Vietnam's investment payouts fall short of targets!

Vietnam's investment payouts fall short of targets!

The state of public investment in Vietnam shows worrying figures. James Anderson, chief public sector specialist at the World Bank, reports that disbursements in 2024 are expected to reach only 77.55% of the established plan. In comparison, high-income countries tend to receive over 96% of investment payouts. In the first four months of 2024, disbursements amounted to VND128,512.9 billion, which is only 15.56% of the plan set by the Prime Minister. This is a decrease compared to the same period last year, when the payout rate was 16.64%.

The Vietnamese government is targeting economic growth of 8% or more in 2025 and plans double-digit growth for the period 2026 to 2030. Part of this plan includes the goal of disbursing 100% of public investment capital by 2025. To this end, the Prime Minister has already released supporting documents and guidelines to encourage withdrawal rates. Despite these efforts, as of April 30, 2025, 17 ministries and 21 municipalities have not fully utilized the established capital program of almost VND 8 trillion.

Challenges in implementation

What is particularly striking is that 37 out of 47 ministries and 27 out of 63 municipalities have disbursement rates below the national average. The causes are varied: long preparation times, low quality of preparation and complicated procedures contribute to this. The Treasury has also identified additional issues, including slow capital allocations and inadequate local budgets. To be successful, ministries and municipalities must proactively implement government instructions and address difficulties.

A total public investment capital plan of VND 888,087.9 billion is estimated for 2025. Of this, VND 825,922.3 billion was allocated, while local budget capital was increased by VND 50,716 billion. Transfers from previous years could be increased to VND11,449.7 billion by 2025.

Environmental goals and e-mobility

In parallel to these economic challenges, Vietnam is pursuing an ambitious environmental policy. The country is committed to decarbonizing its economy by 2050, which was pledged at the COP26 summit in November 2021. The transport sector represents a significant proportion of greenhouse gas emissions and is responsible, according to the World Bank around 32.9 million tonnes of CO2 equivalent in 2021. Road traffic is the main source of emissions.

Vehicle ownership in Vietnam is currently a luxury affair, but sales are continually growing. Between 2010 and 2022, the average growth rate was 15%. Vietnam has the potential to switch from traditional vehicles to electric vehicles (EVs). High growth targets are being sought by 2035, particularly in the two-wheeler segment, which also includes electric two-wheelers. Currently, 72.16 million two-wheelers are registered, which accounts for 94% of the total registered vehicles.

Sales of electric vehicles must increase to 1.5 million by 2030 and 7.3 million by 2050. Forecasts suggest that cumulative market demand for EVs could reach over 7 million between 2024 and 2030 and more than 71 million between 2031 and 2050. This transition to e-mobility could create up to 6.5 million new jobs by 2050, with 61% in the area of ​​electric vehicle charging infrastructure.

The recommendations to the Vietnamese government include creating an interministerial body for e-mobility and promoting the acceptance of electric vehicles across all vehicle categories. It is also recommended to expand electricity generation and intelligent charging solutions in order to meet the challenges of e-mobility and promote a shift from private transport to public transport.

Given these complex challenges and goals, it is clear that Vietnam faces a complex implementation process that takes both economic and environmental aspects into account.