VietFinanceNews.com - Data on public spending and investment must be made more transparent to ensure investment efficiency, economists said at a recent meeting in the central city of Hue.
There must be a radical change in the way information is disseminated about the use of public funds and foreign loans, they said at a conference themed "Restructuring of public investment in the context of changing growth model and restructuring the economy in Vietnam.”
The two-day conference ending today is being organized by the National Assembly’s Economic Committee, Vietnam Academy of Social Sciences, and the United Nations Development Program in Vietnam.
Though the state sector’s contribution to GDP fell from 38.52 percent in 2000 to 34 percent in 2008, its capital and fixed assets jumped in value, economist Le Dang Doanh said.
Investment efficiency has, thus, become a concern, he added.
Funds from the budget and official development assistance (ODA) were channeled to state-owned enterprises (SOEs), with private enterprises operating as subcontractors.
But SOEs’ debts are mounting at an alarming rate, adding to public debts.
So improving transparency in public investment -- through online publishing of projects, winning bidders, and their details -- is one of the most effective ways to boost the efficiency of public investment, Huynh The Du of Fulbright Economics Teaching in HCMC told Tuoi Tre.
For years the state sector received a lion’s share of the investment but did not proved its efficiency and so must make way for the private sector, he added.
Delegates stressed that Vietnam should relinquish the growth model based on intensive capital investment.
Gross capital formation surged from VND115 trillion (US$5.9 billion) in 2000 to VND371 trillion in 2009, with public investment taking the lead, Vu Tuan Anh from the Vietnam Institute of Economics said.
The higher the public investment, the bigger the public debt, he said, pointing out that public debt nearly doubled from $14.2 billion in 2005 to $27.9 billion in 2009, or around 39 percent of GDP.
Budget deficits have become a chronic disease and the global economic recession has made it worse, he said.
The investment structure has seen no change in recent times, which suggests that public investment remains the engine for development, he said.
So, the government should stop doing business and focus on social welfare and key infrastructure projects, he added.
Since the country’s savings rate is low, it has had to suffer rising budget deficits and public debt because of the need to borrow to fund infrastructure development, Tran Du Lich, an economist and NA member from Ho Chi Minh City, said.
But a continuation of this will destabilize both the financial system and economy, he warned.
