City to support infrastructure PPP’s

Jun 16, 2017 | 09:39 AM GMT+7

Ho Chi Minh City will provide great support for the public-private-partnership (PPP) model in infrastructure development, its leaders told a meeting held recently to discuss attraction of funding through the model.

City to support infrastructure PPP’s
PPP is an optimal solution for the lack of funding for infrastructure. Photo:

“In recent times HCM City has issued many measures to create a favourable investment environment, especially establishing the PPP Steering Committee and preparing to set up the Project Development Fund (PDF) and the Viability Gap Fund (VGF) to support financing for PPP projects,” Nguyen Thanh Phong, chairman of the People’s Committee, said.

Following a 2015 Government decree on PPP investment, the city has been hugely successful in attracting investment, which has helped resolve some serious problems related to transport, the environment and flooding.

With public debt growing and the Government’s financial constraints, PPP is an optimal solution for the lack of funding for infrastructure.

The city has 153 PPP projects with a total investment of VND451 trillion (US$20 billion), with 23 of them being completed.

Though PPP projects accounted for only 5 per cent of the city’s public projects in 2011 – 15, they involved five times more investment.

Between 2006 and 2020 the city’s infrastructure needs were estimated at VNĐ850 trillion (US$37.5 billion), but the Government can only provide a fifth of it.

An official from the HCM City Finance and Investment State-owned Company (HFIC) said, “Administrative procedures are still cumbersome and take a lot of time while most PPP projects are huge and need to be begun quickly.”

He also complained about the shortage of land to pay developers for build-transfer (BT) projects, meaning undertaking such projects is difficult.

“The 2015 Government decree on PPP has somewhat improved the status of PPP projects, but difficulties related to acquiring land and legal provisions still exist.

“Furthermore, the PPP model is only regulated by a decree and many investors worry about the reliability of the policies in the absence of a law.”

He said authorities should first pay compensation and clear lands before inviting BT bids.

“Administrative procedures should be comprehensively reformed, urban planning information should be publicly announced and the PDF and VGF should soon come into operation to fund PPP projects.”