Barriers to lending rates and VAT refunds in BOT projects soon to be resolved

August 11, 2021 | 22:56

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Investors of build-operate-transfer projects are expected to rejoice over upcoming solutions related to issues surrounding lending rates and VAT refunds in August, enabling them to make the next steps.

Barriers to lending rates and VAT refunds in BOT projects soon to be resolved

A BOT transport project

The Government Office on August 11 issued Document No.5503/VPCP-KTTH on the direction of Deputy Prime Minister Le Minh Khai about solving the problems and barriers related to lending rates and refunds of VAT for BOT projects.

The move follows the urge of the Vietnamese Association of Road Systems Investors (VARSI) on these issues.

Accordingly, the DPM asked the Ministry of Finance to work with relevant agencies to soon consider the proposal of the VARSI and come up with solutions for these problems, before replying to the association and reporting to the prime minister about the results within August.

Build-operate-transfer (BOT) – a type of public-private partnership – is the most popular model in Vietnam. However, banks still hesitate to lend to BOT initiatives for fear of capital increase, long investments, and high risks.

Previously, a number of BOT transport initiatives have hit the rocks, including Dau Giay-Phan Thiet Expressway – the first pilot transport project in this format, despite the strong interest of international investors.

Meanwhile, other BOT initiatives were credit stuck, such as at Huu Nghi-Chi Lang, Van Don-Mong Cai, and Trung Luong-My Thuan. Many of them halted construction for a number of years due to loan access problems.