Investors expect Govt to share risks in PPP projects

06-Dec-2018 Intellasia | The Saigon Times | 6:00 AM Print This Post

Investors participating in the Vietnam Business Forum (VBF) 2018 in Hanoi today, December 4, proposed the government share their risks incurred in infrastructure projects executed under the public-private partnership (PPP) format.

At the forum, Kenneth Atkinson, chair of the British Business Group in Vietnam, said British enterprises were keen on using the PPP model. However, they needed a guarantee of the effectiveness of these projects that would allow them to receive benefits and prevent potential risks during the projects’ execution.

The foreign exchange risk is among the top concerns of investors. If foreign investors have to take this risk, the project execution costs could surge.

Atkinson proposed the Vietnamese government set up a specialised agency in charge of infrastructure development and apply global practices.

According to Ryu Hang Ha, chair of the Korea Chamber of Business in Vietnam, under the PPP format, private enterprises will benefit from the investment, construction, maintenance and operation of public facilities, while the government will cut taxes and provide part of the investment.

Although the Vietnamese government, in May, issued Decree 63/2018/ND-CP on investment in the PPP form, with administrative procedures for these projects being simplified, a government guarantee of risk sharing has yet to be offered, remarked Ryu.

The government’s improvement of regulations to reduce possible risks for investors undertaking PPP projects will definitely enhance the efficiency of these projects, Ryu added.

Speaking at the forum, Koji Ito, chair of the Japan Business Association in Vietnam, said that infrastructure development was an essential requirement of Vietnam’s long-term economic development plan. The use of the PPP format is one of the most effective ways to achieve this target.

He also suggested the Vietnamese government be subject to part of the currency risk. The government should identify key projects, which will receive State capital, Ito remarked.

Regarding the loans for PPP projects, Tony Foster, head of VBF’s infrastructure working group, noted that multiple regulations have hindered the execution of many PPP projects. This has raised concerns for lenders, affecting the mobilisation of capital for PPP projects.

Foster pointed to major obstacles in the capital mobilisation process, including the restriction of the land use rights of foreign lenders, the lack of foreign exchange risk sharing by the government and taxes on the interest from foreign loans, among others.

The VBF’s infrastructure working group proposed the new law on PPP investment, which is being drafted by the government, should include specific regulations on these issues.

According to a report from the Ministry of Planning and Investment on the execution of PPP projects over the last two decades, some 200 projects have been executed under the PPP format, including 158 traffic infrastructure projects, nine projects in the power sector and five wastewater treatment projects.


Category: Business, Vietnam

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