Since the first project applying the public private partnership (PPP) financing in 1997, Vietnam has a total of 336 PPP projects and mobilized a total of VND1,600 trillion (US$68.75 billion) in capital for national infrastructure development, according to Nguyen Chi Dung, minister of Planning and Investment.
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“Despite the format's shortcomings, PPP projects have helped improve Vietnam’s transport and urban infrastructure, waste water and garbage treatment, while timely addressing people’s concerns over public services and the country’s urgent demands for infrastructure improvement for socio-economic development,” Dung said.
According to Dung, current PPP regulations are limited to scope of a government decree, which is subject to adjustments to a number of laws, including the Investment law, the Construction law, the Corporate Law, the Land law, among others.
Meanwhile, most PPP contracts are long-term and of large scale, a fact that poses high risks to investors and requires a consistent and predictable policy environment, Dung added.
Dung stated the existing framework lacks vital mechanisms, including the government’s support, incentives and guarantee for PPP projects to enhance the attractiveness of these projects and ensure the success in implementation.
“Therefore, a specialized law on PPP is necessary to avoid overlapping legal regulations stipulating PPP investment activities,” Dung stressed.
Dung revealed the draft PPP law would remove fields not subject to PPP financing, while the investment minimum threshold for PPP project is set at VND200 billion (US$8.6 million).
The bill also allows investors to issue corporate bonds as a mean to mobilize capital, but for the PPP project only.
Vice Chairman of the National Assembly Uong Chung Luu urged the government to remain cautious during the process of drafting the law and take into account all factors.
Nguyen Van Giau, chairman of the National Assembly’s Committee for External Relations, said the PPP bill would have major impacts on Vietnam’s socio-economic lives, but a dozen of clauses remain unclear.
In a conference discussing the PPP financing mechanism in Vietnam on September 12, experts said it would be vital for Vietnam to have a predictable and consistent policy environment to maintain sustainable cooperation in PPP.
According to the Global Infrastructure Outlook, Vietnam will need over US$600 billion to reach its infrastructure goals by 2040.
The Asian Development Bank estimated Vietnam would need at least US$16.7 billion per year on average for the 2015 – 2025 period to cover capital needs for infrastructure development.
Meanwhile, the World Bank suggested the figure could rise to US$25 billion per year, much higher than the average investment capital in the 2011 – 2015 period.
