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Vietnam lacks legal framework for PPP projects

 VietNamNet Bridge – Thirty-eight investment projects in the public-private partnership (PPP) format in the country have not been able to get off the ground due to the absence of a complete legal framework for PPP investment.

VietNamNet Bridge – Thirty-eight investment projects in the public-private partnership (PPP) format in the country have not been able to get off the ground due to the absence of a complete legal framework for PPP investment.



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Participants at a training course on PPP infrastructure projects held on March 31 by the HCMC Finance and Investment Company (HFIC), French Development Agency (AFD) and PADDI, a center on urban studies, took issue with the insufficient legal documents for PPP although this form of investment began to be piloted in 2010.

Speaking at the opening of the four-day training course on March 31, Pham Duc Tung, a representative of AFD, said foreign investors pay much attention to the legal framework for PPP investments in Vietnam.

He said 38 PPP projects are in the pipeline but the fourth draft of a Government decree on PPP investment will not go before to the Ministry of Justice until April 25 and be passed by the Government until May this year.

In the third draft decree on PPP, Tung said, some terms have been made clear, but not clear enough to convince foreign investors.

He suggested the PPP decree should contain provisions attractive to private investors and make sure that they can earn profits when making such investments.

Tran Hong Hai from the HCMC Department of Finance said investors should suggest legal terms for PPP regulations based on what they want and need for a PPP project as policymakers may not be aware of what investors want.

Le Quoc Binh, CEO of the HCMC Infrastructure Investment Joint Stock Company (CII), said the legal framework for PPP is not yet complete, so investors now need support from the Government to invest in infrastructure projects.

He took the Hanoi Highway for example. The upgrade of this road was finished in 2009 but toll collections from it will begin in 2019 and end in 2045, meaning it takes investors too long to get back their capital without state support.

To attract private investors into infrastructure projects, Binh suggested authorities have a specific timeline for land handover to investors, and that if investors do not receive land as promised, it will have to reimburse investors.

HCMC needs big infrastructure investment

The HCMC Department of Transport has predicted that from now until 2015, the city will need some VND71.22 trillion (US$3.37 billion) to invest in infrastructure development, or around VND23.74 trillion (US$1.12 billion) a year.

From 2015 to 2020, the city will need some VND326.27 trillion (US$15.47 billion) to invest in infrastructure projects, said the department.

The state budget, however, can meet only 15% of the investment demand each year and if ODA and funds outside of the city budget are included, the city can only provide around 30% of capital needed each year.

The availability of a full legal framework for PPP will help solve the financial issue.

Source: SGT

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