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

Video Protests Continue in Ferguson, Spread to Other US Cities

Missouri officials say deployment of more than 2,000 National Guard soldiers helps curb second night of rampant arson and looting in Midwestern town More

Video Ebola, Crackdown on Illegals Hit Business in Guangzhou

Chinese city has largest community of Africans in Asia More

Video Legendary Lebanese Actress, Singer Sabah Dies at 87

Music and film diva, affectionately called 'Sabbouha' by millions of her fans, performed at Carnegie Hall in New York, Royal Albert Hall in London, Olympia in Paris, Sydney Opera House in Sydney More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Changei
X
November 24, 2014 10:09 PM
Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid