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Remodelling infrastructure finance
The state budgets and ODA resources from most countries across the world cannot fully meet capital demands for infrastructure development, and Viet Nam is no exception. Recently, public-private partnerships have emerged as a good model for infrastructure investment in Viet Nam.
The model has been applied successfully over the past 20 years across the world. Public-private partnerships (PPP) describe a business venture between the government and the private sector-including both foreign and local companies-to build and operate large projects, usually public service ones, according to Tran Van Cuong, President of the real estate Nam Cuong Group.
Viet Nam now has a severe capital shortage for infrastructure development. Besides the State budget and ODA resources, it would be more and more necessary to apply PPP models throughout the nation.
Both international and domestic experts emphasised that PPP was extremely essential for better infrastructure in Viet Nam, to attract more and more overseas investors and to help promote socio-economic development in the country.
The Ministry of Planning and Investment (MPI) was actively making up programmes to implement PPP projects effectively with the hope to see US$160 billion in the next 10 years for infrastructure development-half of which would likely come from the private sector, which would help ease the burden on the limited State budget.
Experts said that Viet Nam's State budget only satisfied 20-30 per cent of the total demand for infrastructure development.
Seven sectors would run trial PPP models, including roads, public services, airports, sea ports, railways, bridges and tunnels, according to the MPI.
In fact, there is currently no legal framework for PPP in Viet Nam.
Minister of the MPI Vo Hong Phuc said, "The model is a new concept in Viet Nam that we are researching; this form will generate great opportunities to lure investment capital for infrastructure development in the country."
Viet Nam is now studying laws, legal systems and learning experiences from PPP in other countries.
The Government recently asked the MPI to co-ordinate with other relevant bodies to build up legal systems to lure investors under PPP forms. Running on trial PPP projects-a solid foundation to make policies for the model-was one of the proposals of the ministry, Phuc said.
Many international organisations such as the World Bank (WB) and the Asian Development Bank have been encouraging Viet Nam to legalise PPP.
The WB was ready to back Viet Nam's efforts to formulate an institutional framework and train staff for the realisation of PPP, said WB Country Director Victoria Kwakwa.
Over the past two years, through policy-making assistance, the WB and Vietnamese partners had mapped out specific regulations on PPP so as to create a solid foundation for mobilising private resources for social investment projects.
The WB hoped that the policy framework for PPP would be completed and submitted to the Government for ratification later this year, she said.
Experts said that a good collaboration between the Government and enterprises would benefit both sides, as the State-developed public works could take full advantages of capital, skilled labour forces and the management of companies, which in turn would produce profits to support the State.
With these projects it is easier for local companies to access preferential loans, businesses say.
However, experts claimed that one of the most important factors in luring foreign and local companies to take part in PPP projects was transparency.
In the PPP legal framework, experts suggested some points. The framework should define accurately the support and warrantees of the Government in each project, including advanced payments, loan access and land clearance.
It is also necessary to improve the capacity of agencies relating to PPP projects and to simplify administrative procedures in this area.
Last but not least, investors emphasised transparency in bidding procedures. The Government had committed to enhancing the PPP model soon in the prioritised sectors of aviation and road transportation. The Government would also strengthen the application of the PPP model in other sectors such as education, science and information technology.
Phuong Hoa
vietnamnews
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