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MACROECONONY & FINANCE

IMPROVING THE PUBLIC INVESTMENT EFFICIENCY TO

ENHANCE PRIVATE ECONOMIC DEVELOPMENT IN VIET NAM

NGUYEN THI HANH, HOANG THI MINH CHAU, DINH VAN CHUC

Abstract: Public investment is a significant policy, a tool to develop and regulate the economy of states in most countries around the
world. Depending on specific circumstances and conditions, each country uses public investment appropriately. If the government
invests in the right areas, it will be able to achieve the best socio-economic efficiency. For Viet Nam, public investment often plays a
crucial role, as a driving force for development. Because the need for infrastructure development is usually great, the proportion of
public investment in overall social investment is sometimes very high. This study analyzes the current situation of public investment
in Viet Nam in recent years. In addition, this study provides some solutions to enhance public investment in order to attract private
sector investment and promote Viet Nam’s economic development.

Keywords: Public investment, private economic development, production and business, fiscal policy
Received: January 4 , 2023 credit, official development assistance (ODA), investment
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Revised: February 26 , 2023 capital from enterprises government, foreign investment
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Accepted: March 2 , 2023 (FDI) and the private sector.
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Theoretical basis Thirdly, the objective of public investment activities is
to develop socio-economic activities, in which mainly to
Public investment is significant for the growth pursue the objectives of public policy (investment in the
and development of each country. Countries around establishment of State-owned enterprises) to maintain the
the world often prioritize public investment to bring position of the State. Public investment is capable of being
about the quality, efficiency and competitiveness of the a tool of the State to regulate the economy, and also for
economy based on the fields of public investment. The business purposes, creating financial income for the State;
overall objective of the investment policy is to encourage invest in important and essential sectors of the economy,
reasonable and effective private investment in order but the private sector does not invest; investing to fill the
to improve national production capacity and national "holes" of the market economy, ensuring the great balances
competitiveness. In addition, the investment policy is also of the economy; or for other purposes of public policy
aimed at creating many jobs to bring satisfactory income such as: Development of socio-economic infrastructure
for the population, thereby promoting economic growth, system; job creation; Narrowing the gap between rich
transforming the economic structure towards progress, and poor between regions; Developing border areas and
improving the quality of life of the people. islands, linking socio-economic development policies
The Law on Public Investment 2019 applied from with security and defense...
January 1 , 2020, also clearly stipulates the concept of Public investment is invested in building socio-
st
public investment in Clause 15, Article 4, according to economic infrastructure to help improve infrastructure,
which: “Public investment is an investment by the State attract domestic and foreign private investment, create
in programs and programs and other public investment jobs and increase social welfare. As a result, many
subjects as prescribed in this Law”. Thus, it can be businesses and individuals in an area benefit from such
understood that public investment is an investment infrastructure at no additional cost or at a lower cost if
activity of the State, using capital mainly from the the infrastructure has to be made available to users. In
State budget to design and build programs and projects addition, the infrastructure can be seen as providing
for socio-economic development. This view affirms extraneous benefits to those users.
that public investment must satisfy three factors: the
investor is the State; investment capital from the State The public investment situation and private sector
budget and investment objectives for socio-economic investment attraction in recent years
development.
Firstly, public investment is an investment activity According to statistics, expenditure on development
of the State, from organizations and agencies with investment or public investment has an increasing
investment functions in accordance with the current law proportion in the period 2017-2020, from VND 365,526
on decentralization and investment decisions. billion, accounting for 25% of total state budget expenditure
Secondly, investment capital for public investment in 2017 to VND 550,028 billion, accounting for 30.76% of
activities is from the State, including: State budget, state 2020. In 2021 - the first year of implementation of the
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