return icon

Well-structured law to channel foreign investment into Vietnam’s infrastructure

The Vietnamese government is trying to lure investors to the country’s infrastructure development projects amid limited public funding and experts believe the investors will come if the government can create a sound legal and regulatory environment.



The key for Vietnam’s infrastructure upgrade is a well-crafted PPP law.


Currently, only 10% of Vietnam’s infrastructure is funded by the private sector, much lower than many other middle-income countries in Asia.

However, experts at the Asian Development Bank (ADB) said that a well-structured law on private-public partnerships (PPP) is a key opportunity to upgrade Vietnam’s infrastructure as it will attract the investors.

 According to experts, the country’s current PPP investment regulations are not sufficient to create a comprehensive framework for investments.

 Naoyuki Yoshino, dean of ADB Institute, said that private investors, especially foreign investors, remain skittish about investing in infrastructure projects due to high risks, long-term payout schedules, and site clearance issues, among others.

 In addition, investors in infrastructure face a variety of risks such cost overrun incurred by delays in construction or land acquisition, unexpected shortages in revenue due to lower-than-forecast  traffic, and unanticipated expenses.

 The lack of a clear risk allocation mechanism for specific sectors has also left both the public and private parties in a PPP venture in the mist.

 To resolve the shortcomings, the government is formulating a new PPP law, which experts said is tricky. They explained if the law is too generous, governments can be saddled with millions of dollars in contingent liabilities. However, if it is too conservative, investment stalls, and governments typically wait several years before trying to pass a new law.

 Key points proposed

 According to Donald Lambert, a principal private sector development specialist at the ADB’s Southeast Asia Department, and Sanjay Grover, a PPP specialist, while drafting the PPP law Vietnam should keep in mind some key points so as to create a sound legal framework that could supercharge Vietnam’s effort to improve its infrastructure.

 “Now more than ever, guarantees are the most efficient way to crowd the private sector into infrastructure development in Vietnam,” they said, explaining that with increasing fiscal constraints, a high debt-to-gross domestic product ratio and limited resources to meet overwhelming demand for infrastructure, guarantees can more efficiently and effectively allow Vietnam to support the “public” role in PPPs.

 To keep guarantees affordable, they must target the specific risks that make a project unbankable, according to the specialists.

 The experts also suggested a PPP maximizes value for money by allocating risk to the party that is best able to manage it.

 “The support that Vietnam may need to provide could vary from absorbing demand risk for an expressway of strategic national importance to absorbing construction cost escalation caused by unknown geological conditions on hilly terrain or land acquisition delays in an urban area,” they said.

 As Vietnam moves forward, it is important that the new PPP law be comprehensive enough to allow the Government the flexibility to structure project risk allocation to maximize value for money. Given that Vietnam is a civil law country, where case law is secondary and subordinate to statutory law, these provisions must be explicit to avoid legal ambiguities, they noted.

 A broad and comprehensive PPP law can be further buttressed by deferring details to sector-specific decrees and circulars. Circulars are revised much more frequently than laws and can be updated to respond to market movements.

 “This ensures that despite the flexibility afforded by the law, governments do not lose fiscal control and guarantees are provided only if necessary – and no more than necessary – to make a project bankable,” they explained.

 Besides, the experts also urged authorities to set targets, not quantities. According to the experts, a PPP brings private sector capital, but equally if not more importantly, it brings private sector expertise, which, in countries like Vietnam, is critical in maximizing the benefit of a PPP procurement. Hanoitimes

Linh Pham

South Korean portfolio investment pours into Vietnam

South Korean portfolio investment pours into Vietnam

South Korean invested securities companies are putting pressure on Vietnamese companies, competing in terms of service quality, number of branches and the possibility of providing loans for margin trading.

Vietnam’s outlook positive for investment attraction

Vietnam’s outlook positive for investment attraction

Vietnam is expected to attract more investors as its economy is developing at a stable rate, with GDP growth of 7 percent.


Ha Giang warns about online hotel reservation scams

Ha Giang Provincial Department of Culture, Sports and Tourism have warned tourists about online hotel reservation scams.

Wild sunflowers in bloom in northwestern Dien Bien Province

The wild sunflower is a shrub with an average height of about 2m - 3m. Its plant stem is dark green and erect. When the trunk turns to wood, it is grey-brown. It grows alone or in clusters, and the buds bloom at the beginning of winter.

HCM City to ban sleeper buses entering downtown from mid-December

The HCM City Department of Transport has proposed to ban sleeper buses entering the city centre between 6am and 10pm from the middle of next month in an effort to crack down on picking up and dropping off passengers illegally.

Low pay, high stress lead teachers to question their careers

Nhat Tien, a teacher at a primary school for autistic children in HCM City’s District 3, has been thinking about quitting her job for many times.

Dinh Hong Quan to defend IBF title

International Boxing Federation (IBF) champion Dinh Hong Quan is set to defend his title on December 10 at the Grand Ho Tram Resort in the southern coastal province of Ba Ria-Vung Tau.

Vietnam records boom in number of Japanese restaurants nationwide

The number of Japanese restaurants across the country has enjoyed strong growth in terms of scale and number, particularly in Ho Chi Minh City.

HCM City association to host first international photography fest

The HCM City Photography Association (HPA) is hosting the first-ever international photography festival from November 25-30.


Big supermarkets join Promotion Month 2022

Missosology picks locals contestant among Top 3 at Mister Grand International

Missosology, the world’s leading publication on beauty pageants, has named Vietnamese representative Vu Linh among its hot picks of the Top 3 currently participating in the Mister Grand International 2022 pageant.

HIV infections rise among people under 29

The number of young people catching HIV has seen an upward trend recently, with 50% of new cases being under the age of 29.

Three female scientists receive L’Oreal-UNESCO awards

Three female scientists were granted the 2022 L'Oreal-UNESCO awards at a ceremony in Hanoi on November 25.

Vietnam has two more named in Asia-Pacific documentary heritage list

Two heritage pieces of Vietnam were recognised as part of documentary heritage in Asia and the Pacific on November 26, at the 9th general meeting of the Memory of the World Committee for Asia and the Pacific.


NA Chairman Hue to visit Australia, New Zealand

Big firms absent from 'good governance' list

The list of companies recognized as having the best transparency and governance on the Hanoi Stock Exchange (HNX) doesn’t include many well-known names.

People must live in rooms of at least 8sq.m to register for permanent residence

The Hanoi People’s Council plans to require at least 8 sq m of living space in state-owned properties and 20 sq m in non-state owned properties for registered permanent residence.