Part of Ring Road 2 in Hanoi, built under a public private partnership. (Source: VNA) Hanoi (VNS/VNA) - More than per 76 percent of current investmentprojects following public-private partnerships (PPP) are in the field oftransport infrastructure, but investors still feel insecure.
Of the 289 PPP investment projects, there are 220 involved in transportinfrastructure, said Deputy Minister of Transport Nguyen Nhat attending aconference themed "Solutions to promote investment in the development oftransport system structure under PPP" in the capital last week.
Nhat told Viet Nam News: “The total investment capital of PPP projects in theform of construction-business-transfer or BOT is worth about 210 trillion VND (morethan 9 billion USD), and this was significantly supporting the limited budgetin the field.”
“The legal framework for PPPs is not strong enough to encourage more privateinvestors, especially in the context that an infrastructure project usuallylasts between 15 and 20 years, and has high risks,” he said.
The Ministry of Transport sent 125 delegations and inspectors to PPP projectsbetween 2018-19, and the Vietnam Association of Road Traffic Investors (Varsi)surveyed 12 road projects. The results showed investors faced many obstaclesand problems carrying out PPP projects in Vietnam.
Tran Chung, chairman of Varsi, said regulations for PPP capital managementremained lax as State capital in PPP projects was mainly allocated from theannual public investment plan.
In more detail, Can Van Luc, chief expert at the Vietnam Development Bank(BIDV), said PPP capital came from four sources: 20 percent from owner'sequity, 40-50 percent from credit institutions, 20 percent from capital marketssuch as corporate and project bonds, and 20 percent from the fund.
Luc said BIDV specialised in medium and long-term capital, but it was in arestructuring period and could not meet the capital demands of all projects. Atthe same time, other credit institutions in the market preferred short-termloans as long-term loans could lead to bad debt.
Saying that PPP was an effective method to attract investment, Nguyen Mai, vicechairman of the Vietnam Association of Foreign Invested Enterprises, said: “Thebiggest roadblocks for PPP in Vietnam is that local investors have encountereda series of difficulties when implementing projects, and foreign investors arewary of getting involved in road projects.”
Mai told Viet Nam News the lack of guarantees or a risk-sharing mechanism wasthe biggest obstruction for investors. For example, the Government should comeup with effective methods to ensure the toll collection roadmap. Conflictsbetween investors and local people caused losses for investors.
Nguyen Van Khang, deputy general director of the Cuong Thuan Investment andDevelopment Joint Stock Company (IDICO) recalled a case in 2017 when somepeople opposed paying a toll at BOT stations. Without regulations clarifyingthe responsibilities and rights of stakeholders, corporates faced losses.
Capital was another matter, according to BIDV’s Can Van Luc, who said the minimumcapital of 200 billion VND (8.6 million USD) for a PPP mentioned in the draftlaw was lower than the international level which ranges from 50-100 million USD.
Luc said slow investment would take its toll on projects, reducing investmentefficiency and putting off big investors.
The conference was held last week to get more ideas for the draft law on PPPswith 11 chapters and 112 articles. Composed by the Ministry of Planning andInvestment, the draft is about to be submitted to the National Assembly for considerationand is expected to be approved in May 2020./.
VNA
