Southern hub seeks transport investments

Ho Chi Minh City is looking for public-private partnership investments into the city’s transportation sector

The city last week held an investment conference introducing hundreds of public transport service projects to call for investments under public-private partnership (PPP) investment forms. Preferential fields of investment will be roads, bridges, tunnels, ferries, railways, bridges for railway, tunnels for railway, airports, seaports, river ports, clean water supply system and power plans.

Nguyen Thanh Tai, deputy chairman of the People’s Committee said: “The city will need some $15 billion investment into its public transport system within 2011-2015.

“All coming public transport services and projects that can create income or refund investment will be open to the private sector under PPP form. For those that cannot, we will offer their investors compensation in other financial sources.”

He added: “The city will try to bring all transport projects with cleared land on for tender under PPP form to ensure that winning bidders can start construction immediately then. All reality happenings during the investment time such as land clearance and compensation issues, if any, will be addressed and comprehensively stipulated in PPP contracts,” Tai added.

According to the draft regulation on experiment investment under PPP submitted to the prime minister by the Ministry of Planning and Investment (MPI) in late March 2010, PPP describes a partnership of government and a private party to develop an infrastructure project or to provide a public service under a project contract.

The capital investment made by the private sector (excluding government contributions) must not be made up a public debt but include private equity and commercial loans. In addition, private equity must be 30 per cent at least of total capital investment made by the private sector. Investors can mobilise funds (without government guarantee) for up to 70 per cent of the total private capital investment.

Vietnam has seen very limited investments from the private sector on traffic infrastructure projects, due to the lack of close and uniform coordination among authorities and industries, and because the government has not yet anticipated and stipulated all of the investment’s possible happenings.

Dang Huy Dong, deputy minister of planning and investment, said that as the largest city of the country, Ho Chi Minh City needed to fasten up its transportation system development pace for the socio-economic development of not only itself, but also the rest of country, and especially the surrounding provinces.

“Therefore, the new investment approach of PPP should be now prioritised especially when the currently common models of Build-Operate-Transfer (BOT), Build-Transfer (BT), Build-Operate-Own (BOO), and Official Development Assistance (ODA) alone are not enough for a series of projects to progress at a time,” Dong said.

He added that “now when it comes to infrastructure projects, we (the government) no longer wait for investors but to look for them, offering them partnership proposals for each other’s benefits.”

Dong also said that the government would prioritise projects that were highly feasible and refundable for PPP. The selection of investors would be made in a competitive, equal, transparent and cost efficient manner and in compliance with Vietnamese law and international practice. And the government would be accountable for compensation and delays via putting aside a sum of money for business and property projects.

Infrastructure projects have frequently forced the relocation of local residents without proper compensation, or adequate planning, which causes severe delay to the projects.

“As the draft regulations on PPP are on approval process, the MPI still works on some PPP projects in specific areas to gain experience first. During that, we might need international consultants to help us familiarise with and professionalise PPP approach,” Dong said.