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Greater private investment for transport infrastructure

Released at: 08:37, 15/12/2014

Greater private investment for transport infrastructure

Vietnam expects to attract more than VND45 trillion ($2.12 billion) in private investment for transport infrastructure next year.

by Nguyen Quynh

Vietnam's transport sector has seen remarkable success in attracting private investment over recent years. In 2014 the number of projects implemented from private investment sources rose to 65, with total investment capital of VND42.5 trillion ($2 billion). In 2015 Vietnam expects to attract more than VND45 trillion ($2.12 billion) in private investment for transport and has pledged to promote the public, private partnership (PPP) model in order to improve transport infrastructure in the future.

The figures were revealed at the Workshop on Investment Promotion for Transport Infrastructure in Vietnam, organized by the Ministry of Transport (MoT) on December 12. Addressing the workshop, Deputy Minister of Transport Nguyen Hong Truong said that with State budget funds for transport being limited, the mobilization of private investment and foreign developers are critical. "MoT has effectively implemented several projects under the PPP model and build-operate-transfer (BOT)," he said. "But Vietnam still faces many difficulties regarding its legal framework for the PPP model."

In many countries, PPP and BOT are effective means of mobilizing private capital in transport, for instance the UK, Canada, and South Korea. Yet many countries have likewise failed, including Thailand and Poland, according to Mr. Le Tuan Anh, Deputy Chief of the Investment Department under the Ministry of Finance. "It's therefore necessary for Vietnam to foresee challenges and cope with the risks," he said.

Many representatives from international bank and organizations at the workshop shared their experience in PPP in Vietnam. According to Mr. Paul Vallely, Transport Sector Coordinator at the World Bank in Vietnam, the main method of dealing with risks in PPP is for the government to ensure minimum revenue. When revenue decreases, the government must support investors.

The Vietnamese government will promulgate a new PPP decree in early 2015, contributing to creating a new legal framework to develop PPP and BOT in the transport sector.

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