Revising the Law on Public Investment: Thorough decentralization to create initiative and avoid waste of resources

	Eliminate ineffective project, speed up the disbursement of public investment capital
	Shortcomings in Decree guiding the Law on Public Investment need to be amended

Many problems caused by the Law on Public Investment lead to slow disbursement of public investment. Photo: ST

Medium-term public investment plan is rigid

At the seminar for consultation on the Draft Law amending and supplementing a number of articles of the Law on Public Investment, organized by the National Assembly’s Finance and Budget Committee in coordination with the Ministry of Planning and Investment (MPI), the MPI, the representative agency in charge of drafting said that until now, the draft has unified many contents and approached many innovative plans on management of public investment capital to overcome problems with an important objective of improving the efficiency of management of public investment capital in order to promote economic growth.

However, there are still some contents to be clarified so that the Law on Public Investment is in accordance with reality and ensures the feasibility in the implementation process. This encompasses such criteria as for the definition of public investment capital, the renewal of appraisal decentralization of capital sources and the ability to balance investment capital, the right to consider and decide the investment policy and adjust projects; the development of a 3-year rolling public investment plan - a new point of the draft law, etc.

According to Mr. Nguyen Quang Vinh, Deputy Director General of the State Treasury, since the Law on Public Investment was issued with problems thereof, the annual disbursement rate of public investment capital through the Treasury has been reduced. Commenting on the draft Law on the definition of public investment capital, for the retained revenue which has not paid to the budget, according to Vinh, there are two ways, one is not to include this revenue into the Law on Public Investment, two is to include it into the Law but it must strengthen the decentralization and introduce a private process. “Personally, I think that, if we exclude this revenue out of the Law on Public Investment, there needs a process to manage this revenue and a guiding decree, and if this revenue is included in the Law on Public Investment and still managed by the process of Law on Public Investment, this is not necessary, because this revenue is not stable, especially in the current world’s and country’s fluctuations. This is unstable revenue, but it must be submitted to the National Assembly that effectiveness and efficiency are not high," said Nguyen Quang Vinh. If this revenue is included in the Law on Public Investment, it must be attached to decentralization, if it is decided to be included in the medium-term and annual plans, the decision shall be made by ministries, sectors and localities.

Regarding the content of the three-year rolling public investment plan, “In order to be in line with the State Budget Law, I agree to have a 3-year public investment plan, but that is only the reference value and has no basis in law,” Mr. Vinh said.

Regarding the problems of the Public Investment Law, the World Bank’s experts also said that the medium-term public investment plan defined in the Law on Public Investment with a fixed cycle of 5 years with a rigid nature, has caused a negative impact on capital planning because it does not take arising fiscal situations or actual implementation progress into account. Although it is specified in annual public investment plans, it is still difficult to harmonize medium-term public investment plans with a medium-term budget framework in the rolling manner as provided in the 2015 State Budget Law.

Need thorough decentralization

Regarding problems in reality, Mr. Nguyen Xuan Quang, Deputy Director of Vinh Phuc Department of Planning and Investment said, due to the capital allocation time being October 31, but on October 31, only allocating capital for a project’s implementation, which includes construction drawing, estimation and site clearance, because while project drawings and site clearance take a lot of time, this leads to the actual construction time to complete work for capital disbursement to be insignificant. “Another example, a project was approved on November 1, the year before the plan year, so until 31 October of the next year, the capital was allocated for the implementation, but during this period, the construction drawing and site clearance was not carried out, thus, we will take a year to fill legal gaps to do nothing. "

Also according to Mr. Quang, after investment capital is allocated, the investor must take 3-5 months for construction drawing for simple projects and from 6 months to 1 year for complicated projects. Bidding to select contractors also includes 2 steps (with the investment consultancy value of over VND 500 million, it requires consultancy bidding and the step 2 of project bidding). “projects of group B take 130-200 days for this work. After allocating the annual public investment plan, it takes 6-9 months to carry out the above contents, so there are only 2-3 months to implement the project, this is the main reason for the slow disbursement of public investment projects, Mr. Quang said. Accordingly, he proposed that the draft law does not specify the time for allocation of public investment capital before October 31, but stipulates the Government is in charge of a decision, so the drafting agency is requested to study the law and advise the Government to introduce a solution to stipulate the appropriate time for allocation of public investment capital, which does not separate the construction drawing and site clearance from the project construction stage, to better prepare projects and shorten implementation time.

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Regarding competence to decide the contents, develop and implement public investment plans, Mr. Nguyen Quang Vinh also emphasized that it requires thorough decentralization and superior agencies in charge of post-audit and reasonable supervision.