A Vietnamese highway. The country aims to build 9,000km of highways by 2050 and one third of the construction costs are expected to be financed by private money. (Photo baochinhphu.vn) Duong Dang Hue, a legaladviser at the Vietnam Association of Road Traffic Investors, is concerned thatthe number of PPP-based projects have been declining since the Law on PPP tookeffect in early 2021.
He underscored fourreasons why the law gave no boost to private involvement in public projects.
First, the law is toosimplistic, inadequate to regulate many major issues arising from PPPcontracts. Without adequate legal grounds, private investors become discouragedand are unwilling to enter into arrangements.
Second, the law fails toclearly define private investors rights to the facilities in the projects. Theabsence of a clear-cut definition of rights makes investors uncertain abouttheir ownership of the facilities, putting them off.
Third is the right torun the facilities for profits that private investors seek once they put theirmoney into PPP-based projects.
Although the right hasbeen implicitly stated in various legal documents, it is frequently violated inreality, further disheartening investors.
The absence of amechanism to incentivise private investments in minor facilities along publichighways, such as petrol stations and motels, is the fourth reason for lowprivate presence in the public projects scene.
Nguyen Minh Duc, an expertat the Legal Department under the Vietnam Chamber of Commerce and Industry,estimated that Vietnam needs around 900 trillion VND (38 billion USD) between2021 and 2030 to reach its goal of 9,000km of highways and 30,000km of nationalroads by 2050.
The Government expectspublic money to meet two-thirds of the financial need and private investment dothe rest. Unfortunately, almost no private money flowed into publicinfrastructure in 2021 and 2022.
“Low private involvementindicates that the goal of 300 trillion VND of private investments ininfrastructure in the next 10 years is not easy,” he said.
He also revealed thatmany public projects initially expected to kick off under PPP were later fundedsolely by public money as they received a lukewarm reception from privateinvestors.
Nguyen Trong Hiep, Directorof the HPVN Law LTD., underscored the need to revise the Law on PPP toencourage the participation of the private sector in public projects.
He said the Governmenthad to establish a well-developed risk-sharing mechanism to give privateinvestors decent profits to reward for the risks they bear in PPP-basedprojects.
A good risk-returntradeoff would act as a financial incentive for the investors to put theirmoney into public infrastructure.
He also said a disputesettlement mechanism should be put in place to deal with public-privatedisagreements and quickly resolve minor disputes.
He called fortransparency when the contracts are put out to tender to ensure best investorswin the bids. Inspection should be frequently carried out to preventfavouritism.
Nguyen Hong Chung, Chairmanof the DVL VENTURES, urged the Government to change its management mindset,establish institutions promoting PPP and found a national fund for PPPdevelopment.
He said it was time tochange the relationship between the State and the private sector to keep upwith the times./.
VNA
