On the other hand, onlending to domestic enterprises as a stimulus measure presents complex challenges. Adequate and transparent risk and cost benefit assessments, and detailed and individual project evaluation are required. In Viet Nam, projects financed through the onlending mechanism of the fiscal stimulus package included strategic sectors such as ship building, steel, cement, and the aircraft industry, in addition to light manufacturing (textiles, ceramics, etc.). The slower pace reported in disbursement of the onlending mechanism, in comparison to the quick implementation of other components of the stimulus package, should be an area for further analysis when establishing the relative efficiency of the fiscal stimulus components. The incremental capital output ratio in Viet Nam has increased over the last 10 years, and continued to increase after 2008. This suggests that the efficiency of the economy is falling. There is a strong view that the root cause of inefficiency is in public investments and the state-owned enterprise (SOE) sector. There is perceived little transparency or accountability on how large-scale public investments are selected and implemented, and little oversight of investment decisions.
Countercyclical Support