Accelerating disbursement foreign investment capital

	Speed up disbursement of public investment capital
	FDI disbursement up despite a decline in capital inflow
	Disbursement of investment capital through State Treasury reaches more than 41% of the plan

The pilot urban railway project, Nhon - Hanoi Station, is planned to deliver VND 3,274 billion in 2019, but only VND 1,104 billion will be delivered by the end of August, reaching 34% of the plan. Photo: Internet

Capital arrangement lacking compared to demand

According to the Ministry of Finance, the disbursement of public investment capital in general and ODA and foreign loan capital in particular in recent years has been very slow. In the three years of 2016-2018, the total investment capital from ODA and foreign loans was VND 137,176 billion, accounting for 74.53% of the estimate assigned by the National Assembly. In this situation, the Prime Minister and the Ministry of Finance have directed relevant units to actively implement effective measures to promote the disbursement of public investment capital in 2019.

The latest statistics still show negative figures. Capital of ODA and foreign concessive loans until August 31, 2019 have disbursed only VND6,480 billion, reaching 10.7% of the capital plan assigned by the National Assembly and 15.7% of the capital plan allocatedby the Ministry of Planning and Investment. Regular expenditure from foreign capital is equal to 18.5% of the estimate approved by the National Assembly. Of which, thirty-five ministries, branches and localities have not disbursed anything since the beginning of the year; Many ministries and localities have very low disbursement rates such as the Ministry of Education and Training (5.8%), Ministry of Health (4.8%), QuangNinh Province (0.5%), Quang Nam (2.3%) and Hung Yen (8.3%).

The reason for the slow disbursement of ODA and concessive loan capitalin recent years and from the beginning of 2019 is due to problems in the allocation of medium-term public investment plans, which are slow and insufficient compared to demand.Capital allocation is not close to reality. Adjusting the plan is slow andprocedures take too long. In addition, ministries, agencies and localities announced the 2019 capital plan slowly. By the end of June 2019, the Ministry of Planning and Investment has delivered about 55% of the capital plan assigned by the National Assembly and nearly 68% of the plan approved by the National Assembly until July 16, 2019. This situation leads to the fact that ministries, branches and localities do not have the capital to disburse while demand for implementing projects is very urgent. Moreover, the allocation of capital plans in the last months of the year meansthe agencies face difficulties in the disbursement work, which can lead to the inability to fully disburse and cancel the capital plan.

Reflecting this problem, Mr. Ngo Van Quy, Vice Chairman of Hanoi People's Committee gave an example: The pilot urban railway project on Nhon - Hanoi Railway Station, in 2019, the plan is to assign 3,274 billion VND, but by the end of August, the total amount was just VND 1,104 billion, reaching 34% of the plan. Another example is the Hanoi urban railway project, the section south of Thang Long - Tran Hung Dao has so far disbursed only 5% of the plan. Specifically, in 2019, VND 393 billion was assigned but bythe end of August, just VND 18.4 billion was disbursed.

The capital arrangementnot meeting the demands of implementation and schedule as well as the commitments of the loan agreements are of concern to both project owners and donors. According to the review of six development banks, the group of projects using loans from six donors alone has more than 60 projects that have not fully arranged the capital plan in 2019 according to progress and ability of disbursement, with additional capital needs of over VND 34,000 billion.

In addition to the above reasons, the reason also lies in the low availability of investment projects, slow investment procedures, obstacles in site clearance, and arrangement of reciprocal capital; delays in completing procedures on disbursement records as well as revenue and expenditure records.

Complaining about this, Mr. Tran TuKhanh, Director of the Financial Planning Department, Ministry of Education and Training said: In May 2019, the Ministry had two projects approved by the National Assembly in the medium-term public investment plan. By July 2019, ODA funds to implement these projects have been allocated but lack reciprocal capital. When reporting to counterpart funds to supplement the reciprocal capital, it is required to be balanced within the assigned scope of the Ministry. “But the Ministry of Education and Training is currently implementing 22 projects with assigned capital of VND 300 billion. This number has been dividedinto projects, now it is no longer available. There is no reciprocal capital leading to the ODA capital that was already held but could not be used," Mr. Khanh said.

Adjusting and allocating capital on time

In 2019, if the actual public investment disbursement reaches a maximum equal to the plan (VND 60,000 billion), the remaining plan for 2020 is VND 162,824 billion. According to the disbursement progress in the past three years, using up the remaining capital plan in 2020 is not feasible. From the above situation, in order to promote the disbursement volume in the last months of 2019 to achieve the capital plan, the Ministry of Finance has reported to the Prime Minister to propose groups of measures for problems.

Speakingabout the solution, Mr. Truong Hung Long, Director of Department of Debt Management and External Finance, said that the National Assembly passed the Law of supplementing and amending a number of articles of the Law on Public Investment.Therefore, the Ministry of Finance proposed the Government assign the Ministry of Planning and Investment to urgently coordinate with concerned ministries and branches in drafting a new decree on ODA management and concessive loans to replace the current documents in the direction of focusing on public debt management;reviewing to simplify administrative procedures including the process of supplementing annual capital plans, mechanisms for adjustment of capital plans as well as the mechanism of accounting and transferring sources of ODA and concessive loans. In addition, the Ministry of Planning and Investment is requested to review the overall implementation of the medium-term public investment plan by 2020 to promptly adjust and allocate capital for projects that are lacking capital to ensure completion of disbursement of medium-term public investment.

On the side of the Ministry of Finance, according to Mr. Long, during the one-year assessment of the implementation of the Law on Public Debt Management, the Ministry of Finance will also review and evaluate the implementation of the decrees guiding the Law on Public Debt Management, including Decree No. 97/2018/ND-CP on re-lending ODA and foreign loans of the Government. The Ministry of Finance will also strictly implement the Prime Minister's Directive No. 18/CT-TTg of June 29, 2019 on strengthening the management and raising the efficiency of ODA and concessive loan capital in the new situation for development investment, not for regular expenditures.

Adiditonally, the Ministry of Finance directed the State Treasury to urgently implement the decree on administrative procedures in the field of State Treasury as soon as the Government signs it for promulgation; continuing to review the process of controlling expenditures, processing capital withdrawal applications at the Ministry of Finance, the State Treasury to ensure the prescribed deadline, without leaving the file without reason; urge the investor to carry out procedures to control expenditures within four days after having the completed volume, leaving none unsold till the end of the year.