital to complete the projects.
The Chairman of the Ho Chi Minh City People’s Committee has reprimanded a number of units for slow disbursement of public investment capital. The Department of Finance, the Department of Transport of Ho Chi Minh City, and the People’s Committee of District 6 have been reminded four times. These units are responsible for removing obstacles and difficulties and providing feedback, but they have not taken any action or provided any response so far.
To ensure a breakthrough in public investment disbursement in the last months of 2024, Assoc. Prof. Dr. Bui Thi An (former National Assembly Deputy) suggested that the Prime Minister should assign responsibility to the leaders of units and localities, requiring them to commit to a roadmap and progress for capital disbursement.
“If there are human factors and officials are hesitant to act out of fear of responsibility, the leaders need to take decisive measures. The Prime Minister has reminded that those who are not daring enough to act should step aside,” said Ms. An.
Dr. Nguyen Quoc Viet, Deputy Director of the Institute of Economics and Policy Research (VEPR), suggested that reducing procedures is crucial to promoting the disbursement of public investment capital.
“Sometimes, for safety reasons, we have to seek the opinions of all departments and sectors, even those that are not directly related to the matter. In my opinion, we should only seek the opinions of departments and sectors that are truly necessary, and the deadline for response should be clearly stated in the documents,” said Mr. Viet. The MPI is expected to address these procedural issues in the upcoming Law on Public Investment (amended).
The revised Law on Public Investment is expected to include important new content, such as allowing the use of regular expenditure and other legal sources for project preparation; and enabling land clearance to be implemented as an independent project for all project groups.
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