Foreign capital to help infrastructural development

According to the Global Competitiveness Report 2017-2018 of the World Economic Forum, Vietnam’s infrastructural development indicator ranks 79^th among 137 countries that is still considered weak.
Nguyen Van Vien, deputy director of the Vietnam Institute for Development Strategy, said that the infrastructure system in Vietnam “has taken shape,” with a traffic system comprising 364,000km of roads, 745km of highways, 23,000km of national roads, 32 seaports and several waterways. However, most of them are of low quality, “the energy infrastructure relies heavily on fossil fuels and urban infrastructure is lacking, evidenced by rampant flooding, congestion, and the lack of connectivity."

Vietnam’s infrastructural development indicator ranks 79th among 137 countries in the Global Competitiveness Report 2017-2018.

Similar deficiencies can also be witnessed in other areas such as healthcare and education infrastructure, Vien said.
Nguyen Van Hieu, Deputy Minister of Planning and Investment (MPI), said that despite the country’s internationally recognized advancements in recent years, there were signs of a “slowdown and stagnant productivity,” and a significant factor in this is the “low quality of infrastructure.”
Infrastructure had been identified by the Vietnamese Government as one of three pillars of its growth strategy for the 2011-2020 period, alongside institutional reforms and human resources development. In recent years, the country has focused its resources on infrastructure investment, with an annual investment value amount to 5.7 percent of its GDP, a relatively high rate compared to other countries in the region. However, as in other developing countries, the enormous investment required is beyond the capacity of the State budget.
“The capital needed for infrastructure development until 2030 has been estimated at VND3.3 quadrillion (US$145.3 trillion), which has not included costs for high-speed railways, airways, and waterway development. However, the National Assembly has only approved a mid-term investment plan of VND150 trillion ($6.6 trillion), a small fraction,” Hieu said.
According to Alex Wong, head of Global Challenge Partnerships and member of WEF Executive Committee, as Vietnam has made it to the group of middle-income countries, the abundant foreign development assistance it once enjoyed is no longer a dependent source, therefore, Vietnam needs to diversify its investment forms, and public-private partnership has become a necessity.
He said that PPP was “a long marriage” and that the Government needs to understand that private sector involvement is not “free money.” PPP’s potentials can only be fully realized if each party is fully aware of its share of the risks and responsibilities.