Amend the law to promote disbursement of public investment capital

Amend the Vietnam law to promote disbursement of public investment capital

(Vietnam) Important provisions in the Vietnam Law on Public Investment are proposed to be amended and supplemented to remove difficulties for public investment projects, especially ODA-funded projects.

Boosting disbursement of public investment capital

The information is perhaps not too surprising. That is, after reviewing, up to this point, there have been 67 ministries, central and local agencies applying to return the investment capital of the central budget in 2021, with a total amount of more than 25,000 billion. The reason is that the disbursement was not timely, even some projects did not have time to complete investment procedures, problems in site clearance, even in the process of appraising and approving design documents, etc.

It is worth mentioning that, of the above 25,000 billion VND, there is only 3,000 billion VND is from the domestic central budget, the rest more than 22,000 billion VND is foreign capital from the central budget (ODA).

In the past two years, the disbursement of ODA has been very slow. If in the past 9 months, the rate of disbursement of public investment capital in general was 47.38% of the plan assigned by the Prime Minister, then the disbursement of capital from the central budget in the country reached 51.71%, while foreign capital only reached 12.69%. Last year, ODA disbursement was slow, but the same period still reached 21.65%.

There are many inherent reasons that have been pointed out by the Ministry of Planning and Investment, from slow site clearance, financial capacity of the investor and especially this year, the Covid-19 epidemic, causing many Key areas must implement prolonged social distancing. However, there are also reasons stemming from subjective factors, including the inadequate quality of planning and preparation of public investment projects in some ministries, branches and localities, leading to many projects being assigned plans, but not being able to execute and disburse.

For projects using ODA capital, the situation is even more difficult, due to many problems related to foreign partners. The Ministry of Planning and Investment said that many transitional ODA projects have passed the prescribed time, but ministries, central and local agencies have not reported to the competent authorities for permission to extend the time to allocate capital, extend the agreement, carry out procedures for adjusting investment policies, etc.

Amend the Vietnam law to remove some barriers

Among many problems, there are issues related to institutions and policies. That is one of the reasons why the Prime Minister’s Special Working Group has continuously worked with ministries, branches and localities on this issue.

As a result, the Working Group received more than 80 problems related to institutions and policies. Although more than half of these are due to incorrect and different understandings of ministries, branches and localities, there are also real problems in institutions and policies.

For example, with ODA projects, there are cases where only the project implementation time is changed, but the adjustment process must be done like the process of deciding on investment policy for a new project, so it takes a long time.

This is an inadequacy that many localities. And that is also one of the reasons that the provisions on this content in the Law on Public Investment are being proposed to be amended and supplementing a number of articles of 10 laws related to investment and business.

According to the provisions of Article 25 of the Law on Public Investment, projects under the authority to decide on investment policies of the Government must submit to the Prime Minister twice for consideration and approval of project proposals and decision on investment policies. If the investment policy has to be adjusted, it must once again be up to the Prime Minister. Not to mention, before that, the Ministry of Planning and Investment still had to make a move to get opinions from relevant agencies and send it back to the agency for consideration and explanation before the Prime Minister approved. 

This process is in fact only suitable for Group A, large-scale, inter-sectoral and inter-regional projects, often with a high on-lending rate, and must be performed according to strict requirements and conditions. If projects in groups B and C also need to be submitted to the Prime Minister three times, they will easily be behind schedule, fail to fulfill their commitments with investors and have to extend the agreement.

Therefore, the Government has proposed to amend and supplement a number of provisions of Articles 17, 25 and 33 of the Law on Public Investment. Accordingly, one of the most important amendments is that the head of the governing body decides on the investment policy of Group B and Group C investment projects using ODA and concessional capital of foreign investors.

According to the plan, the Draft Law amending and supplementing a number of articles of these 10 laws will be discussed at the 2nd Session of the XV National Assembly in a separate special meeting. When passed, the revised Law will facilitate disbursement of public investment, especially for ODA-funded projects.

ASL LAW is the top-tier Vietnam law firm. If you need any advice, please contact us for further information or collaboration.


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