2025-01-19-世界银行-越南区域投资_挑战与机遇（英）_37页_2mb

Summary of "Challenges and Opportunities in Regional Investment in Vietnam"

Core Content

This document, prepared by the World Bank's Decentralization & Spatial Integration Advisory Program, outlines the challenges and opportunities in Vietnam's regional investment strategy as the country aims to reach upper middle-income status by 2030 and high-income status by 2045. It focuses on the inefficiencies in the Public Investment Management (PIM) and Intergovernmental Fiscal (IGF) systems, and provides recommendations to improve vertical and horizontal coordination in public investment.

Main Points

1. Vietnam's Development Ambitions

• Vietnam aims to become a modern and industrialized nation with a higher quality of life for its citizens by 2045.
• To achieve this, the country needs to maintain public investment levels of 7.3% of GDP annually to support infrastructure development.
• Overall gross capital investments should account for 32 to 35% of GDP from 2021 to 2030.
• Global experience shows that fast-growing economies typically have public investment of at least 7% of GDP.

2. Public Investment Trends

• Vietnam's public investment level has declined from 8% of GDP in 2011 to 6% in 2022.
• Despite this decline, Vietnam remains capital scarce, with public capital stock per capita and per worker significantly lower than in upper middle-income and high-income countries.
• Infrastructure quality is still lagging behind many Asian countries, which impacts attractiveness for FDI and long-term growth potential.

3. Inefficiencies in PIM and IGF Systems

• Allocative inefficiencies are widespread, including:
  • Over-investment in low-value projects such as industrial parks and provincial ports.
  • Under-investment in strategic infrastructure and environmental protection.
  • Suboptimal private sector mobilization and lack of complementarity with public investments.
• Implementation inefficiencies include:
  • Chronic under-execution of the investment budget, with only 77% of allocations effectively implemented between 2017 and 2022.
  • Long delays in project completion and significant cost overruns.
  • Land acquisition and resettlement challenges are major causes of delays in infrastructure projects.

4. Regional Investment Challenges

• Decentralization has led to fragmented investment planning and lack of coordination between central and subnational governments.
• Provincial governments often pursue individual investment strategies that may distort competition and harm national interests.
• Regional masterplans are being developed, but institutional and financial mechanisms to support these are still underdeveloped.
• Economic zones have been established in large numbers, but many are uneconomic and underutilized, with low occupancy rates in industrial parks and inadequate growth in airports.

5. Environmental and Climate Risks

• Vietnam is highly vulnerable to climate change and natural disasters, with US$852 million of economic activity and 316,000 jobs at risk annually from floods and extreme weather events.
• The average investment in disaster protection infrastructure is only 0.05% of GDP, far below the required levels.
• Projected costs to improve coastal resilience by 2035 are estimated at US$4 billion, with US$2 billion needed for sea dike construction alone.
• The total incremental financing needs to address climate change and green transition could reach US$701 billion from 2022 to 2040, or 6.8% of GDP annually.

6. Recommendations

• Rebalance infrastructure investment from provincial to central levels.
• Address legal loopholes, especially in the State Budget Law, to enable vertical and horizontal coordination.
• Institute a matching grant mechanism to facilitate cross-provincial infrastructure investment.
• Establish robust monitoring and oversight mechanisms for capital budget resources at both central and provincial levels.
• Improve the efficiency of the PIM and IGF systems to prioritize and execute impactful investments.

Key Information

• Public investment in Vietnam has declined over the past decade, despite growing needs.
• Infrastructure quality is a major constraint to Vietnam's economic competitiveness.
• Provincial competition in investment mobilization leads to inefficient and redundant projects.
• Environmental protection and climate adaptation are underfunded and underprioritized.
• The PIM system fails to align with national and regional priorities, leading to suboptimal investment outcomes.
• The IGF system lacks central oversight and effective coordination, contributing to inefficiencies and misallocation.

Conclusion

The document emphasizes the urgent need for institutional and policy reforms to improve public investment efficiency and regional coordination in Vietnam. These reforms are crucial to support sustainable growth, enhance national competitiveness, and address climate and environmental risks.