Summary of Doctoral thesis Finance – Banking: Efficiency of public investment in the current period in Vietnam

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On the ground of evaluation of Vietnam’s public investment in the period of 2007 – 2019 by systematizing theories and summarizing international experiences on managing public investments, the thesis suggests solutions for changing methods for managing Vietnam’s public investment in the coming time.

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Nội dung Text: Summary of Doctoral thesis Finance – Banking: Efficiency of public investment in the current period in Vietnam

MINISTRY OF EDUCATION AND STATE BANK OF VIETNAM TRAINING BANKING ACADEMY OF VIETNAM --------- DAO THI HO HUONG EFFICIENCY OF PUBLIC INVESTMENT IN THE CURRENT PERIOD IN VIETNAM SUMMARY OF DOCTORAL THESIS Hanoi, 2021
MINISTRY OF EDUCATION AND STATE BANK OF VIETNAM TRAINING BANKING ACADEMY OF VIETNAM --------- DAO THI HO HUONG EFFICIENCY OF PUBLIC INVESTMENT IN THE CURRENT PERIOD IN VIETNAM Major: Finance – Banking Code: 9.34.02.01 SUMMARY OF DOCTORAL THESIS Academic supervisors: 1. Assoc. Prof. Dr. To Kim Ngoc 2. Assoc. Prof. Dr. Nguyen Thanh Phương Hanoi, 2021
1 COMMITMENT I hereby declare that this is my own research. The data and materials used in the thesis have a clear origin and are quoted in accordance with regulations. The author of the thesis Dao Thi Ho Huong
2 ACKNOWLEDMENT The thesis is a study of the author seriously for a long time with the support of individuals and organizations. First of all, the author would like to express my deep gratitude to Assoc. PhD. To Kim Ngoc and Assoc. PhD. Nguyen Thanh Phuong for their expert guidance on my research. The author also would like to thank teachers of Banking Academy and Postgraduate Faculty for facilitating learning and researching for the PhD candidate. The author would like offer my sincere gratitude for the generous help of scientists and officers in agencies of finance, science, technology and research institutes on conducting the actual survey. Sincerely thank my family as well as agencies, colleagues and friends, for encouraging the author to complete the thesis. The author of the thesis Dao Thi Ho Huong
3 INTRODUCTION 1. Research background Unstable conditions of the world at the present time such as the financial crisis of 2007 – 2008, COVID-19 pandemic, etc. have posed many risks to any countries’ economy. Public investment is considered as an indispensable tool to affect the economy. Effective public investment will be the driving force for economic growth, especially in the pandemic context. These ideas are consistent with the findings of Chakraborty and Dabla – Norris (2011) on effects of public investment on economic growth, or the findings of IMF (2015) on the relation of public investment efficiency and socio- economic development. Vietnam’s public investment for development accounts for a modest proportion in the national expenditure (state budget), but this rate, when comparing to the same rate of other regional countries, is higher, showing too much government intervention in the economy. Vietnam’s public investment efficiency in the present is fairly low. The study of Pho Thi Kim Chi et al. (2013) showed that the effect of public investment on economic growth in short-term period was much larger in long-term period. CIEM (2013) in the study on Public Investment, Public Debt and Budget Sustainability in Vietnam gave an overview of the current situation of public investment, evaluated Vietnam's public investment efficiency in the period 2000-2012 and stated the effect of incomplete legal framework on low public investment efficiency in Vietnam. Vu Thanh Tu Anh (2013) claimed the requirement of a standard process of implementing public investment to achieve public investment efficiency. Tran Kim Chung et al (2015) mentioned that instead of investing into a great amount of sectors, Vietnam should make public investments with a lot of care. Therefore, the study of “Efficiency of public investment in the current period in Vietnam” is absolutely necessary. 2. Research objectives General objectives: On the ground of evaluation of Vietnam’s public investment in the period of 2007 – 2019 by systematizing theories and summarizing international experiences on managing public investments, the thesis suggests solutions for changing methods for managing Vietnam’s public investment in the coming time.
