Bottlenecks that need to be removed in public investment

Many times, the Prime Minister was present at the construction site early in the morning or late at night, working through the Tet holiday to resolve difficulties and obstacles right at the site, requiring the disbursement of public investment capital according to plan.

Understanding that importance, from the beginning of his term, Prime Minister Pham Minh Chinh has directly directed, urged and inspected at the site a series of key public investment projects across the country. Many times, the Prime Minister was present at the construction site early in the morning or late at night, working through the Tet holiday to resolve difficulties and obstacles right at the site, requiring the disbursement of public investment capital according to plan. The political determination is very clear - but to realize the development goal, the Prime Minister and the Government need a companion institution: that is an open, flexible, transparent and effective Public Investment Law.

Currently, the Government has submitted to the 9th Session of the 15th National Assembly a law amending many laws in the fields of investment, finance, and budget, including the Law on Public Investment.

In fact, the current Law on Public Investment has created a relatively complete and strict legal framework for the establishment, appraisal, approval and supervision of investment using state budget capital. Thanks to the Law, fiscal discipline and the efficiency of using public investment capital have been gradually improved, limiting the situation of scattered, fragmented investment and loss. Many important principles such as publicity, transparency, decentralization of responsibility and social supervision have been institutionalized, contributing to strengthening public investment governance throughout the system.

However, in the new development context - with the requirements of rapid economic recovery, promoting digital transformation, large-scale infrastructure investment and attracting private resources - the limitations of flexibility, compatibility and synchronization in implementing the Public Investment Law are increasingly evident. Therefore, reforming the Public Investment Law is not intended to deny the achievements that have been made, but to perfect the institutions and remove the bottlenecks we are facing, meeting practical requirements.

Major bottlenecks in the Law on Public Investment

One of the most common complaints is that the public investment process has too many layers, lacking integration and flexibility. From the steps of establishing investment policies, project appraisal and approval, allocating medium-term capital plans to annual capital, and then adjusting capital plans - each step requires consulting, submitting to competent authorities and supplementing documents according to different forms. Many agencies are involved, leading to overlapping, prolongation and unclear responsibilities. As a result, investment opportunities are missed, projects are delayed in starting construction, and capital use efficiency is significantly reduced.

The situation of "money lying idle in the treasury" is no longer a local phenomenon but has become a chronic disease, recurring for many consecutive years. The consequences are that many infrastructure projects are behind schedule, costs increase, growth opportunities are missed and, most importantly, trust in government policies is eroded.

When a project is stuck and cannot be disbursed – due to problems with land acquisition, design documents, or bidding procedures – it is not easy to transfer capital to another project due to the strict regulations of the Law. This creates a "blockage" effect: a small bottleneck can stall the entire public investment plan of a sector, locality, or even the entire fiscal year.

Although the 2020 PPP Law has established a separate legal framework for public-private partnership projects, when state capital is used to support construction works, this capital must still follow the procedures of the Public Investment Law. According to Clause 5, Article 70 of the PPP Law, state capital is managed as a separate sub-project or item and is fully regulated by public investment law.

The simultaneous application of both the PPP Law and the Public Investment Law makes project implementation procedures complicated, lengthy and inflexible – contrary to the characteristics of the PPP model. This increases legal risks, causes apprehension in the private sector and affects the ability to mobilize non-budgetary capital. To overcome this, it is necessary to review and adjust the coordination mechanism between the two Laws in a clear, concise and convenient manner for implementation.

The law stipulates quite heavy legal responsibilities, but is unclear about the evaluation criteria or principles for handling errors. This leads to a mentality of anxiety and fear of being accused of wrongdoing during the implementation process, even if it is just a technical or procedural error. In the context of incomplete laws and inconsistent guidance, many officials choose "not doing anything rather than doing something wrong". Personal safety overwhelms the motivation to act for work efficiency.

Public investment is a driving force for development.

The root cause of institutional congestion

The bottlenecks in implementing the Law on Public Investment are not only the result of a lack of uniformity in implementation guidelines or local staff capacity, but also stem from core issues in legislative thinking, institutional design and risk management approaches in the public sector.

The Law on Public Investment was developed in the context of tightening discipline and preventing loss, so the main thinking is to control input instead of promoting output. Each process and procedure is designed as a layer of protection against violations, but it inadvertently becomes a barrier that slows down the entire system. As a result, instead of creating a mechanism to encourage innovation, daring to think, daring to do, the Law encourages a mentality of safety and avoidance.

Although the Law on Public Investment has classified projects into groups A, B, C with corresponding procedures, in reality, this distinction mainly stops at the level of investment decision authority, appraisal time and approval procedures, but has not led to a system of administrative procedures, monitoring mechanisms or clearly different governance models. Many procedures are still applied relatively evenly, causing some small-scale, low-risk projects to go through a cumbersome process, wasting time and resources. This shows that the Law still lacks a sophisticated risk management mechanism, which is the core point in the modern public investment management model in many developed countries.

