News / Asia

Vietnam Tries Public-Private Partnerships

Japan's Hitachi Ltd. company is building an urban railway in Hanoi and plans to build another in Ho Chi Minh City.
Japan's Hitachi Ltd. company is building an urban railway in Hanoi and plans to build another in Ho Chi Minh City.
— Here’s a new way for governments to offer public services: use other people’s money.
 
The concept of public-private partnerships (PPP) isn’t novel, but it is gaining new traction in Vietnam. The country recently announced it will build its first express highway through a PPP arrangement that draws on private investment by Bitexco, a large multi-industry corporation.
 
Doing so will lessen the dent on public funds at a time when Vietnam is increasingly worried about its growing budget deficit.
 
It also will be a test of the communist country’s resolve to move away from bulky state-owned enterprises that are seen as one of the main drags on the lackluster economy. Analysts say cooperation with the private sector will bring greater expertise and the efficiencies of the market to infrastructure projects.
 
“The city leadership are really, really wanting to, and determined to, push the projects forward,” said a Ho Chi Minh City official who declined to be named. His department is not involved with the $750 million highway project, which will connect a neighboring province along the National Highway 1 with the resort town of Phan Thiet. But he said the city has submitted PPP deals for national approval and recognizes it is “high time” for such partnerships.
 
The timing matters. Growing interest in PPPs here is directly tied to Vietnam’s growing wealth. First, it reached middle-income country status in 2010, which makes it harder to attract official development assistance (ODA) from international donors and lenders. Second, its rapid urbanization and industrialization are creating demands on infrastructure that the government cannot meet alone.
 
“Vietnam is an emerging economy that has a great demand on infrastructure development, including airports, seaports and highways,” Bitexco deputy general director Nguyen Tien Dzung told Bloomberg Television.
 
Looking for international financing
 
His company has a 60 percent stake in the new expressway, with backing from the government and the World Bank. The hope is that private investors abroad will finance the remaining 40 percent.
 
It is unclear how the project would turn a profit, but private stakeholders presumably will reap returns by installing a toll system on the four-lane road.
 
Government policymakers will also have to convince investors that they have a sturdy framework to handle PPPs. They made a push to facilitate these partnerships in 2010, though progress has been slow. PPP divisions are being created at several levels, from the Ministry of Planning and Investment to its equivalent within the Ho Chi Minh City government.
 
Infrastructure projects are underway throughout Vietnam. This earlier highway bridge project was in Quang Binh province.Infrastructure projects are underway throughout Vietnam. This earlier highway bridge project was in Quang Binh province.
x
Infrastructure projects are underway throughout Vietnam. This earlier highway bridge project was in Quang Binh province.
Infrastructure projects are underway throughout Vietnam. This earlier highway bridge project was in Quang Binh province.
The city official who spoke with VOA said he and his colleagues want to offer a “one-stop shop” for PPP deals. They’ve already worked on roughly 25 other projects that involve alternative financing, such as through the build-operate-transfer (BOT) model. For PPPs, they are tasked with outlining a procedure that’s transparent, fair, competitive and reliable.
 
“The private sector views [the] PPP bidding and negotiation processes as unpredictable and lengthy,” said Vinh Pham, a former government liaison for the local European Chamber of Commerce.
 
The new highway has reportedly attracted interest from 100 foreign investors. If successful, it would open the way for similar arrangements to improve water, power, and public transit infrastructure.
 
Gears in motion
 
Some already have set the gears in motion. The Japan Bank for International Cooperation, for instance, has signed a memorandum of understanding to develop projects via PPP with Hanoi and Ho Chi Minh City.
 
But so far, most investors seem to have taken a wait-and-see approach. Not just anyone can tackle as ambitious a contract as constructing an expressway. “Bitexco is perhaps one of the few companies that would have enough power and relationship with the government to take over the project,” said Pham Ngoc Bich of Saigon Securities.
 
Bitexco started off as a textile company but has ballooned into a powerhouse that invests in everything from mineral water to real estate, including the most iconic skyscraper anchoring the Ho Chi Minh City skyline.
 
It’s exactly this kind of investment Vietnam is seeking as it grapples with deficits in public funds. As of midyear, spending exceeded revenue by 62.1 trillion dong ($2.9 billion), according to the Ministry of Finance, compared with 50.7 trillion dong in the first quarter.
 
In the mixed bag of solutions, there’s been talk of raising the public debt ceiling and of issuing bonds worth at least 90 trillion dong this year. And now there’s both talk and action on public-private partnerships.

You May Like

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Israel Targets Gaza Supply Tunnelsi
X
July 24, 2014 4:42 AM
The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video MH17's 'Black Boxes' Could Reveal Crash Details

The government of Malaysia now has custody of the cockpit voice and flight data recorders from Malaysia Airlines Flight 17, which was hit by a missile over Ukraine before crashing last week. As VOA's Carolyn Presutti reports, the so-called black boxes may hold information about the final minutes of the flight.
Video

Video Living in the Shadows Panel Discussion

Following a screening of the new VOA documentary, "AIDS - Living in the Shadows," at the World AIDS conference in Melbourne, a panel discussed the film and how to combat the stigma associated with HIV/AIDS.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid