Private investment needed in infrastructure

Update: September, 09/2015 - 08:34
The flyover on Thai Ha-Chua Boc in Ha Noi's Dong Da District helps reduce traffic jams. Transport infrastructure needs private investment to meet increasing demand. — VNS Photo Thai Ha

HA NOI (VNS) — Demand for transport infrastructure is increasing, so the Ministry of Transport must review transport system planning and seek private investment for transport projects, according to officials at a workshop.

The meeting was held by the Viet Nam Institute of Economics and the Bank for Investment and Development of Viet Nam (BIDV) on Monday. It focused on promoting investment in transport infrastructure.

The demand for investment in transport infrastructure between 2016 and 2020 had grown to VND1 quadrillion (US$45 billion), said Nguyen Danh Huy, director of the Public-Private Partnership Department at the Ministry of Transport.

The State budget is limited. It can provide about 28 per cent. However, the Ministry of Planning and Investment's plan on public investment for 2016-2020 only puts the figure at about 7 per cent of the demand or VND66 trillion ($2.93 billion). So attracting private investment at home and abroad would play an important role in transport infrastructure development, Huy said.

According to Huynh The Du, a lecturer in the Fulbright Economics Teaching Programme, investment in Vietnamese transport is double the average of many other countries over the past two decades.

A lot of investments have been made in transport infrastructure but they haven't been used efficiently.

It's expensive to build highways in Viet Nam compared with other countries, and many highways are not used effectively.

La Ngoc Khue, a former deputy transport minister, said it was necessary to review transport system planning in Viet Nam to determine the effectiveness of transport projects.

"The transport infrastructure in Viet Nam is poorly planned and unsynchronised," Khue said. "Roads prevail over waterways and railways, which goes against global trends."

Tran Dinh Thien, director of the Viet Nam Institute of Economics, said there were shortcomings in transport infrastructure planning, so investment in the transport sector wouldn't produce the desired effects.

In order to boost investment efficiency and encourage private sector participation, Thien said that Viet Nam needed a detailed plan for developing infrastructure.

He emphasised the importance of the development of railway infrastructure in the next decade.

"Railway infrastructure development will not only help reduce the overloading of road infrastructure, but also help enterprises cut costs for transport and storage," he said.

To make projects attractive to investors, Ho Minh Hoang, general director of Deo Ca Investment Joint-Stock Company, suggested the government create an institution that would detect the risks investors could face.

"Identifying risks and delivering solutions will make built-operate-transfer and built-transfer projects more attractive," he said.

Nguyen Tuan Huynh, director general of Civil Engineering Construction Corporation No 4, said the transport ministry should divide projects into phases so the payback periods could not surpass 15 years, because transport infrastructure investment required very large-scale and long-term payback periods.

To offset the risks, investors expected revenue guarantees from State management agencies, he said.

Meanwhile, Tran Bac Ha, Chairman of BIDV, said it was necessary to develop a mechanism for the domestic and foreign financial investment fund, and State Capital and Investment Corporation to invest in infrastructure projects.

He also spoke about the need to diversify sources for long-term transport infrastructure investment.

Private investment should continue to make up about 34 per cent of total transport infrastructure investment.

Deputy Minister of Transport Nguyen Hong Truong said the transport ministry would issue a reasonable solution to mobilise capital from the private sector to develop transport infrastructure in the coming time. — VNS