Public-private partnership: effective model to attract capital

04/07/2008 -- 8:30 PM

Hanoi (VNA) – The Ministry of Planning and Investment (MPI) is actively coordinating with relevant agencies in building a mechanism for public-private partnership (PPP), an effective model to develop infrastructure in the context that the Government is cutting investment to curb inflation. With ground, tax and capital incentives, the MPI hopes the model will fully tap the private sector’s construction capability and financial potential. The model, though widely applied to large-scaled projects worldwide, is implemented only under a number of build-operate-transfer(BOT) projects in Vietnam where most feasible infrastructure projects are funded by the State and executed by State-owned businesses. So far, the model has been applied to only 18 BOT contracts with 15 percent of capital invested in infrastructure. According to Kamran Khan, senior infrastructure finance specialist of the World Bank, Vietnam will face great challenges due to its heavy dependency on ODA, which represented almost 37 percent of the country’s investment in infrastructure in 2007. This is attributed to the reduction of preferential loans and aid in the coming years. The MPI is selecting projects for experimental application of the PPP model. Deputy Director of the MPI’s Infrastructure and Urban Department Tong Quoc Dat said PPP would be applied to traffic infrastructure development projects, especially road traffic projects. The Quang Ninh-Hai Phong road project capitalised at around 1 billion USD is expected to be selected for pilot implementation. The result of the project will serve as a basis for finalisation of the PPP mechanism, Dat said. Mobilising private capital is important for further growth, according to Kamran Khan. He suggested that the Vietnamese Government formulate sound mechanism and policies to attract this capital source.-Enditem
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