JoNaThaN PiNCus

Senior international economist United Nations Development Programme in Vietnam

Beginning in the second quarter last year, the government accelerated the rate of public investment disbursements, which are an important source of demand during periods of slow growth in world trade. While the first quarter of every year is typically a period of slow disbursements, recent data released by the General Statistics Office indicates that public investment spending is on track in 2024.

While progress has been made accelerating the pace of public investment spending, the quality of public investment remains a concern. Vietnam’s system of planning and implementation is one of the most decentralised in the world. Provinces, which in Vietnam are small compared to other countries, account for 84 per cent of public investment, and they have near full authority to select and implement projects.

In the absence of a national system of feasibility assessment and ex-post project evaluation, we cannot estimate the contribution of public investment to growth, improvements in living standards, or access to essential services. Provinces have an incentive to favour small projects that can be completed quickly so they can reach their expenditure targets.

The implementation of larger projects of national and regional importance are held up by negotiations between the various local and national agencies involved and weak coordination among provinces. Strengthening regional planning and evaluation mechanisms, as required under planning laws and regulations, should be a priority.