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Investment needed for development
The nation needed a long-term infrastructure development strategy which would require massive investment and co-operation by the public and private sectors, said KPMG Viet Nam chairman John Ditty at the Conference on Infrastructure and Public-Private Partnerships (PPP) in Viet Nam held here on Thursday.
As the availability of both public and private capital was constrained, PPP was taking centre stage in the context of the increasingly pressing need for infrastructure in developing countries, added International Finance Corporation (IFC) senior investment officer Towfiqua Hoquer.
Deputy Minister of Planning and Investment Dang Huy Dong told the conference that Viet Nam would need around US$200 billion for infrastructure development over the next decade, of which he expected $70-80 billion would come from the private sector.
"The Government is looking for ways to raise funds for infrastructure projects, mostly for transportation, energy and water," said Dong. "We have been exposed to many international experiences and perspectives on PPP and we still need a lot of help from the international donor community to build an appropriate PPP framework suited to Viet Nam."
The Government issued Decree No.108/2009/ND-CP in January of this year to help facilitate infrastructure construction contracts using Build-Operate-Transfer (BOT), Build-Transfer (BT) and Build-Transfer-Operate (BTO) models.
Further regulations were being drafted, Dong said, and the Dau Giay-Phan Thiet Expressway pilot project, based on the impending PPP framework, was under negotiation.
Such projects include risks to investors in terms of bidding, transaction costs, long-term contracting burdens and policy changes, requiring clear guidance on the allocation of such risks between the Government and investors, Towfiqua said.
"Risk transfer lies at the heart of effective PPP design," he added. "As each participant faces risk, the framework should allow for clear and fair risk allocation to protect investors and ensure project efficiency."
Stanley Boots, counsel of the international law firm Lovells LLP, said a more comprehensive framework, particularly for BOT contracts, were essential and should address with greater specificity the extent of Government guaranty.
Dong said major principles based on the best international practices would be developed and applied.
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