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Partnerships key to infrastructure

Update: May, 21/2013 - 09:19
Cars travel over Rach Chiec Bridge in HCM City, which was built under the public-private partnership model. Companies say the legal aspects of the State's participation in the model have to be clarified to make it more feasible and attractive.— VNA/VNS Photo Hoang Hai

HCM CITY (VNS)— Investments under the public-private partnership (PPP) model would be encouraged in HCM City to develop key technical infrastructure projects, a Sai Gon Giai Phong (Liberated Sai Gon) report has said.

In its Saturday edition, the daily said that the municipal administration had sought permission from relevant ministries and agencies to invite PPP investments for major transport infrastructure projects.

The projects deemed suitable for PPP investments include the Rach Chiec Bridge on the eastern outer belt road, which links the road with the Ha Noi Highway, a bus terminal at Cho Lon, and two water loss reduction projects.

The city has called for all sectors to participate in the development of technical infrastructure systems under Build-Transfer (BT), Build-Operate-Transfer (BOT) and other forms of investment.

Such investments have seen several infrastructure works completed, like the King Duong Vuong Road, the Rach Chiec Bridge and Phu My, thus making important contributions to the city's socio-economic development.

However, Bui Xuan Cuong, director of the municipal transport department, said BT and BOT investments were no longer attractive to investors for several reasons, so the city had to seek other investment models.

Under the PPP model, the private party provides a public service or project and assumes substantial financial, technical and operational risks.

For its part, the Government's contribution to a PPP may also be in kind (notably the transfer of existing assets).

In projects for public good, the Government may provide a capital subsidy in the form of a one-time grant, so as to make it more attractive to the private investors.

In some other cases, the Government may support the project by providing revenue subsidies, including tax breaks.

Given these advantages, the city administration had proposed that a series of technical infrastructure projects be developed using the PPP model, Cuong said.

Although this plan is still on paper, it has been welcomed by many companies since they expect to receive significant support from the State when they participate in the projects.

Some companies have said that the legal aspects of the State's participation in the PPP model had to be clarified to make it more feasible and attractive.

Le Binh, general director of the HCMC Infrastructure Investment Joint Stock Company, said the State should have specific regulations on the guarantee it provided for enterprises to borrow capital from official development assistance (ODA) sources.

He said if joint stock companies were facilitated in getting early returns for their investments, they would find it easier to raise capital through various means.

Binh also suggested the State organise tenders for PPP projects and ensure their quality as well as availability of their investment capital. — VNS


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