Although the Law states the principle of decentralization, in reality, decision-making authority is still concentrated at the Central level, especially in the stages of adjusting capital plans, changing investment policies, or approving project lists. Localities are only implementing units, but are bound by the request-grant process. Assigning tasks without giving sufficient authority and adjustment tools makes it impossible for local officials to proactively resolve practical difficulties, leading to passivity and dependence.

Currently, public investment control is still mainly focused on the earlier stages – approval, appraisal, and acceptance – while the later stages such as implementation, acceptance, and efficiency assessment do not have a strong and independent monitoring mechanism. The monitoring system relies on people, paper records, and lacks the application of technology and digital data. This does not help prevent violations in practice, but also creates excessive pressure at the initial stage, slowing down the entire investment implementation process.

From the core reasons mentioned above, it can be seen that amending the Law on Public Investment is not just a technical adjustment, but requires a comprehensive reform mindset - shifting from the old-style rule of law to modern governance, focusing on efficiency and results.

To make public investment truly a growth driver, not a development drag, a fundamental institutional reform is needed.

Radical reform solutions according to international standards

For public investment to truly become a growth driver, not a development drag, Vietnam needs a fundamental institutional reform, not just a technical patchwork. That reform needs to be based on four core principles of modern public administration: empowerment – ​​accountability – smart monitoring – focus on outputs . Specifically:

First, there is a need to streamline and integrate fragmented procedures. The steps of project proposal, appraisal, approval and capital allocation need to be consolidated into a single, consistent process, instead of being divided into multiple layers as is currently the case.

In particular, it is necessary to apply the "rolling plan" model - a common international practice - instead of just making fixed 5-year and annual plans. (This is an investment plan that is reviewed, updated and adjusted periodically (annually or quarterly) , based on the approved medium-term plan , instead of being completed once and then "framed" for 5 years.) Thanks to that, projects can be updated flexibly when conditions are ripe, avoiding wasting time waiting for a new planning phase.

We need to move away from the “one size fits all” mindset – and instead, build a procedural system based on risk classification and investment scale. Small, low-risk projects (such as commune-level construction renovations, inner-city infrastructure, etc.) should apply a streamlined process, delegating more authority to localities. Large, high-risk projects need a more rigorous process, independent assessment, and public information for social monitoring.

This approach not only saves time and resources, but also focuses control on the right places where risks are high – in line with the principle of “risk-based management” widely applied in OECD countries.

We must move from "formal decentralization" to "substantive decentralization". Localities and ministries need to decide to adjust capital plans within their assigned scope, instead of having to ask for the Central Government's opinion for every small change.

Along with that, it is necessary to apply the model of "responsibility contract" between the Central and local levels - in which the delegation of authority goes hand in hand with individualized responsibility. Those who fail to complete the disbursement progress must be assessed and handled according to the output results, instead of blaming the process.

Currently, the state capital portion in PPP projects must still fully comply with the procedures of the Public Investment Law, leading to cumbersome and lengthy procedures and reducing flexibility - which is the core strength of the PPP model. Therefore, it is necessary to limit the scope of application of the Public Investment Law to only the public capital portion, not to extend it to the entire project, while simplifying administrative procedures and ensuring harmony between the two Laws through inter-connected guidelines or appropriate amendments. This solution will contribute to unlocking private resources, promoting infrastructure investment and improving the effectiveness of public-private partnerships.

Investment efficiency does not lie in the review of documents, but in the final results on the ground. It is necessary to build an independent post-audit system - to evaluate the actual effectiveness of the project after completion and make it public to create pressure from society.

Instead of piling up pre-approval processes, let localities take the initiative and be accountable for the results, like the model New Zealand and Canada are applying.

Finally – and fundamentally – is the need to digitize the entire ecosystem. public investment. An integrated data system (dashboard) needs to be established at the national level, connecting the State Treasury, the Ministry of Finance, localities and investors.

Information on progress, disbursement, problems and output efficiency should be updated in real time and made public on digital platforms. It is not only a smart monitoring tool, but also an antidote to fear of responsibility, because everything is transparent.

Need for an institutional revolution in public investment

Amending the Law on Public Investment is not just a technical adjustment, but must be an institutional revolution - from a controlling mindset to a creative mindset.

To do that, the Law on Public Investment needs to be redesigned according to modern governance principles: empowerment - responsibility - smart supervision - output focus. Only then will public investment truly become a driving force for development, instead of being a bottleneck as it is today.

Dr. Nguyen Si Dung

Source: https://baochinhphu.vn/nhung-nut-that-can-thao-go-trong-dau-tu-cong-102250523061713674.htm