Nov 27, 2012

Vietnam - Fund to set up to encourage PPP model in Vietnam

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VietNamNet Bridge – Vietnam may set up a fund which helps prepare and start investment projects under the mode of private public partnership (PPP). This could be seen as a solution to make PPP more popular in Vietnam.

Dau tu has quoted its sources from the Ministry of Planning and Investment--as saying that the negotiations between the State Bank of Vietnam and the Asian Development Bank ADB have finished, and it is very likely that an agreement on the establishment of the fund would be signed this month between the two.

The sources also said that the fund would have the initial capital of 20 million dollars, which is not a big sum, but would have much significance in push up the implementation of infrastructure projects under the mode of PPP.

“Appropriations would allow the state taking initiative in preparing for the projects, and selecting investors for PPP projects,” the official from the Ministry of Planning and Investment said.

Despite its great advantages, PPP still not a big choice for the investors and contractors in Vietnam.

“In the past, since there was no fund to prepare for the projects, the State was always in the passive voice. In many cases, it has to choose the investors, who initiated and suggested the projects, even though the investors were not capable enough,” he explained.

In principle, the State needs to be the body which builds up and prepares projects. After that, it would invite for bids to choose investors.

Deputy Minister of Planning and Investment, Cao Viet Sinh, also many times affirmed that in order to develop PPP in Vietnam, it needs to create a market for PPP, and build pilot projects with high merchandise level in order to attract private investors.

Meanwhile, to date, the pilot projects all have been suggested by investors. Some of the projects were suggested by local authorities. However, since there has been no initial fund, the projects have not been attractive enough in the eyes of investors.

An official of the PPP Office has pointed out that investors could not see profits in most of the projects suggested by local authorities; therefore, they kept away from the projects.

“Sometimes we received the suggested projects with no detailed information, except the name of the projects. These would not catch the eyes of investors,” he said.

Regarding the feasibility of the fund, according to Le Van Tang, Head of the Bidding Management Department under the Ministry of Planning and Investment, ADB has promised to give support to develop the fund. Besides, other donors have also sent words they would be ready to give support.

“AFD is one of them. It is highly possible that the appropriation it gives may be up to 8 million euros,” the official said. “Others have also shown their interests in this”.

“We try to design the fund under the mode of an open fund, so that not only ADB, but other sponsors would be able to give additional capital to the fund. This would allow us to prepare PPP projects in a more effective way to attract investors,” Tang said.
The recent moves by the government showed that it has been determined to encourage the PPP mode in infrastructure development.

Recently, the Ministry of Planning and Investment has set up the one-stop-shop division in charge of PPP projects. The government has released the decision on the establishment of the PPP Steering Committee headed by Deputy Prime Minister Hoang Trung Hai.

Compiled by Thu Uyen

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