Vietnam - Hanoi has big capital needs

Hanoi needs $190 billion to make the city’s development planning for 2011-2020 come true given its current intensive efforts to woo investment capital through the public-private partnership (PPP) model and maintain current growth, Hanoi People Council’s Economics and Budget Department head Nguyen Van Nam said.

The capital needs a colossal capital amount of $190 billion to realise the city’s socio-economic master planning 2011-2020 which recently got the nod from the prime minister. Can Hanoi woo such a huge amount?

There needs a general approach when it comes to appraising Hanoi’s master plan.

It is really a big amount given the fact that the capital city will need to woo $19 billion worth in investment capital each year from now until 2020. However, not all that capital is sourced from the state coffers which are expected to only account for 15-16 per cent of the total. Investment capital will come from diverse sources such as from local firms or foreign-invested enterprises.

Hanoi is proactive in making trials with the PPP model which has the potential to become an effective capital-absorbing channel in the upcoming period.

The planning scheme is for the next decade. In fact, the development of the country and Hanoi particularly may vary from year to year. Maybe, this year we need $19 billion or even $25 billion in total investments. The following year, we may need just half of that amount. This depends on particular development conditions of each year.

I do believe with current pace of growth Hanoi is within reach to fulfill the target.

Hanoi will accelerate supporting industry development as well as major industries with big industrial parks and clusters. Things seem gloomy as Hoa Lac Hi-tech Park only appealed to a few investors after more than a decade of establishment while local supporting industry remains underdeveloped. What is your opinion?

In fact, developing local supporting industry was just conceived in Vietnam for around five years after we failed with the objective to raise the localisation rate in manufacturing sectors. In the near term, Hanoi will need to set out concrete advantageous areas to highlight supporting industry development. In respect to poor investment at Hoa Lac Hi-tech Park, in my view it is unlikely that Hanoi lacks investment incentives. Maybe, there are divergences in development objectives and investment fields of the capital city and businesses.

What is your comment on a series of Hanoi property projects having to revise their planning in recent years?

The reason why these projects had to revise their planning is due to the Hanoi People’s Committee. In my view, a planning demands a stable vision and rooted on development forecasts, particularly infrastructure planning.

Revisions are essential when some factors arise affecting the implementation of the planning scheme. – VIR

VBN on Jul 25 2011