Vietnam to cut VND97 trillion worth of public investments

According to the latest report by the Ministry of Planning and Investment (MPI) to the Prime Minister, 96,888.3 billion dong worth of public investments will be cut by ministries, branches and general corporations in order to help reduce the total demand of the national economy.

Of this amount, 50 trillion dong worth of investments will be cut because the disbursement period for the 2011 plan will not be extended, while the capital for the 2012 investment plan will not be advanced. Also, 32 percent of the capital from government bonds and 10 percent of the state’s investment credit will be cut.

Vietnam plans to cut 5128 billion dong worth of investment from the state budget, 2547.5 billion dong worth of government bonds and 39,212.2 billion dong worth of investments by state owned economic groups and general corporations.

The main message that the Minister of Planning and Investment, Vo Hong Phuc wants to convey, is that the capital volume to be cut is relatively low in comparison with the total investment capital, and that ministries and localities still hesitate to cut down investments.

The picture of economic groups’ investments

Power, oil, gas, post and telecommunication economic groups do not have high expected investment cut percentages in comparison with the total investment capital, but high expected investment volumes.

The MPI’s report which gathers figures from 22 economic groups and general corporations shows that the economic groups initially planned to invest 350 trillion dong in their projects in 2011. The investment capital to be cut was reserved for 907 projects, which accounted for 10.7 percent of the total capital reserved for development investment.

The Saigon Water Supply Company has been listed as the company which plans the biggest investment cut (50.57 percent of the total investment capital); while Vinalines plans to cut 38.4 percent of its initial investment capital. Other economic groups which plan to cut investments sharply include power group (12,159 billion dong), oil and gas (6595 billion dong), post and telecommunication (3 trillion dong).

The noteworthy thing is that the majority of the investment projects to be cut are the projects on building headquarters, offices and purchasing expensive equipments which do not serve the production and business of enterprises.

The report by MPI to the Prime Minister did not give details about the capital to be cut of the state owned economic sector, which is called the “locomotive of the national economy”. However, the above said figure shows that 10 percent of the initially planned capital investment of the economic sector just aimed to decorate their headquarters instead of focusing on improving the business capability.

Local authorities still linger

The report said that 1709 projects capitalized at 5128.6 billion dong, which were previously to be funded by the state budget, will be cut. Of these projects, 1502 projects are just equal to 21 percent of the number of new projects, and the capital of 3452.8 billion dong for the projects is just equal to 23.5 percent of the 2011’s capital budgeted for new projects.

Especially, MPI has said that many agencies and localities have not submitted reports on tentative investment cuts, including the National Assembly’s Office, the Vietnam Journalists’ Association, the Vietnam Football Federation and 23 provinces and cities, including HCM City, Thanh Hoa and Binh Duong.

MPI has proposed the government to order ministries and branches to complete checking and planning investment cuts prior to May 31.

Source: SGTT