VietNamNet Bridge - The State Bank of Vietnam (SBV) has restricted disbursement of funds to implement BOT (build, operation, transfer) transport projects. The aim is to tighten credit for BOT projects. 


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The move has been supported by the Ministry of Transport (MOT).

A MOT representative confirmed at a recent workshop on BOT project development that a large proportion of capital for BOT projects was sourced from commercial banks. 

Of the BOT projects under MOT control only, banks have provided VND135 trillion in loans, or 89 percent of total investment capital.

Le Tuan Anh, Deputy director of the Ministry of Finance’s Investment Department, also confirmed that transport projects implemented under the mode of BOT have been relying heavily on loans from domestic commercial loans.

Economists have warned that it was risky for bankers and the economy to develop transport projects with a ‘life cycle’ of 20 years and more with short-term capital provided by commercial banks.

While BOT investors are given big ‘power’ to develop projects, in many cases, they cause problems for local authorities. The BOT Phu My Bridge is an example.

Established in September 2009, Phu My bridge across the Sai Gon River was expected to attract a large volume of transport travelling from the Mekong River Delta to HCM City, the northern and central region. 

However, the traffic turned out to be not as large as expected. PMC, the investor, then decided to ‘give the project back’ to HCM City authorities, while asking the city authorities for an extension of the debt payment.

Prior to that, the investors of BOT projects on upgrading Huynh Tan Phat Road in district 7 and Ong Thin Bridge in Binh Chanh district also gave the projects back to city’s authorities.

For these reasons, experts have applauded the central bank’s decision to tighten lending to fund BOT projects.

The central bank, in an instruction released in mid-July, requested banks to enhance risk control in lending to BOT transport projects.

Banks have been told to check investors’ capability thoroughly before providing loans and only agree to fund projects whose investors have their own capital, meeting the requirements stipulated in the current laws.

Analysts noted that investors had rushed to register to implement BOT transport projects recently. However, they did not develop projects with their own capital, but relied on bank loans. This explains why the required investment capital of the projects was very high.

Minister of Transport Dinh La Thang has supported the central bank’s decision.

“MOT only supports investors to implement BOT projects if they have financial capability and can pay debts,” he said.

TBKTSG