It should not be done mechanically!

(Baonghean) -Public investment is the responsibility of the State. Because only the State is allowed to use people's tax money and money from selling resources for public investment, only the State can borrow ODA capital or long-term loans with very low interest rates...

Every era and every society has to face the contrasting picture of rich and poor. That is the law, the natural, invisible regulation by the inherent objective laws of the market mechanism, the defects of the market mechanism, so the task of the State, especially the socialist State, is to use its visible hand to bring about social justice through macroeconomic policies, in which public investment is an important tool.

Public investment is a very necessary and legitimate activity, even considered an obvious task of the Government.

So why are there many opinions that public investment is too costly, does not generate profits, the more investment, the greater inflation, prices will continue to rise... then it is urgent to cut public investment to limit inflation. Public investment cannot, never be the culprit of inflation, of price storms. On the contrary, it also plays an important role in stabilizing the economy in a sustainable way. If public investment is related to inflation, it is due to incorrect planning, loopholes in the implementation process, misuse, or even mismanagement. The nature of public investment is not waste, but only the planning, implementation and management processes have caused waste and loss. Putting all the blame on public investment is unfair, not objective, and ultimately destroys socio-economic goals.



Due to tightening investment capital, the progress of the Commercial and Urban Center Project at Vinh Market Crossroads has been stalled.
Photo: Hoang Vinh

In fact, wrong planning of public projects is not something that happens in Vietnam. Wrong allocation will also lead to money going the wrong way, instead of going to schools and hospitals, it goes to resorts, high-end apartment buildings, unusable projects... Many investment projects are handed over to local management without monitoring, and are used for the wrong purposes, and ultimately the responsibility lies with "Mr." public investment. When the State budget is lost and wasted, money is no longer an investment but becomes a cost, or rather a waste, and public investment invisibly becomes an economic burden for the State, a factor causing loss and inflation, and the right purposes and responsibilities of public investment are not guaranteed.

Over the past decades, public investment in Vietnam in general and in Nghe An in particular has had important effects, promoting economic growth and development, especially in the infrastructure system and some public welfare projects. However, according to assessments, many public investment projects are still wasteful and ineffective, with high investment costs, and planning, appraisal, capital allocation, and construction quality control have not been strictly controlled, revealing issues that need to be promptly corrected.

One is: There is still a closed mechanism for requesting and granting in implementing public investment projects. Investment is still heavily localized and favoritism. Localities compete to "run" projects, not based on the actual situation, conditions, and advantages of the locality. Every province has industrial parks, airports, ports, golf courses, commercial areas, high-end urban areas, etc. As a result, investment projects are widespread and there is a serious lack of capital. Some localities are proactive and creative, exploring economic models and projects that are suitable to the comparative advantages of the locality, which have brought about socio-economic efficiency and received public approval. Other localities also imitated mechanically and unscientifically. In recent years, investment in the rural agricultural sector has not increased significantly, investment in education and training has not increased in relative numbers, so in the coming time, it is necessary to focus on investing completely in a number of construction projects, which in our opinion is to focus on cutting investment in some infrastructure, such as roads, industrial parks, ports, etc. in the provinces, to concentrate capital resources on completing National Highway 1A and then the high-class railway.

Second: The paperwork when setting up a project, capital sources, and bidding procedures are like a "matrix", with some documents having more than 10 signatures and seals, but they are very loose or difficult to implement. When the plan goes bankrupt, no one takes responsibility. The more signatures, the lower the responsibility because it is divided equally among everyone.
Third: For state-owned enterprises, only non-profit enterprises should exist. The state doing business does not mean there must be state-owned enterprises, but only needs to create a legal corridor and macroeconomic policies for enterprises to operate.

In fact, in recent times, the more we invest in state-owned enterprises for profit, the weaker they become. While all state-owned enterprises that do business have not been equitized, the capital investment in these enterprises is public investment, but it is specific and for profit. Therefore, in our opinion, there must be a regime for collecting and using state budget capital, preserving capital and setting profit norms for these enterprises. The capital preservation index must be higher than the inflation index and must be evaluated by the physical assets and assets of the enterprise at the end of each year.

In State-owned enterprises, there is an extremely unreasonable mechanism, which is that there are two owners, the owner of State capital but it is not clear, there are many small owners that form the State owner. Besides, the owner who uses capital is a specific director, here there is a clear separation between the right to own capital and the right to use capital. The owner who uses capital is not strictly controlled, and only exists for a period of time while being assigned the directorship, therefore, the phenomenon of buying expensive, selling cheap, corruption, buying a 30-year-old used ship of Vinashin Company is not difficult to understand.

The collection of capital use, capital preservation, and profit norms in State-owned enterprises are management mechanisms that achieve the above goals. On the other hand, it creates a healthy competitive environment between State-owned enterprises and other enterprises, such as capital costs, capital preservation, and profits to be achieved. Only then can we eliminate the situation of competing to become directors of State-owned enterprises, and select talented people to be directors of State-owned enterprises and corporations. Only then can leaders of State-owned enterprises be truly honored as entrepreneurs.

Fourth: Regarding public investment in recent times. In recent years, the Government has continuously adjusted macroeconomic policies in two directions: when prices increase, it tightens monetary, fiscal and investment policies; when production stagnates, it implements stimulus packages. The implementation of these macroeconomic policies is too fast, sometimes too loose, sometimes too tight, continuously causing shocks to the economy. Therefore, in the macroeconomic strategy, the Government must forecast the long term to make appropriate adjustments for each step. To do so, the Government must employ disciplined and talented policy makers.

Five: After more than 1 year of implementing Resolution 11/NQ-CP, it has basically fulfilled its role of fighting inflation, however, it has also left quite serious consequences for the economy, a series of businesses went bankrupt, unemployment increased, causing many consequences for society. At this time, we need to gradually relax Resolution 11/NQ-CP, but we must strictly manage monetary, fiscal and investment policies. "Tight management" will harmoniously resolve the "tightening" and "loosening" because if we tighten, the economy cannot develop, if we loosen, the economy will be in chaos.

Sixth: The Government needs to have stimulus packages like the 2009-2010 period, continue to implement public investment projects, especially infrastructure, education, health, agriculture, rural areas and some other projects if necessary, but must be cautious and considerate to achieve high efficiency.

In the current conditions of our country, cutting public spending is a suitable solution, but we should not focus on cutting mechanically. It is important that resources be allocated to the places with the highest efficiency and the most widespread impact on the economy and society. And we must determine the order of priority, and classify the public investment projects that will be cut. Moreover, when the budget cake is limited, we need to calculate how to use it properly, so that state capital is used most effectively and reasonably.

Duong Xuan Thao