PPP timeframe in sharp focus

The PPP model is seen as a cure to Vietnam’s infrastructure shortcomings

The much trumpeted PPP model implies the collaboration between the government and the private sector in carrying out a project with social benefits, to share the responsibilities and risks. Matthias Duhn, director of EuroCham in Hanoi, said the slow pace in the PPP framework’s implementation would make Vietnam’s poor infrastructure situation more acute.

“PPP projects will be of key importance to upgrade Vietnam’s infrastructure as the country integrates further into the world economy,” said Duhn. The Ministry of Planning and Investment (MPI) late last year released new draft regulations on pilot infrastructure development PPP projects after years of preparation. These new regulations are designed to encourage more self-sustainable, viable and profitable infrastructure projects.

MPI Deputy Minister Dang Huy Dong said it took a long time to prepare framework for pilot PPP projects because it was a new investment form in Vietnam and the government had to learn from other countries’ experiences. However, he believed Prime Minister Nguyen Tan Dung could approve the PPP framework drafted by the MPI later this year.

Recently, the government selected Dau Giay-Phan Thiet expressway as the first PPP pilot project in Vietnam. The expressway is one of important transport infrastructure projects in southern Vietnam, connecting Ho Chi Minh City and Phan Thiet City in Binh Thuan province.

Though the government appointed Bitexco Group, a domestic private company, as an investor in the expressway, there was no specific timeline for construction. Tony Foster, head of the VBF’s Infrastructure Working Group, said pilot PPP projects’ implementation was important and urged the government to provide greater details on PPP regulations.

In a document sent to the MPI, Frasers Law Company suggested the MPI detail the risk allocation between state authorities and private investors. In addition to that, the law company also proposed that private investors should be encouraged to self-propose projects.

Under the MPI’s draft PPP regulations, the state authorities will mainly propose PPP projects. Also, the government can fund up to 30 per cent of required investments of a single PPP project, or even 50 per cent of a specific project with a longer operating period, higher cost recoveries, or poverty-relief orientations.