The much-vaunted public-private partnership (PPP) model of investment has failed to take off because of an incomplete legal framework and inability of provinces to make proper project assessments.
The Ha Long – Hai Phong Highway was cSTCn as one of three national pilot PPP projects that met one of the basic criteria of profit-making potential. As such, it was expected to receive financial support of $4-5 million from the International Finance Corporation.
However after its selection, the northern province of Quang Ninh signed a memorandum of understanding with the State Capital Investment Corporation (SCIC) and Ha Long Production Investment and Development Limited to build the highway under the build-operate-transfer (BOT) and build-transfer (BT) models.
Their partner is the Japanese SE company, which will build the Bach Dang Bridge, the most significant construction in the project.
“The BOT arrangement with the Japanese contractor is much quicker than other models. Pressure to finish the highway is very high. If we were to choose PPP, we would have to wait for a long time,” one senior official of the provincial Investment and Planning Department was quoted as saying by the Dau tu (Vietnam Investment Review) newspaper.
The prime minister had in 2010 asked concerned agencies to draft regulations for making about pilot investments under the PPP model, but these have not been released yet.
“It takes six processes for a PPP project to come through, but right now, everything is at the beginning stage,” said Nguyen Dang Truong, deputy head of the Investment and Planning ministry’s Bidding Management Department.
According to Dang Xuan Quang, deputy head of the ministry’s Foreign Investment Department, who is in charge of setting up the regulations, said progress has been very slow.
He said one of the most basic steps for approving a PPP project is that localities must submit good projects themselves.
However, despite the fact that around 30 projects have been cSTCn with a total capital of $20 billion, “they are not good enough for us to submit them to the government. The profit making potential has not been made clear in any of the 30 projects,” he said.
The PPP model has great potential and is ideal for Vietnam in the context of limited capital resources and huge investment demand, however the unfinished legal framework has restricted its operations in Vietnam, said Nguyen Van Tu, deputy director of Hanoi’s Investment and Planning Department.