4 Specific objectives: To fill the research gap mentioned above and to assess the effectiveness of Vietnam’s public investment between 2007 and 2019, this thesis aims for the following three targets: - Systematize and clarify theoretical bases toward economic, social and environmental efficiency of public investment. - Assess the effectiveness of Vietnam’s public investment between 2007 and 2019. - Examine lessons of public investment activities from several countries in the world. - Propose solutions and suggest policies to improve the efficiency of public investment in the coming time. 3. Research questions - What are theoretical issues relating to public investment efficiency needed to be systematized and clarified? - How is the efficiency of Vietnam’s public investment in the period of 2007 - 2019? - What lessons drawing from public investment activities of various countries in the world for Vietnam? - What solutions and policy suggestions are needed to improve the efficiency of public investment in the coming time? 4. Object and scope of the research - Research objects: The theoretical basis of investment and the current state of public investment from the perspective of state management. - Research scope: The thesis examines thoroughly fundamental aspects of public investment: (i) Effect of public investment on economic efficiency; (ii) Effect of public investment on social efficiency; (iii) Effect of public investment on environmental efficiency. The thesis collected data in the period of 2007 – 2019 to assess the effectiveness of Vietnam’s public investment. 5. Research methodologies To achieve the proposed research objectives, the thesis analyzes and implements the following contents:
5 - Using methods of inheritance, analysis, synthesis and systematization of theories about the efficiency of public investment in economic, social and environmental aspects; and systematizing it into a theoretical basis for indicators evaluating public investment efficiency. - Apply methods of scientific inheritance, analyze the prior experience in public investment of several countries around the world to draw lessons for Vietnam to enhance public investment efficiency. - Evaluate empirically the effect of public investment on Vietnam's economy in the period of 2007 - 2019. 6. New contributions of the thesis On the theoretical aspect: - The thesis systematized and made the public investment management mechanism clearer, consisting of: (i) Identify clearly sources of investment capital and factors affecting public investment efficiency; (ii) Provide indicators for evaluation of public investment efficiency in terms of economy, society and environment. These indicators are developed on the foundation of public investment management theories and international experience (of countries producing excellent public investment performance). On the practical aspect: Based on results of analysis and evaluation of the current state of Vietnam’s public investment efficiency on the following contents: (i) Vietnam’s public investment efficiency; (ii) Disadvantages of Vietnam’s public investment, the thesis suggests several policies to implement the Resolution of the 11th National Party Congress.
6 CHAPTER 1 THEORETICAL BASES OF EFFICIENCY OF PUBLIC INVESTMENT 1.1. OVERVIEW OF PUBLIC INVESTMENT 1.1.1. Definition of public investment Keynes (1936) proposed that public investment is designed as a financial instrument helping governments control economic recessions thanks to the ability of boosting aggregate demand, increasing citizens’ income and restoring the economy. Public investment is the state’s investment in socio-economic infrastructure construction projects and programs serving socio-economic development. 1.1.2. Public investment contents Public investment activities are the State’s investment activities in programs and projects for constructing socio-economic infrastructure and development. Public investment objects are targeted programs, technical, economic, social, environmental, defensive and secure projects. Public investment sectors: (i) Socio-economic investment projects; (ii) Investment projects to serve state agencies, non-business units, political organizations, social-political organizations; (iii) Investment projects to supply public products and services; (iv) Public investment in the form of public-private partnerships. Sources for public investment: The state budget National bonds Local authority bonds Official development assistance (ODA) Retained revenues 1.1.3. Roles of public investment The role of public investment is to provide essential public services through the construction of schools, hospitals, public housing and other social infrastructure. Public investment also helps the public and businesses take advantage of economic opportunities through the provision of economic infrastructure hubs such as airports, ports and telecommunications, transportation, manufacturing networks and transmissions of electricity, water…
