On November 9 2010, the Prime Minister signed Decision No 71 on implementing a pilot PPP project to create a legal corridor for attracting more investment capital from the private economic sector to the development of infrastructure facilities and public services in Vietnam.
At the on-going 44th Asian Development Bank (ADB) Annual Meeting, Vietnamese and international economic experts have exchanged opinions and experiences with a view to developing a pilot cooperation model of this kind.
Priorities given to infrastructure
In his speech at the recent Vietnam Business Summit, Deputy Minister of Planning and Investment Dang Huy Dong said, “The Vietnamese Government always encourages the domestic and foreign private sectors to pour investment capital into infrastructure development in Vietnam. The country pins high hopes on the successful implementation of the PPP model, under which it can attract more investors with advanced technologies and management experiences from the private sector to stimulate the development of infrastructure and public services.”
It is essential to invest in “overload” areas such as schools, hospitals and public transport projects with the involvement of private investors. The Ministry of Planning and Investment is building a US$8 million e- project to put the PPP model out to tender. After the start of the project, many private investors are willing to spend a lot more money on building an online bidding system, Dong noted.
In the next few years, the Vietnamese Government will carry a number of pilot PPP projects in a bid to help form a full PPP market and increase capacity for management agencies which will lay a foundation for building a comprehensive legal framework for PPP cooperation in Vietnam.
During the pilot period, PPP projects will focus on developing technical infrastructure for roads and seaports. The successful implementation of the pilot PPP projects will add fresh impetus to expanding the PPP cooperation model to other economic areas.
Transparent policies needed
According to economic experts, everything must be transparent right at the start of any PPP project. Domestic and foreign investors need to take advantage of business opportunities opened by streamlined administrative procedures.
Japanese central Bank governor Masaaki Shirakawa said the PPP model has been applied in Japan for more than one century. Private companies have engaged in building railways and social welfare projects for residential areas. The successful construction of infrastructure facilities in these areas has lured a large number of people using public services. The Japanese Government has offered favourable opportunities to promote the PPP cooperation model with a focus on combating corruption.
Sharing this view, Dong added “Previously, it took four years to negotiate BOT projects in Vietnam. This is unacceptable for foreign investors who had to spend a lot of time and money on the investigation and verification process. In addition, Vietnam needs to launch effective communication campaigns to create a better understanding between the public and concerned parties involved in the PPP scheme. Vietnam will have to vie with other countries in choosing private investors.”
The Managing Director General of the Asian Development Bank (ADB), Rajat Nag, said if the PPP cooperation model pays off in transport infrastructure and energy projects, it will be applied in other projects on social security and environmental protection.
“There is no common mechanism for all PPP projects. They must be considered, case by case, in line with specific policies on land, finance and subsidies. The Vietnamese Government is drawing up a list of specific projects to create a real commercial PPP market in Vietnam”, Dong said.
VOVNews