VietNamNet Bridge – The state budget is not big enough to provide capital to all transport projects. Meanwhile, the idle capital in the society still has not been mobilized for the transport infrastructure development.

The Highway No. 14 project, implemented under the mode of BOT (build, transfer, operation) still has not been fulfilled after two years of implementation. Only a small volume of the works, mostly the roadside, has been fulfilled, while the project has been going at a snail’s pace.

The representative of the investor admitted that the project cannot be sped up because of the lack of capital. The investor could not anticipate the changes in the bank loan interest rates, while 75 percent of the total capital of the project comes from bank loans.

“We thought that the interest rates may increase during the project duration, but we could not imagine that the interest rate would jump from 12 percent to 24 percent,” said Nguyen Van Quy, Deputy Director of BOT Duc Long, Gia Lai.

In fact, most of the BOT investors have been relying on the borrowed capital to develop road projects. While the investment rate is very high, it always takes a long time to recover the investment capital.

Therefore, though transport projects are believed to be profitable, a lot of investors still refuse to undertake the projects, especially, the road fees the investors can collect to cover their investments are overly low.

Nguyen Duy Thanh Binh, Deputy General Director of Cienco 5, a transport infrastructure development company, affirmed that the Highway No. 1A project is unfeasible if applying the Circular No. 90 of the Ministry of Finance which allows raising the fees by two folds.

Most recently, the government allowed raising the road fees from the BOT project on the Highways No. 1 and 14 by 3.5 times. This has been applauded by the investors, but has not satisfied local authorities.

Local officials have voiced their concern that the localities’ competitiveness would be weaker because of the high road fees.

Director of the Dak Nong provincial Transport Department -- Nguyen Van Vien, has proposed not to allow many projects to be implemented under the BOT mode, because if the investors charge high fees, this would lead to the lower competitiveness of the localities in attracting investment.

Meanwhile, economists believe that the local competitiveness does not lie only in the road fees, saying that it’s necessary to consider the long term benefits the projects can bring. Especially, they said the quality of the roads would be improved once investors feel satisfactory about the profitability of the projects.

It has always been a big headache to the government to seek capital for infrastructure projects. It’s obvious that Vietnam should diversify the capital sources instead of relying on the state budget to develop transport projects. However, the unsolved problem is that no reasonable mechanism has been found to ease the investment costs and harmonize the benefits of the state, local authorities and investors.

In the latest news, the plan to issue government bonds to raise funds for the Highway No. 1A was mentioned at the latest government’s meeting held some days ago.

Minister, Chair of the Government Office -- Vu Duc Dam, said this proves to be the most feasible solution for the highway upgrading project. The Highway No. 1A is a backbone road system of Vietnam, but the traffic capacity on the road is not high enough to persuade investors to put money into it.

NCDT