7 Firstly, public investment funds promote economic growth and enhance people’s welfare. Secondly, the public investment acts as a significant governance instrument enabling the government to implement cyclical policies in condition of economy recession. Thirdly, the public investment increases the aggregate demand of the society as well as accounts for a substantial proportion of the total investment of the economy. Fourthly, the public investment is used as a “bait investment”, to build up and maintain growth momentum. 1.2. EFFICIENCY OF PUBLIC INVESTMENT 1.2.1. Definitions of efficiency of public investment The concept of investment efficiency, according to Tu Quang Phuong and Pham Van Hung (2013), is generally an economic category showing the comparative relation between economic and social gains of investment and the costs it takes to have those results in a given period of time. Investment efficiency can be classified according to the following aspects: In field of activity: Economic efficiency, social efficiency, technical efficiency, etc. The scope of impact of efficiency: Investment efficiency of projects, of each enterprise, of each industry, locality and the entire national economy. The scope of benefits: Financial efficiency and socio-economic efficiency. The efficiency of public investment can be calculated in terms of absolute efficiency by subtraction costs from results or relative efficiency by a ratio of outcome and cost. Accordingly, the greater the benefit obtained per unit cost or the lower the state must spend per output (economically/ or socially/ or environmentally), the state public investment is considered to be effective. 1.2.2. System of indicators of assessing public investment efficiency 1.2.2.1. ICOR The incremental capital output ratio (ICOR) is a ratio measuring the amount of public investment needed to create one point of GDP: Kt Kt / Yt ( I t   Kt 1 ) / Yt I t / Yt ICOR     Yt Yt / Yt gt gt
8 1.2.2.2. Public investment efficiency index (PIE-X) Public investment performance index simplify the way measuring the produced per total public investment funds amount. However, for comparison, it is necessary to have a database which is large enough to be able to build the efficiency frontier. The method of calculating the PIE-X public investment efficiency index is as follows: Firstly, the countries/economies have to build an output index of the public investment product called the infrastructure index that each economy has in a certain period of time (possibly is one year). Secondly, economies must also calculate public investment expenditure on mentioned targets. Thirdly, the data of economies mentioned above are allocated onto a coordinate system where the vertical axis is infrastructure index, and the horizontal axis is the amount of public capital. 1.2.2.3. Public investment productivity indicator Efficiency of implementing public investment can be directly measured by the impact of public investment on infrastructure quality and growth outcome, or indirectly measured by efficiency of intermediate stages of investment process. Two indexes measure directly public investment efficiency: - Efficiency of public investment is measured by PIE-X index (mentioned above) on the coverage and quality of public investment services. - Public investment productivity is measured by a ratio of the real average of capital growth to the real average of economic growth. Six indexes measure indirectly efficiency of implement public investment at each investment stage: Stage 1: Public investment planning - Public investment level index is the proportion of state investment in public expenditure. - Public investment volatility index is the standard deviation of the growth of total state investment. Stage 2: Public investment allocation - Public investment stability index by industry is the average rate of absolute percentage change compared to the same period last year in terms of the allocation of
9 public investment in sectors of state expenditure according to international standards of the United Nations. - Public investment growth guideline index is measured by the investment amount in economic sectors (including public and private economic sector) compared with total public investment. Stage 3: Implementing public investment - The Reliability Index of public investment budgeting is measured by the absolute difference between the anticipated and implemented public investment capital. - Public Investment Integrity Index uses corruption perceptions index. 1.2.3. Factors affecting to public investment efficiency 1.2.3.1. Macro factors a. Political system The political system plays a substantially significant role in determining public investment activities as well as is one of decisive factors in choosing projects, management quality and implement, and investment efficiency. b. Macroeconomic indicators The macroeconomic factors which can affect the efficiency of public investment include the possibility of GDP growth in the project area, inflation, average salary, exchange rate and comparative advantages of the region compared to other places. c. Legal framework for public investment The aim of legal framework is to provide a list of key policy issues for the government supporting various types of public investment and enhancing investment development benefits. d. Strategies and plans Strategies and plans are critical perspectives to drive government decisions and investment decisions of economic sectors. e. Natural conditions Harsh natural conditions could affect seriously on the efficiency of public investment of a country. 1.2.3.2. Micro factors a. Effectiveness of public investment management
