PPP efficient for Vietnam’s infrastructure projects, officials say

Public private partnerships are the most efficient solutions for Vietnam’s infrastructure projects, which are grappling with a shortage of investments in the current difficult time, experts say.

View of East-West Highway in HCMC. Public private partnerships are the most efficient solutions for Vietnam’s infrastructure projects (Photo:Minh Tri)

Truong Tan Vien, deputy minister of transport, said the domestic transport sector was coping with many tough challenges including the government’s limited budget and short-term loans with high interest rate.

Therefore, the PPP solution is appropriate for Vietnam’s projects on traffic infrastructure, Vien said. Statistics from the World Bank show 32 PPP projects were carried out with the total investment of around US$6.7 billion in the period of 1994 and 2009.

To achieve the targeted economic growth rate of 7-8 percent by 2020, Vietnam requires around $150 billion for key infrastructure projects on traffic, electricity, water supply and environment.

Analysts said the projects could not rely on financial supports from traditional funds including the government’s budget, government bonds and ODA.

“The government is trying to set up the legal framework for PPP projects,” Vu Van Ninh, minister of finance, said, adding that the government will also finance key articles of the projects in order to attract domestic and foreign investors.

According to the Ministry of Planning and Investment, there are 24 PPP traffic projects requiring tens of trillions of dong each.

They comprise of the Ninh Binh – Thanh Hoa Highway with the investment of VND33 trillion ($1.65 million), Dau Giay – Lien Khuong Highway with investment of VND48.3 trillion and Ha Long – Mong Cai Highway with investment of VND25 trillion.

Vietnam is set to build more power plants with the total output of more than 50,000 megawatts by 2020 to meet up with the rapid growth rate of the electricity sector, which is expected to amount to around 14-16 percent in the period of 2011 and 2015, said Hoang Quoc Vuong, deputy minister of industry and trade.

The Ministry of Industry and Trade is listing projects on building power plants, which will be applied PPP solutions, Vuong said.

Thai Thanh Hai, deputy general director of the financial consultancy Deloitte Vietnam, admitted PPP projects were attractive. However, investors remain concerned about the explicitness of the mechanism for attracting their participation in the projects.

Nguyen Van Tu, deputy director of the Hanoi Department of Planning and Investment, notices the role of the government and private investors in PPP projects is equal, thus a legal framework of supervising and managing the projects is required.

Vietnam will ensure that the PPP framework will have “everything ready on the table” for investors, avoiding delays that have marked other forms of investment, Thanh Nien Newspaper quoted Deputy Minister of Planning and Investment Dang Huy Dong as saying at a conference last month.

Under the framework, investors will no longer have to worry about undue delays. All they will need to do is to pour in capital, either from their own sources or through bank loans, Dong said.

By Quang Minh and Tuan Ngoc – Translated by Vu Minh

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