Dr Tran Kim Chung, Deputy Director of the Central Institute of Economic Management, said in an interview with Nhan Dan (People) newspaper that the effective implementation of the Law on Public Investment would help bring public debt under control.
*What are the most notable results after three years of restructuring public investment?
There has been significant improvement in the system of public investment management policies. The first is Directive 1792/CT-TTg issued by the Prime Minister on strengthening management of capital from the State budget and bond issuance.
The implementation of this directive has made a large impact on curbing inefficient and dispersed investment. Since 2012, a principle has been established that public investment must be made within the budget and those who make investment decisions must be held accountable. Following Directive 1792 came a number of other directives on streamlining public investment.
A series of directives issued by the Prime Minister have helped strengthen the management and effectiveness of public investment. And most importantly, the Law on Public Investment, the highest legal basis to regulate this activity, has been approved by the National Assembly and will take effect on January 1, 2015.
With these legal documents, the ratio of public investment to GDP has decreased significantly. In 2011, total investment in development accounted for 36.4 percent of GDP, dropping to 33.5 percent in 2012 and 30.4 percent in 2013. In 2014, the ratio is estimated at 30.1 percent, according to a Government report to the National Assembly. So the goal to bring the ratio of investment in development to 30-35 percent of GDP has been achieved.
State investment capital will now be used as a magnet to attract capital from other sources. I think that it is hard to assess whether the progress of public investment restructuring is fast or slow because we do not have any criteria with which to measure it; but, compared with the set target, we have achieved certain results.
*Is it because we do not have a master plan on public investment restructuring that we cannot assess the progress of restructuring in this area?
In my opinion, although we do not have a master plan on public investment restructuring like the banking sector and State-owned enterprises, the road map and restructuring steps are in fact very clear and they are being implemented nicely. The lack of such a plan does not affect the progress of public investment.
*Should we anticipate that the Law on Public Investment will substantially push through public investment restructuring in the future?
Not many laws have a good start like the Law on Public Investment. The implementation of Directive 1792/CT-TTg has laid the foundation for the effective implementation of the Law on Public Investment, which has a broader scope and greater impact. Therefore, the implementation of this law will definitely further accelerate public investment restructuring. In order to achieve that goal, documents guiding the implementation of this law should be adopted as soon as possible. Besides the Law on Public Investment, we need to have a law on planning and amend the Law on Budget, the Law on Investment and a number of other decrees on investment so as to perfect the legal basis for public investment activity.
*How should public investment restructuring be implemented to make sure the level of public debt is safe given the fact that Vietnam’s public debt has grown to a higher level?
The rise in public debt can still be manageable if public investment restructuring is implemented in a systematic and serious way. Public investment projects at both central and local levels will be closely scrutinised before approval; if there is a rise in investment; it will be controlled right from the first stage when projects are approved. Now when the law comes into effect, there will not be unexpected and excessive rises in public debt.
Meanwhile the capital borrowed by central and local governments to invest in State-owned enterprises are not subject to the Law on Public Investment but to the Law on Budget, Law on State Capital Management and Law on Public Debt Management. At this plenary meeting, the National Assembly is expected to approve the Law on Investment and Management of State Capital in Enterprises .-VNA
*What are the most notable results after three years of restructuring public investment?
There has been significant improvement in the system of public investment management policies. The first is Directive 1792/CT-TTg issued by the Prime Minister on strengthening management of capital from the State budget and bond issuance.
The implementation of this directive has made a large impact on curbing inefficient and dispersed investment. Since 2012, a principle has been established that public investment must be made within the budget and those who make investment decisions must be held accountable. Following Directive 1792 came a number of other directives on streamlining public investment.
A series of directives issued by the Prime Minister have helped strengthen the management and effectiveness of public investment. And most importantly, the Law on Public Investment, the highest legal basis to regulate this activity, has been approved by the National Assembly and will take effect on January 1, 2015.
With these legal documents, the ratio of public investment to GDP has decreased significantly. In 2011, total investment in development accounted for 36.4 percent of GDP, dropping to 33.5 percent in 2012 and 30.4 percent in 2013. In 2014, the ratio is estimated at 30.1 percent, according to a Government report to the National Assembly. So the goal to bring the ratio of investment in development to 30-35 percent of GDP has been achieved.
State investment capital will now be used as a magnet to attract capital from other sources. I think that it is hard to assess whether the progress of public investment restructuring is fast or slow because we do not have any criteria with which to measure it; but, compared with the set target, we have achieved certain results.
*Is it because we do not have a master plan on public investment restructuring that we cannot assess the progress of restructuring in this area?
In my opinion, although we do not have a master plan on public investment restructuring like the banking sector and State-owned enterprises, the road map and restructuring steps are in fact very clear and they are being implemented nicely. The lack of such a plan does not affect the progress of public investment.
*Should we anticipate that the Law on Public Investment will substantially push through public investment restructuring in the future?
Not many laws have a good start like the Law on Public Investment. The implementation of Directive 1792/CT-TTg has laid the foundation for the effective implementation of the Law on Public Investment, which has a broader scope and greater impact. Therefore, the implementation of this law will definitely further accelerate public investment restructuring. In order to achieve that goal, documents guiding the implementation of this law should be adopted as soon as possible. Besides the Law on Public Investment, we need to have a law on planning and amend the Law on Budget, the Law on Investment and a number of other decrees on investment so as to perfect the legal basis for public investment activity.
*How should public investment restructuring be implemented to make sure the level of public debt is safe given the fact that Vietnam’s public debt has grown to a higher level?
The rise in public debt can still be manageable if public investment restructuring is implemented in a systematic and serious way. Public investment projects at both central and local levels will be closely scrutinised before approval; if there is a rise in investment; it will be controlled right from the first stage when projects are approved. Now when the law comes into effect, there will not be unexpected and excessive rises in public debt.
Meanwhile the capital borrowed by central and local governments to invest in State-owned enterprises are not subject to the Law on Public Investment but to the Law on Budget, Law on State Capital Management and Law on Public Debt Management. At this plenary meeting, the National Assembly is expected to approve the Law on Investment and Management of State Capital in Enterprises .-VNA
