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State, private sector link up to develop infrastructure
The Ministry of Planning and Investment (MPI) has suggested setting up an investment fund for infrastructure development, in the form of a public-private partnership (PPP) with the aim of removing obstacles to the development of the country’s infrastructure, which hinder the country’s efforts to attract FDI.
According to MPI Deputy Minister Truong Van Doan, the fund will utilise every resource to help investors use their capital at as low an interest rate as possible. However, ways of getting the fund up and running are still under discussion, he said.
Vietnam has a huge demand for investment in its infrastructure. The transport sector alone now requires hundreds of trillions of Vietnamese dong to carry out the roads construction programme during the period 2011-2020 period, according to Nguyen Trong Tin, Head of the MPI’s Urban Infrastructure Department.
In other countries around the world, the PPP model has been applied to many large-scale projects while in Vietnam, it can be seen in build-operate-transfer (BOT) projects.
The problem is that almost all feasible infrastructure projects are prioritised for State-owned businesses and mainly funded from the State budget, ODA, and infrastructure bonds. However, the State budget is limited while preferential loans, which have the advantage of lower interest rate and a long repayment period, are only on a small scale.
“As the budget is limited, PPP proves as an effective model for the State and the private sector to work together to develop the country’s infrastructure,” Tin stressed.
The MPI has started a technical assistance project, with funding supplied by the World Bank, targeting the implementation of three pilot PPP projects to build motorways and clean water supplies for urban areas in Vietnam .
Along with this, more attention will be given to reforming the legal framework. Firstly, Decree 78 on BOT investment, a similar model as PPP but more limited, will be amended. According to Tin, next year the MPI will submit to the Government a number of draft amendments to the decree, which came into effect in 2007.
Tin said the ministry plans to deploy the PPP model in both social and technical infrastructure projects in the future, because the existing urban technical infrastructure system is seriously overstretched, resulting in regular traffic jams, a massive leakage of fresh water and environmental pollution.
At a conference on promoting urban infrastructure investment held in Hanoi earlier this year, the MPI introduced a list of 67 projects that need a total investment capital of 12 billion USD for the 2009-2016 period.
vietnamnet, vna
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