10 Public investment management efficiency is one of the factors that directly affect public investment. When considering investment efficiency, people often consider indicators evaluating economic efficiency, but in reality, the effectiveness of public investment management depends greatly on the stages from initial policy making, the beginning for the appearance of public investment projects, to the stage of project selection, implementation, evaluation and appraisal. b. Level of transparency information on public investment capital usage The countries with an open and transparent public procurement and expenditure management process based on public bidding will prevent the misuse of public investment capital. c. Issues of corruption Corruption leads to the difficulties of controlling public investment spending, unnecessary projects, projects with the scale and capacity which are inconsistent with real needs, projects with technology which does not meet requirements, projects which are invested at unreasonable times and locations or projects with outdated equipment affecting the safety and reducing its life. Consequently, corruption can make decision processes of public investment be inaccurate. d. Other factors There are also a number of other factors affecting public investment. 1.3. EXPERIENCE ENHANCING THE EFFICIENCY OF PUBLIC INVESTMENT IN SOME COUNTRIES 1.3.1. Public investment experience in various countries around the world 1.3.1.1. Experience in public investment in Korea In Korea, the CEO's role is still limited on the consideration of completed assets comparing to project plans. Investment projects are subject to the audit of the supreme audit organization, including the value for money audit. 1.3.1.2. Experience in public investment in Japan Japanese authorities currently use a variety of methods of cost-benefit analysis to assess the effectiveness of public investment projects, which ensures selection of successful projects, especially in the context of scare public investment resources funding large-scale infrastructure projects. 1.3.1.3. Experience in public investment in China
11 In China, the supervision of public investment projects is carried out through many different levels and stages with the purpose of ensuring public spending for right projects which are effective and in compliance with regulations. 1.3.2. Lessons for Vietnam Some lessons drawn from experiences in public investment management of South Korea, Japan and China for Vietnam to increase the efficiency of public investment are as follows: - Investment orientation, construction and initial screening - Select the project and the budget - Independent evaluation of project appraisal - Project appraisal - Project implementation - Project adjustment - Comprehensive evaluation and re-evaluation after completing the project
12 CHAPTER 2 THE CURRENT SITUATION OF VIETNAM’S PUBLIC INVESTMENT EFFICIENCY 2.1. OVERVIEW OF VIETNAM’S PUBLIC INVESTMENT 2.1.1. Public investment size and structure 2.1.1.1. Public investment size (1) According to the subject a) Total social investment capital Vietnam is adopting an economic growth model primarily depending on the increase of investment capital. The facts showed that total value of social investment capital in the period of 2007 – 2019 increased 4.12 times from 404.7 trillion VND in 2006 to 2.046.83 trillion VND in 2018 with the average growth rate of 8.65% per year. The growth rate tended to slow down from 2011. The average growth rate in the period of 2006 - 2010 was 13.2% per year, but this figure is only 8.7 % in the period of 2011 – 2019. b) Total public investment capital Although the value of public investment capital did not increase as dramatically as the 2006 – 2010 period, but it has continuously increased from 2011 up to now. (2) According to management level In the 2007 – 2019 period, Vietnam's public spending was categorized to central and local funding. Public expenditure funded by the central budget accounted for about 50.7% in 2006 and decreased to 40.5% in 2019. Local managed public expenditure increased from 59.3% in 2006 reaching to the highest of 59.5% in 2019. 2.1.1.2 Public investment structure In recent years, the structure of public investment by industry and field has shifted according to the direction of the Party and State, as well as accelerating Vietnam’s economy restructure towards industrialization and modernization. Most of social development capital invested into construction and fixed assets for production. In the transport sector: Road transport accounted for about 89% of the total public expenditure of the industry. Although it accounted for over 90% of passenger transport and 70% of freight, but it was the most expensive form of freight transport. In the agricultural sector: Policies of focusing on investment into developing large irrigation works for the main areas of rice cultivation have ensured food security, but have provided poor added value.
