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Downturn revs up transport sector
Minister of Transport Ho Nghia Dung spoke to Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) about the sector’s capital disbursement for infrastructure development.
Opinions have said that transport is the only sector which turned the disadvantages of economic decline around into advantages, even including bond disbursement. What do you think?
Economic decline is a time for countries to restructure their economy, including investing in infrastructure, particularly transport. For this reason, disadvantages can be turned into advantages. Viet Nam is doing the same. At present, transport infrastructure investment creates jobs for workers and stimulates the development of other production sectors in a time when many businesses encountered operational difficulties and workers lost their jobs as a result of declining purchasing power. Development of transportation infrastructure also contributes to recovering economic decline by creating conditions for economic development.
We are maximising the opportunities that emerged with the economic decline to upgrade transport infrastructure. As part of the stimulus package, the Government prioritised capital for the transport sector, focusing on key projects such as highways, ports, airports and rural transport.
In 2009, VND6 trillion ($336 million) worth of Government bonds will be earmarked for rural transport development, accounting for 60 per cent of the total amount set aside for the transport sector. We targeted a disbursement 1.5 times higher than 2008.
What about Official Development Assistance (ODA) disbursement?
ODA disbursement so far this year has been 1.5 times higher than the same period last year, particularly capital provided by the Japanese International Co-operation Bank.
However, disbursement of ODA provided by the World Bank hasn’t met our target for many reasons, including differences between disbursement procedures between the bank and Viet Nam. All disbursement processes, particularly site clearance tasks, must be reassessed by the bank after completion. When the two sides finally reach an agreement, the disbursements will be made.
When the economic crisis passes, provided that the transport sector would not have much hope in receiving capital sources from ODA or Government bonds, what could the sector do to mobilise capital for infrastructure development?
This is something the transport sector always takes into consideration because infrastructure upgrades require so much time. Annual budgets will continue to be used for investment preparation tasks and meeting capital demand for site clearance tasks, while construction works will use capital from ODA. When ODA sources gradually reduce, we will seek other capital sources. At present, many international organisations are willing to lend Viet Nam the help it needs to upgrade infrastructure at higher interest rates than ODA loans but still cheaper than commercial or bond interest rates.
We will also focus on exploiting capital from businesses. Highway construction projects, which require huge investment capital and a long period of time for capital recovery, will use funds from the State budget. Smaller projects will use capital mobilised from businesses. In order to encourage businesses to pour capital into infrastructure development, apart from State policy requirements, there will be more policies for businesses to use roads for their business operation.
What shortcomings remain in the transport sector?
At present, it is the sector’s fault that there hasn’t been a focus on building highways. China started to build highways in the 1980s. So, we mapped out a strategy to develop highways, focusing on building the North-South highway and highways linking Ha Noi, HCM City and other key urban areas.
I hope that in the next four to five years, Viet Nam will have a network of highways and in the next 10-15 years, the same level of networked highways as China.
vietnamnet, vietnamnews
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