This is one of the important statement at the Joint press release of the Asian Pacific Economic Cooperation (APEC) Finance Minister Meeting 2017 at Quang Nam on October 21.
Transport infrastructure development plays an essential role for Vietnam's economic growth.
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The formation of capital markets in economies, especially credit market and financial assets are important steps in mobilizing long term financial resources for infrastructure projects and increasing options for governments. Through the using of mechanism “mix financing” – using the public financial resources and mobilizing additional investment fund from private sector, the government can reduce risks and increase the participation of private sectors in infrastructure investment.
Finance Ministers said, in almost all economies, lending from commercial banks are common financial resources for infrastructure development. The financial system is controlled by commercial banks, which means there will be high risks to the banking system. Therefore, it is necessary to have supporting policies to identify opportunities in facilitating the participation of the private sectors in infrastructure development through development phases of projects.
With regard to the Public – Private Partnership (PPP), some international organizations stressed 03 important factors to identify the support level of the government for PPP projects, so that policy makers can develop appropriate mechanism, including: Setting up clear legal framework with the support of related administrative agencies; Identifying options with regard to PPP based on the monetary value; and lastly, applying transparent financial management procedures to reduce financial risks, as well as to ensure the consistency in public expenditure.
Favorable business environment, efficient law system, strictly following the commitment to contract and regulations are foundation to attract investment from the private sector into infrastructure development.
Risks must be categorized, which can be measured and managed by capable administrative agencies. An efficient contract will consist of the government’s objective in providing appropriate services suitable with the objective for profit of private sector, along with acceptable risks.
APEC’s Finance Ministers said, contract regulation, insurance and guarantee are efficient instruments to reduce or transfer commercial risks in some APEC’s economic members. Therefore, it is necessary to choose good practices in public investment.
Secretary-General of the Organization for Economic Co-operation and Development (OECD) Jose Angel Gurria said, investment is an important factor influencing the future growth rate. Infrastructure in turn is essential for the improvement of productivity and increasing competitiveness. Mr. Gurria stressed the important of not overly focus on physical infrastructure development such as bridges, highway, ports, airports, but also to improve intangible infrastructure such as education, skills, efficient legal framework. With this being said, physical and intangible infrastructures are equally important. Representative of the Canadian Finance Minister Paul R. Samson said, in PPP, private sector can participate in infrastructure projects in a new way. Recently, Canada has established an infrastructure bank, which is specialized in providing funds for private sectors, as this sector should be operated in a separate way.
