Vietnam needs 1.65 million VND of public investment capital if it wants to grow 10% next year

At the seminar “Public investment – removing bottlenecks to break through growth in 2026” on the afternoon of December 23, Dr. Do Thien Anh Tuan, Lecturer at Fulbright School of Public Policy and Management mentioned the huge role of public investment to achieve the economic growth target of at least 10% from 2026.

Currently, total social investment capital accounts for about 33% of GDP. Of which, public investment capital accounts for about 10%, equivalent to 28% of the total social investment capital structure. Mr. Tuan stated the hypothetical scenario in 2026, if real GDP increases by 10% and inflation is at 4%, the scale of the economy could reach more than 14 million billion VND at current prices.

“At that time, according to the Government’s plan to bring total social investment capital to 40% of GDP, we will need about 5.8 million billion VND, with public investment capital equivalent to 1.65 million billion VND,” Mr. Tuan calculated. For comparison, this number is about 1 million billion VND higher than this year’s public investment disbursement level, as of mid-December (603,602 billion VND).

According to the Ministry of Finance, public investment disbursement in 2025 currently reaches 66% of the plan assigned by the Prime Minister. According to Dr. Do Thien Anh Tuan, disbursement progress is being affected by key bottlenecks that need to be resolved such as site clearance, resettlement, lack of synchronization in technical infrastructure of electricity, water, and supply of construction materials…

Sharing the same opinion, Mr. Phan Tan Dat, Chairman of the Ho Chi Minh City Mineral Industry Association, said that construction materials, especially leveling materials, still encounter legal bottlenecks that hinder the progress of key projects.

According to him, Ho Chi Minh City and surrounding areas have construction stone reserves with approved resources of up to 1,194 million m3, actual demand each year ranges from 25 to 28 million m3, but the current licensed mining capacity is only 17 million m3. He proposed that authorities soon increase exploitation capacity.

Facing these challenges, Mr. Dau Anh Tuan, Deputy Secretary General and Head of the VCCI Legal Department pointed out a series of new legal amendments that are helping pave the way for public investment capital flows in 2026.

Accordingly, the Land Law was adjusted to be flexible, adding cases of land recovery, shortening the notification time and applying a new, simpler land price list, thereby removing congestion for large and urgent projects.

The Law on Public Investment 2025 promotes decentralization and gives proactive power to localities and ministries in adjusting capital plans, thereby reducing legal conflicts and accelerating public investment progress.

“These changes ensure that public investment projects can flexibly adjust according to actual implementation without having to repeat the multi-level approval process as before,” Mr. Tuan commented.

In addition, he believes that the synchronization between the Laws on Land, Construction, Planning and Public Investment will help legal conflicts that have been hindering for a long time be resolved completely.

Next to capital scale, Dr. Do Thien Anh Tuan noted the problem of efficiency of public investment. This is measured through the ICOR coefficient, which indicates how much capital is needed to produce an additional dollar of output. Accordingly, the higher the ICOR, the lower the investment efficiency.

In previously successful industrialized countries, the ICOR coefficient fluctuated between 2-3. Meanwhile, in the past 15 years, ICOR Vietnam has never dropped below level 4, showing that there is still huge space to improve investment efficiency.

Particularly in the post-Covid period until now, the average ICOR is 5.85. Mr. Tuan said that if the efficiency of capital use remains at this level, the scale of social investment must be pushed up to more than 47% of GDP to achieve the 10% growth target. This is great pressure on the economy because just increasing its scale will be like a “sand castle”, easily affected by waves of macroeconomic fluctuations.

Instead, a more feasible scenario is to maintain a social investment level of about 40% of GDP but must drastically improve the efficiency of capital use, bringing the ICOR coefficient to below 5. Experts recommend shifting the management focus from prioritizing disbursement rate to evaluating efficiency throughout the project’s life cycle.

That is, instead of just looking at annual disbursements, management agencies need to focus more on the economic net present value (NPV) of the project, ensuring investment decisions are based on scientific calculations instead of emotional judgments.