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

UN: 1 Million Somalis at Risk of Hunger

Group warns region is in dire need of humanitarian aid, with at least 200,000 children under age of five acutely malnourished as drought hits southern, central part of nation More

Human Rights Groups Allege Supression of Freedoms in Thailand

Thailand’s military, police have suppressed release of independent report assessing human rights in kingdom during first 100 days of latest coup More

Jennifer Lawrence Contacts FBI After Nude Photos Hacked

'Silver Linings Playbook' actress' photos were posted on image-sharing forum 4chan; Federal Bureau of Investigations is looking into matter More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Larger Than Life Chinese Lanterns Make Southern California Appearancei
X
Elizabeth Lee
September 02, 2014 8:57 PM
Chinese lanterns with a long history are lighting up in 21st century style at the Los Angeles County Fair in southern California. Visitors can see traditional lanterns that hang, but also lanterns in the shape of animals, iconic landmarks and many other objects, all created by artisans from a place in China known for its lanterns. Elizabeth Lee has the details from the fair in the city of Pomona.
Video

Video Larger Than Life Chinese Lanterns Make Southern California Appearance

Chinese lanterns with a long history are lighting up in 21st century style at the Los Angeles County Fair in southern California. Visitors can see traditional lanterns that hang, but also lanterns in the shape of animals, iconic landmarks and many other objects, all created by artisans from a place in China known for its lanterns. Elizabeth Lee has the details from the fair in the city of Pomona.
Video

Video Experts See Rise of ISIS as Significant Development

The Islamic State’s rise seems sudden. It caught the U.S. by surprise this summer when it captured large portions of northern Iraq and spread its wings in neighboring Syria. But many analysts contend that the group - which grew out of al-Qaida in Iraq - has been rebuilding for years. VOA's Jela de Franceschi takes a closer look at the rise of ISIS and its implications for the Middle East and beyond.
Video

Video Israel Concerned Over Syrian Rebels in Golan

Israeli officials are following with concern the recent fighting between Syrian rebels and government forces near the contested Golan Heights. Forty-four U.N. peacekeepers from Fiji have been seized by Syrian Islamist rebels and the clashes occasionally have spilled into Israel. VOA’s Scott Bobb reports from Jerusalem.
Video

Video Ukraine Schools Resume Classes, Donate to Government Forces

A new school year has started in Ukraine but thousands of children in the war-torn east are unable to attend because of ongoing clashes with pro-Russia rebels. In Ukraine's capital, patriotic education has become the norm along with donations to support injured security forces fighting to take back rebel-held areas. VOA's Daniel Schearf reports from Kyiv.
Video

Video US Detainees Want Negotiators for Freedom in North Korea

The three U.S. detainees held in North Korea were permitted to speak with foreign media Monday. The government of Kim Jong Un restricted the topics of the questions, and the interviews in Pyongyang were limited to five minutes. Each of the men asked Washington to send a representative to Pyongyang to secure his release. VOA’s Carolyn Presutti has our story.
Video

Video Turkmen From Amerli Describe Survival of IS Siege

Over the past few weeks, hundreds of Shi'ite Turkmen have fled the town of Amerli seeking refuge in the northern city of Kirkuk. Despite recent military gains after U.S. airstrikes that were coordinated with Iraqi and Kurdish forces, the situation remains dire for Amerli’s residents. Sebastian Meyer went to Kirkuk for VOA to speak to those who managed to escape.
Video

Video West Africa Ebola Vaccine Trials Possible by Early 2015

A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video Survivors Commemorate 70th Anniversary of Nazi Liquidation of Jewish Ghetto

When the German Nazi army occupied the Polish city of Lodz in 1939, it marked the beginning of a long nightmare for the Jewish community that once made up one third of the population. Roughly 200,000 people were forced into the Lodz Ghetto. Less than 7,000 survived. As VOA’s Kane Farabaugh reports, some survivors gathered at the Union League Club in Chicago on the 70th anniversary of the liquidation of the Lodz Ghetto to remember those who suffered at the hands of the Nazi regime.

AppleAndroid