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Infrastructure needs private investment: conference
Public-private partnerships are the most feasible way to bring capital-short public infrastructure projects the funds they need, said representatives at a conference Friday.
Truong Van Doan, deputy minister of Planning and Investment, said most public infrastructure projects in Vietnam are funded by state money or ODA (Official Development Assistance) loans from overseas.
But he said these two capital sources alone could not meet the country’s high demand for new infrastructure.
More partnerships with the private sector would be necessary to meet the demands of the nation’s development, he said.
Jim Winkler, manager of the Vietnam Competitiveness Initiative, an economic growth project funded by the United States Agency for International Development, said most governments are unable to provide the capital needed for all state infrastructure projects.
Traffic system projects that generate income later can easily attract private investors and the state does not have to finance these projects by using tax revenue, he said.
He noted that there are, however, certain kinds of infrastructure projects that must be funded by the state itself.
If the government thinks it would be more effective to call for private investment in building schools, hospitals or charitable institutions, subsidies and guaranteed revenues must be provided by the government, he said.
In general, the government must decide which financing model is best for infrastructure development, he said.
Vietnam should set higher targets and develop more public-private partnership (PPP) projects, Winkler said, suggesting 20-30 projects a year.
He said the country should establish a solid legal framework for the PPP model and ensure that the government has the capacity to run such projects.
Dang Huy Dong, director of the Ministry of Planning and Investment’s Department of Public Procurement, said the Hanoi–Hai Phong Highway project and the southern Phu My 3 Power Plant project were all PPPs.
But he said the government needed to be more discerning when selecting or approving private firms for partnerships.
International financial advisor Ben Darche said the government should assess the capabilities of companies that invest directly in infrastructure projects, instead of judging them based on the competence of their parent companies abroad.
He said the government’s primary concern must be the project and the involved company’s ability to complete it, not the parent company, which does not bear any responsibility for problems associated with its smaller arms.
In a public-private partnership, a government and one or more private sector companies come together to fund a public project
Thanhnien
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