VietNamNet Bridge - Analysts believe that the latest decision to remove the state-owned capital limit for projects developed through private public partnership (PPP) would trigger a new wave of investment in infrastructure.

 

Legal framework 

Tuan Loc and Yen Khanh are two of six enterprises which won a bid to implement the first phase of the the Trung Luong – My Thuan Highway project, capitalized at VND14.6 trillion and expected to be completed by 2018.

The other four include CII, BMT, Hoang An JSCs and Thang Loi Company Ltd.

Both Tuan Loc and Yen Khanh are infrastructure development companies established in 2005. After 10 years of operation, they have become much larger (Tuan Loc has chartered capital of VND1.6 trillion, while Yen Khanh VND1 trillion). 

Both of them have quietly expanded their business by buying state capital in leading enterprises in the field such as Cienco 1 and Cienco 4. Having long-term capital is a great advantage of infrastructure project developers. 

However, with the PPP mode, investors can mobilize capital from many different sources. As the government has committed to bear a part of risks, analysts believe that PPP will attract huge capital from private investors in the time to come. 

The limitation on the state’s capital in PPP projects has been lifted, which would also help make projects more attractive to investors.

Under the old laws, state capital must not be higher than 49 percent of total investment capital of BOT (build, operate, transfer), BT (build, transfer) and BTO (build, transfer, operation) projects, and must not be higher than 30 percent of PPP projects.

However, the barrier was removed after the government realized that projects with different scale would need varying levels of capital.

PPP projects await private investors

The Traffic Safety Management Committee has suggested building the Bac Giang – Lang Son highway with total investment capital of VND13 trillion under the PPP mode.

If the project is approved by the Ministry of Transport, it may kick off in 2015 and completed by 2018. It is expected to take investors 21 years to recover their investment capital.

The Nha Trang – Phan Thiet Highway super project with estimated capital of VND47 trillion has been submitted by Management Board No 6. The highway, once put into operation, would connect HCM City and southern provinces with Nha Trang City in the central province of Khanh Hoa.

It is expected that the project implementation would start in the third quarter of 2015 and be completed by 2020.

An official of the Ministry of Planning and Investment (MPI) said in the future, PPP would also be implemented in other business fields such as education, culture, sports and information technology.

Kim Chi