Jan 25, 2013

Vietnam - Vietnamese IT firms keep indifferent to PPP scheme

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VietNamNet Bridge – Most Vietnamese IT firms say they would not be foolish enough to get involved in the projects under the mode of private public partnership (PPP) until the legal framework on PPP is set up.

According to Do Cao Bao, President of FPT IS, it will take businesses at least 20 years to make profit with a PPP project. Meanwhile, in Vietnam, the policies, tax rates or regulations would be amended once every five years, which would spoil the implementation of the projects and push businesses against the wall.

The project on identity card issuance and management, for example, was thought as an easy job for IT firms. The enterprises would have to spend money to build the system, while they would have the right to collect services fees from those who want to get new identity cards or have cards renewed.

It is estimated that there are 50 million Vietnamese people aged 14 and higher. Supposed that the identity card issuance fee is five dollars, the total sum of money the service provider can earn would be up to $250 million. If deducting the initial spending of $160 million and the bank loans interest rates, enterprises would still pocket a relatively big sum of money.

However, enterprises would have to anticipate the possible changes in the policies which may hinder their business. Most recently, the management agencies unexpectedly decided that the identity cards must show the names of parents. Later, facing the strong opposition from the public, the State decided to reconsider the decision.

If some businesses which joined the PPP project, had invested $30 million to develop the management system, they would have to wait 1-3 years for the final decision, during which they built system may “die”. If so, they would have lose the money spent on the system.

In fact, a lot of transport companies have suffered form the PPP mechanism. Some enterprises joined the projects to build highways under the mode of PPP, believing that they would earn money by collecting fees from the vehicles to go on the highways.

However, the Ministry of Transport then unexpectedly suggested collecting road toll on every vehicle. The suggestion was not applauded by people. They proposed to remove this kind of fee, and the proposal has just been approved.

“The investors have been in the danger, because they cannot earn money by collecting fee. The best solution in this case is that they sell the works to the State. However, no one can say for sure if the State would buy the projects, and at what prices it would buy,” Bao said.

Tong Viet Trung, Deputy General Director of the military telecom group Viettel, also said that he can see high risks in implementing PPP projects.

Viettel, for example, once planned to implement a PPP project on building up a system to manage the arrival and departure of ships and the volume of goods shipped. However, when it tried to learn more about the information technology application in the business field, it found out that some similar projects were implemented before already.

These included a project developed by the Ministry of Transport, another by the General Department of Customs, and one more by shipping agents. Meanwhile, the three projects are incompatible which cannot be integrated. Trung said that it is necessary to have an overall plan to ensure the smooth operation and connection of component projects, or it would be impossible to run PPP projects.

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