Vietnam - Concerns about HCMC traffic fee collection project

The drafter of a traffic fee collection project costing US$62.5 million for Ho Chi Minh City said the project will help ease congestion and bring huge economic benefits to the city, but many agencies remain doubtful about its actual feasibility.

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At the meeting held by the city People’s Committee yesterday to discuss the project initiated by the Tien Phong Technology Joint Stock Company (ITD), Lam Thieu Duong, ITD general director, said the project will be developed in the Build-Transfer-Operate (BTO) form at an estimated total investment of VND1.3 trillion (nearly $62.5 million), of which VND400 million will be contributed by ITD and its partners, and the rest will come from bank loans.

Of the total investment, more than VND1 trillion will be spent on a high-tech fee collection system.

The 10-year project will set up an operation center that control 35 fee collection gates located in a belt that cover Districts 1 and 3. Each gate will have a system that identify number plates through on-board units (OBUs) fixed to vehicles, calculate fees and deduct the fees from the vehicle owners’ deposits at banks.

The project will have 5 patrol cars and 20 hand-held control devices for police to handle vehicle users who try to evade fee payment.

ITD said the project will help save travel time, estimated to be worth VND16.2 billion everyday, or VND6 trillion ($288.3 million) per year, and bring VND3.21 billion to the city’s budget every day, or VND1.2 trillion per year, Duong said.

The project will be handed over to the city authorities for management and operation, who will reimburse the investors within 5 years of operation, using the collected fee revenue. If the generated revenue is not enough, the reimbursement period will be extended for 5 more years.

Under the project, the fees for vehicles travelling at peak time and off-peak time will be different. VND30,000 ($1.44) and VND50,000 will be applied to cars-taxis and buses-trucks at off-peak time, respectively, while the peak-time fees will be increased to VND40,000 and VND70,000 for the two categories of vehicles above, respectively.

Fees are not collected on Saturdays, Sundays or national holidays.

Doubts expressed about project viability

Truong Lam Danh, a deputy of the city People’s Council, pointed out that when the project goes into operation, the number of vehicles will have increased by 13 percent, thus raising concern whether the project can meet its goals of easing congestion.

Furthermore, the city is planning to build underground parking lots in the future and when those lots are available, car drivers will be encouraged to park vehicles there and switch to another public transport system to enter the city’s central areas, he said.

According to the city Development Studies Institute, paying such fees means “buying a traffic right” that allows vehicle users to travel more rapidly and thereby save time. But if the project cannot meet its goal of easing congestion, then fee payers fall victim to a scheme of “spending money only to get worse services.”

In addition, if the project developers fail to generate enough fees to meet their target revenues, the city authorities will suffer the heavy burden of making interest payment to the bank and reimbursing the investment capital to the investors, the Institute said.

Nguyen Thanh Tai, former vice-chairman of the city People’s Committee, proposed that the city authorities review the project’s feasibility. Although similar projects have been applied in some other countries, Vietnam cannot blindly follow their examples, since every country has its own specific conditions.

More critically, the Finance Department pointed out that the project requires the purchase of a modern system worth as much as VND1 trillion only to collect fee from the public, but it does not create any real value for the society or bring any social and economic efficiency to the city.

That fee collection system is not a durable public good, like a road or bridge, the department explained.

Once applied, the project will cause congestion in areas outside the traffic fee collection gates, since vehicles have to wait to get through the fee payment procedures.

In addition, the fee will push up the transportation cost, leading to a rise in prices of consumer goods, and residents in the areas subject to such a fee will suffer from a price hike.

Moreover, the city will have to bear expenses on equipping State-owned vehicles with OBUs that are required for identification of vehicles, the department said.

Bui Xuan Cuong, deputy director of the city Transport Department, said a poll, involving both the public and scientists, should be conducted to ensure its feasibility.

Speaking at the conclusion of the meeting, Nguyen Huu Tin, deputy chairman of the city People’s Committee, said the government, the Transport Ministry and the city authorities consider fee collection as one of the solutions to the city’s traffic congestion, but any such projects must be carefully prepared and studied.

He asked the Transport Department to coordinate with the Fatherland Front Committee to organize a poll to collect opinions from residents and scientists about this project.

TUOI TRE

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