VietNamNet Bridge - BOT (build, operation, transfer), believed to be a good solution to transport projects’ problems, turns out to have a dark side. 

Good side

Since the HCM City – Long Thanh – Dau Giay Highway was put into traffic in February 2015, the works of Nguyen Minh Thi, director of a construction company in HCM City, have been going more smoothly. 

Thi’s company is now executing a big construction project in Da Lat City. He has to travel there several times a month. With the highway, Thi now can save two hours on every trip.

Though Thi has to pay the fee of VND100,000 for a 50-kilometer travel, he is satisfied because he can save time and money, and does not have to repair car problems.
The HCM City – Long Thanh – Dau Giay Highway is just one highway developed under the mode of BOT.

The Ministry of Transport (MOT) has reported that 68 projects have been implemented under the BOT mode, of which 20 have been fulfilled and put into operation.

A ministry’s report showed that travelers on Noi Bai – Lao Cai, and HCM City – Long Thanh – Dau Giay highways can save 50 percent of time and 30 percent on money. 

The figures are 30 percent and 20 percent, respectively, for Highway No 1 (Hanoi – Vinh City section).

The most outstanding advantage of BOT projects is that Vietnam can develop infrastructure items with non-state capital. 

A WEF report released in 2014 showed that the capability and quality of Vietnam’s transport infrastructure items in Vietnam ranks 74th in the world, a jump of 16 grades compared with 2012 and 29 grades compared with 2010. 

Bad side

Phan Van Truong from John Von Neumann Institute of the HCM City National University pointed out that there are risks in BOT projects.

Since BOT projects, in principle, do not use state capital, they are not covered by many regulations on public finance. 

Meanwhile, the investors of BOT projects have the right to borrow capital from banks with the state’s guarantee at preferential interest rates.

This, according to Truong, is alarming, because BOT contracts are not a new type of business and therefore not an investment form prescribed by the Investment Law.

As loans to BOT projects are guaranteed by the State, this, by nature, is a type of state investment. 

Meanwhile, with BOT projects, investors always ‘play safe’: they will pocket money if the projects can make profits, while the State will suffer if they take a loss.

TBKTSG