As Vietnam works to improve its transport infrastructure, the country has been mulling measures to attract investors to large public-private partnership (PPP) transport infrastructure projects.

The Ministry of Transport (MoT) aims to target foreign investors with strong financial capability into transport infrastructure as demand for capital in projects has grown.

According to Deputy Minister of Transport Nguyen Nhat, to make projects more attractive to foreign investors, State risk-sharing mechanisms in PPP projects need to be revised, including State guarantees for revenue and effectiveness of projects.

The Dau Giay – Phan Thiet Expressway. Photo: gacepo.com

In the past three years, investors from the Republic of Korea, the United States, Hong Kong, Spain, and India enquired to the MoT about projects but none agreed to invest.

In the Dau Giay – Phan Thiet Expressway and the Tan Van-Nhon Trach Belt 3 in Ho Chi Minh city, foreign investors demanded guarantees in revenue, exchange rate and government guaranteesfor loans. The two latter demands are not suitable with Vietnamese law, making it difficult for calling on foreign investors or credit organizations.

“On tapping local investors, the long-term credit market is in difficult times with high rates of long-term loans. So, it is necessary to look at mechanisms and policies to allow investors to access capital,” Nhat said.

Geleximco, a local investor, formed a coalition with the Hong Kong United Investor Holding (HUI) to propose investing in many big transport projects with total capital of up to USD 60 billion.

The Geleximco-HUI coalition sent documents to MoT Minister Truong Quang Nghia recommending investing in four transport infrastructure projects: the sections of north-south expressway from Thanh Hoa to Ha Tinh and from Ho Chi Minh city to Nha Trang, the expressway from Ha Long to Mong Cai, Long Thanh International Airport and the North-South High-Speed Railway.

In response to Geleximco-HUI’s proposals, Nguyen Danh Huy, head of the ministry’s Public-Private Partnership Investment Project Management Department, said the ministry welcomes and is willing to exchange information with investors who express interest in transport infrastructure projects.

However, all projects proposed by Geleximco-HUI have huge investment on a large scale, so the MoT has assigned relevant units to study and build investment plans and seek instructions from the government, an official from the ministry said.

Projects will only be awarded to investors if they prove their financial capability, he said, adding that calling on foreign capable investors is now a top priority to welcome the third wave of investment in PPP infrastructure projects.

According to experts, after two waves of investment in 2012 and during the 2013-2015 period, the demand for capital in the third wave is too much for private investors and domestic credit organizations to satisfy.

Total investment for 68 projects in the list of PPP projects in the 2016-2020 period recommended by the Ministry of Planning and Investment reaches VND 335 trillion (approximately USD 15 billion),of which only VND 114 trillion (roughly USD 5 billion) is expected to come from State budget while the remaining from private sources.

Source: VNA