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investment in the form of PPP, to ensure tripartite
interest harmony, the State, investors and users of
services in the direction of preparing Law on PPP.
For road BOT projects, it is necessary to revise
regulations relating to risk sharing mechanism
between the State and investors, tolling station,
charge rate as well as charging time limit and
the revenue monitoring mechanism to ensure
transparency and accountability, as well as to
maintain harmony of the mechanism which
encourages investors to invest in infrastructure
development. The revised regulations also
need to be more specific about the coordination
mechanism between competent state agencies in
the implementation, management andmonitoring
of PPP projects. Then, it is necessary to review
the implementation of investment models in the
form of PPP in the past to assess the shortcomings
and limitations, thus providing solutions to
overcome, encourage qualified investors to
effectively participate in investment and manage
projects effectively, ensuring interest harmony of
the State, investors and people.
Secondly,
study application of direct financial
supports to investors such as:
(i) Financing: Applicable to economically
feasible but not financially feasible PPP projects.
It is recommended that the level of capital
contribution should not be fixed at 30% as it
currently is, but will be adjusted to suit each
specific project and not exceed 49% of investment
value to achieve PPP target.
(ii) Output subsidies: The government
subsidizes a portion of fees for infrastructure
projects that are economically attractive; however,
conditions have to be carefully considered.
(iii) Assigning project space exploring right to
investors: This is a revenue-generating scheme for
PPP projects, especially for transport BOT projects.
Accordingly, investors are allowed to trade these
land lots to support income from collecting fees.
Legislation needs to regulate trade land rights
along the road corridors for a government-
backed BOT model, in order to enhance project
financial feasibility and attract additional
benefits. However, care should be taken to ensure
information transparency and independent
monitoring mechanisms, to minimize the risks
associated with land for infrastructure conversion
agreements.
Thirdly,
study application of incentive
investment policies specific to the PPP projects
in addition to the usual preferential forms of tax
and land rent. Consideration may be given to the
establishment of mechanisms such as financial
deficit fund, reserve fund for government
guarantee, minimum guarantee for sales, thereby
encouraging private investors to participate in
large-scale infrastructure development projects
Fourthly,
study renewal of pricing and fee
policies in line with the market mechanism,
facilitating and sharing risks with investors. The
infrastructure use fee adjusting process should be
carefully studied and have a detailed intinerary.
Fees should be in line with market fluctuations
in terms of inflation, consumer price index, and
other economic indicators. Fees can be set up for
each project.
Fifthly,
prioritize use of government bond
capital for the state contribution to PPP projects;
at the same time, adopt priority policies on use
of preferential loans of donors as the State’s
contributed capital.
Sixthly,
promote completion of the legal
corridor to support the private sector to
mobilize capital through corporate bond market,
construction bonds; review relevant laws such as
Construction Law, Real Estate Business Law, etc.;
Formulate income tax incentive or extemption
mechanism for organizations investing in project
bonds; reviewand improve the legal framework to
promote corporate bond market and government
bonds, ensuring establishment of a modern legal
frameworkthat ispublic, transparentandcomplied
with international standards on securities and
capital market supervision regulations.
References
1. The Socio-Economic Development Strategy for Vietnam 2011-2020;
2. Huynh Thi Thuy Giang (2012), Public-Private Partnership for the
Development of Road Traffic Infrastructure in Vietnam, PhD thesis, Ho
Chi Minh City University of Economics;
3. NguyenVanGiau (2014), Public-Private Partnership (PPP): International
Experience and Institutional Framework in Vietnam, Knowledge
Publishing House, ISBN: 978-604-908-852-0;
4. Workshop Summary Record “Capital for transport infrastructure
development: needs and solutions” (2015), Vietnam Institute of
Economics.