13 2.1.2. Public investment resources 2.1.2.1. State budget revenue Every year, the State spends more than 187,969 billion VND for investment, accounting for 40% to more than 50% of the total public investment expenditure. 2.1.2.2. Public debt In fact, there have been many international studies on the threshold of public debt that have a negative impact on the economy of a country. Public debt data from the International Monetary Fund (IMF) showed that compared with other emerging and developing economies, Vietnam's public debt had a much faster growth rate. In the period of 2000 - 2019, from the lowest ratio of public debt and GDP in the group of developing countries, Vietnam's public debt surged. In recent years, Vietnam has even reached the top group of high public debt in 2016 with outstanding debt ratio of 63.6% (WB & GVN, 2017). 2.1.2.3. Debt/ ODA sources According to the World Bank (2017) statistics, during 2006 – 2016 period, ODA capital funding Vietnam increased significantly from 2011 to 2014, which higher than the period of 2006 - 2010, and tended to decrease in the 2015 – 2016 period, as shown in figure 2.10. The reason could be that in the 2001 - 2005 period, committed and signed grants of foreign sponsors were not disbursed with the fact that USD 411.24 billion has been committed to aid Vietnam, but only USD 7.877 billion has been disbursed. By the period from 2011 to 2015, disbursement rate has improved significantly with the committed amount of 27.78 billion USD and the disbursement amount of 22.32 billion USD. c) Some difficulties in ODA management in Vietnam Although Vietnam has been improving the management and use of ODA funds as well as the role of foreign NGOs since 1996 by passing a number of legal mechanisms, such as Decree No. 16/2016/ND-CP, Circular No. 12/2016 / TT-BKHDT, Decision No. 251 /QD-TTg, but the legal framework for local NGOs has not been formed. The activities of the NGOs are considered to be fragmented. Therefore, the draft of “Law on Associations” has been formulated but has been collected comments and has not been approved by the National Assembly. 2.2. The current situation of Vietnam’s public investment efficiency 2.2.1. ICOR of public investment For many years, Vietnam has adopting a growth model mainly based on increasing investment capital, especially investment of the state sector. According to Tran Nguyen Ngoc Anh Thu & Le Hoang Phong (2014), the ratio of investment capital on GDP
14 increased strongly since the economy opened up while the growth rate only fluctuated around 6 - 8%. It only increased from 26.4% in the period 1991 - 1995 to over 40% for the period 2006-2010, especially peaked in 2007 at 46.52% of GDP to be the highest ratio in East Asia and Southeast Asia. Social investment capital increased mainly because of significant increase of public investment with the amount of above 53%, 39.1% and 38.4% during 1996 – 2005 period, 2006 – 2010 period and 2011 – 2019 period respectively (Table 2.2). The ratio of public investment capital on GDP accounted for a high proportion and increased more strongly than investment capital from the domestic non-state economic sector and the FDI sector. However, the results showed that the efficiency of public investment was lower than the investment efficiency of the whole economy and the remaining investment areas when assessing the ICOR index shown in Figure 2.14 and Figure 2.15. The gap between the ICOR of public investment capital in the period of 2011 – 2019 was higher than the 2006-2010 period. 2.2.2. Public investment efficiency index (PIE-X) 2.2.2.1. Effectiveness of public investment spending on infrastructure (1) Effectiveness of public investment spending on transport infrastructure (a) Transport infrastructure volume index The road transport sector accounted for about 79% of the total public expenditure of the industry. Public spending on inland waterways, maritime and railways was relatively low, while the transport cost per kilometer of these transport models was much lower than road transport. The waterways transportation network in the period of 2007 - 2017 grew quite slowly with the average growth rate of 3.66% per year. The tonnage of most waterways transport vehicles was below 50 tons accounting for 58.4%; from 51 tons - 100 tons accounting for 15.2%; from 101 tons - 500 tons accounting for 12.7%; from 501 tons - 1000 tons accounting for 6.4% and above 1001 tons accounting for only about 7.6%. (b) Assessment of the increase in public investment spending and the change in the volume of transport infrastructure Public investment of the government in the transport sector was not balanced when it was mainly prioritized for new investment over maintenance. According to the World Bank & GVN (2017), the total investment expenditure for road maintenance only accounted for about 18% of the total expenditure of the transport industry in 2012.
