PPP projects slow to gain sufficient traction

Many of the nation’s infrastructure woes could be addressed by PPP projects

In the nearly six months since the Ministry of Planning and Investment (MPI) required authorities to send on lists of pilot public-partnership (PPP) projects, the MPI has heard only a resounding silence.

“We urged them [local authorities and ministries] many times to send us the pilot PPP lists but they have not yet responded,” said MPI vice minister Dang Huy Dong.

The MPI originally planned to submit the list of pilot PPP projects - based on the reports of local authorities and ministries – to the prime minister last month.

But, Dong said currently he did not know when the MPI could do that.

Last November, Prime Minister Nguyen Tan Dung adopted a decision regulating the implementation of pilot PPP projects in a bid to encourage private investors to engage in infrastructure development.

PPP involves collaboration between the government and the private sector in carrying out projects with social benefits. Both sides share the responsibilities and risks of such projects.

The government now allows PPPs in nine sectors including airport and seaports, energy, roads, railway, water supply, healthcare and urban transport.

Local authorities and relevant ministries are required to compile a list of all pilot PPP projects and the MPI is in charge of submitting the final list to the prime minister, according to the decision.

The only pilot PPP project in existence at present is the Dau Giay-Phan Thiet expressway, linking Ho Chi Minh City and southern Binh Thuan province. The Vietnamese investor Bitexco Group and the World Bank’s International Financial Corporation were selected as the first developers of the project. The last one will be selected through a bidding process this year.

The slowness of the introduction of other pilot PPP projects would continue to hinder infrastructure development, said Dong.

He added the habit of finding funds from official development assistance (ODA) and the state budget for infrastructure projects and even hindrance from state-owned companies were the reasons behind this sluggishness.

According to the MPI, Vietnam will need around $170 billion for infrastructure development during 2011-2020, with the state budget and ODA sources expected to be able to cover about $100 billion.

“The remainder will come from private investors. But without the PPP mechanism, they will not want to get involved in long-term infrastructure investments,” said Dong.

The introduction of the pilot PPP mechanism has attracted attention from many foreign investors. The Philippines’ Manila Water announced it would seek PPP for water treatment projects in Vietnam. The United States’ Airis Holding LLC and ADC-HAS Airports are looking to invest in airports in Vietnam under the PPP formality.

“Many foreign investors told me that they are willing to be involved in PPP projects in Vietnam. That means we should introduce a project list soon,” said Dong.