15 According to the assessment of national competitiveness capacity, Vietnam’s infrastructure was ranked 79 with a score of 3.9 (figure 2.20), slightly higher than some countries in Southeast Asia such as Laos, Philippines and Cambodia. (2) Investment efficiency index for the power generation sector (a) Power output indicators Without nuclear power, the hydropower quantity of about 20.000 MW, the gas turbines power quantity of about 10.000 MW and the limitation of liquefied gas, Vietnam power quantity mainly generated from coal with the total quantity of 20.000 MW accounting for 40% of total national power output. However, it caused the problems of CO2 emission and coal slag. Total energy production increased by 7.9% per year in the period 2001-2005. The figure in the 2006 - 2010 period was only 2% per year (Nguyen Khoa Dieu Ha, 2010). The total primary energy supply increased by 7.1% in the period 2001-2010. The proportion of energy types in the total primary energy supply is 10.3% of oil, 23% of coal, 13% of gas, 22.9% of non-commercial energy, 10,3% of electricity, 20.5% of oil products. Electricity production increased an average of 14.3% a year in the period of 2001 - 2010. The structure of electricity production has changed considerably over the past decade with the fact of gradually reducing hydroelectricity and increasing power generated by gas thermal power and gas turbine from 16.4% to 44.5%, or by coal from 11.8% to 17.9% or imported. (b) Evaluate the level of public investment spending in the energy production sector The production of electricity, gas, hot water and air conditioning in the 2006 - 2019 period accounted for about 13.7% of total national public investment with the amount of about 59,585 billion VND a year ranking 3rd in the highest rate of spending fields. The proportion of public investment in this field increased sharply in the period of 2009 – 2013 because of enormous demand for GDP growth. The output of commercial electricity produced in the 2006 - 2019 period grew at an average of 10.4% a year, while investment spending on electricity and gas production increased by an average of 9.97% a year. In the period of 2010 - 2013, and 2017 - 2019, the growth rate of electricity production outperformed the rate of public investment spending on electricity and gas production. (3) Index of increase in public investment/ level of access to clean water According to the General Department of Water Resources, by the end of 2016, the percentage of people in rural areas using hygienic water was about 87.5%. However, only
16 about 49% of rural residents had accessed to clean water according to the Standard QC02/BYT Regulation of the Ministry of Health. Currently, only 43.5% of the population is supplied with water from centralized water supply infrastructure, while 56.5% must use water from other suppliers. (4) Public investment in the health sector The proportion of health spending in Vietnam is considerable in the context of present income. Government budgets represent about half of total expenditure, but the high share of out-of-pocket health spending is also a public policy concern due to its impact on the poor. In the future, the pressure to put these costs into public funds is likely to grow. Cost pressures are becoming more serious as Vietnam prepares to enter a period of rapidly aging population, much faster than most other countries. In most high-income countries, public spending accounts for almost 75% of total spending, and that proportion is based on solid economic ground that people do not know when they will get sick and pay incurred costs after being sick and they cannot have information to make an informed opinion about where to be cared for, what kind of treatment is needed, and whether to trust the doctor or are not. Thereby, we can see a great expectation of the important role of government spending in the health sector. (5) The index evaluates the efficiency of public investment in poverty reduction From 2007 to 2014, the effectiveness of public investment on poverty reduction in Vietnam was not stable. When it comes to promoting hunger eradication and poverty reduction, the social costs have to be invested more and more and fairly expensive. In 2004, when public investment increased by 1%, the percentage of poor households decreased to 0.86%, but by 2010, this rate decreased only 0.12%. In 2012, the rate of poor households decreased to 0.77% and in 2014, this rate decreased increased to 1.84% Thus, it proved that public investment in Vietnam has made much efforts of reducing poverty but merely achieved the effectiveness of quantity. (6) Public investment efficiency index for the education sector Generally, only in the 2009 - 2012 period, due to the impact of the economic crisis, the capital expenditure for education decreased compared to the previous years. But considering the whole period of 2006 - 2019, the public investment capital spent on education and training had an increasing proportion, which proved that the state was paying more and more attention to education which is the precondition to enhance the quality of human resources in the future.
17 2.3. ASSESSMENT OF THE EFFICIENCY OF PUBLIC INVESTMENT IN VIETNAM 2.3.1. Achievements Firstly, the scale of public investment spending has been continuously expanded to support economic growth during this period. Secondly, the restructuring of public investment has been implemented in accordance with the right direction, the proportion of public investment in the total social investment and on GDP has gradually decreased. Thirdly, the structure of public investment has been gradually shifted to sectors that ensure sustainability growth. Fourthly, the health sector has received attention and invested in improving the quality of people’s health. 2.3.2. Problems and reasons 2.3.2.1. Problems Firstly, Vietnam’s ICOR and comparison with other countries For many years, Vietnam has pursued a growth model mainly dependent on public investment. The ratio of public investment capital on GDP accounts for a huge proportion of the total social investment capital. The average of ICOR in the period of 2011 – 2019 was fairly high but the average growth was only 6.3%, which meant that the increase of 1 “dong” of public investment will generate an extra of 0.42 “dong” of GDP. ICOR tended to increase in the period of 2007 – 2009. In comparison with other countries in the same region, Vietnam’s ICOR was twice larger, which meant that Vietnam’s public investment efficiency was only half that of them. Secondly, the index of public investment in transportation infrastructure The allocation of public investment in the transport sector was inefficient with the considerable expenditure on road systems of 79% while the remaining expenditure on waterway and railway systems. The cost of using highways comparing to other countries in the same region was much higher, but the expressway densities was low. Moreover, despite of enormous investment on the road system, the maintenance costs was still low, leading to the quality degradation and the increase of traffic accidents. Until recent years, the fund for road maintenance, which was established after Government’s directive, was exploited fully, but traffic accidents seemed not to decrease.
18 The efficient allocation of public investment on transport sector causes waste because of the high expenses of good delivery by road, which was 90% higher than expenses of delivery by waterway and railway. The inappropriate implementation of public investment projects such as making the appointment of contractors without public bidding causes wastes of public capital, the capital adjustment and delayed completion. Thus, besides the inefficient allocation of public investment in the transport sector, there was the inefficient exploitation of public capital, which caused capital loss, embezzlement and corruption. Thirdly, the index of public investment in the power generation sector The total amount of public investment on power generation sector in the period of 2006 – 2019 was 59.585 billion VND a year, accounting for 13,7% of the total public investment. The fact showed that the average annual output of electricity production increased annually 10,4% a year while the public investment on electricity production was only 9,97% a year, which caused the situation of lack of public capital and economic growth. Therefore, it is necessary to make more efficient plans of allocation of public capital among economic sectors. Fourth, the index increases public investment /access to clean water The pollution of water sources in rural areas due to lack of infrastructure and the discharge of industrial, agricultural, livestock and domestic wastewater without treatment led to lack of clean water for daily use. Due to the low-quality infrastructure, the proportion of people in large cities and in urban zones getting access to sanitation water accounts for 90% and 41% respectively. Fifth, the index of public investment in the health care sector Vietnam had an average of about 43% of its health spending on pharmaceuticals, a much higher figure than other countries in the same region and around the world due to high and volatile pharmaceutical prices. This caused people to seek medical care with a large amount of expenses of buying more medicine. Sixth, the index of public investment in the education sector The proportion of public investment capital on primary schools was fairly high, while the proportion of public investment on universities and training was low, leading to the low educational quality and the lack of human resource in the future. Graduated students lacked practical skills and necessary skills to integrate. Unemployment among