The need for PPP laws

26-Feb-2019 Intellasia | The Saigon Times | 6:00 AM Print This Post

What the future holds for build-operate-transfer (BOT) roads in Vietnam remains unclear since stakeholders, including the authorities, developers and road management enterprises have yet to reach a consensus

The controversy surrounding BOT toll gates, which seems to have subsided for a while, may erupt again. Problems pertaining to BOT projects are on the rise, culminating in the decision by the Vietnam Expressway Services Engineering JSC (VEC E) to refuse to provide services to two cars, which is in effect a ban imposed on road users.

What the future holds for build-operate-transfer (BOT) roads in Vietnam remains unclear since stakeholders, including the authorities, developers and road management enterprises have yet to reach a consensus. For example, the Ministry of Transport’s head of Road Safety Department believes that enterprises have the right to refuse service instead of imposing a fine if a vehicle owner commits a serious violation (1).

Do enterprises have the right to do so?

Public opinion is divided on the issue, five aspects of which will be discussed below.

First, who owns BOT roads?

Under prevailing regulations, the private investor of a BOT project has the right to channel investment into building a road and operating it to recoup capital before transferring everything to the State. This investor has no ownership rights. Is this unreasonable from investors’ point of view? BOT projects, as well as those under the publicprivate partnership (PPP) format, represent a concession agreement between the State and private investors and do not entail civil rights such as those related to doing business or ownership. This means the rights of investors and enterprises managing and operating a project depend on negotiations. From a legal perspective, the State owns BOT roads although operation and maintenance rights are given to private investors.

Second, if enterprises can manage roads, are these roads considered public or private space?

It is pertinent to consider whether management rights include that of preventing others from gaining access to the roads. This may be true for factories or farms, but roads, even if they are not high-quality expressways or the only paths available to a destination, are another matter altogether since they are essential infrastructure and serve the public’s transport needs.

Third, is it vehicle owners or vehicles that should be punished for a violation?

Vehicles are non-living things, so penalty should be imposed on vehicle owners instead. It makes little sense to ban vehicles since they are not to blame.

Fourth, who can tackle violations?

It is important to distinguish between a firm’s internal regulation and the laws. In a private space such as headquarters or factories, business leaders can impose internal regulations, applicable to those present. However, roads, which are public space, should be governed by the Road Traffic Law or principles set by the State. The aim is to ensure compliance with laws through a service-oriented approach rather than restriction of vehicle owners’ rights. For example, toll gates may make it mandatory to pay fees before a vehicle can pass through them. This is different from banning vehicles from a road.

If vehicle owners break the Road Traffic Law, they will be penalised by the State or State-authorised agencies. Under current laws, there is no such punishment as permanently banning a vehicle or vehicle owner. Neither is such a punishment justifiable as it infringes on a citizen’s fundamental rights.

Fifth, is it fine for firms like VEC E to use flight bans in the Civil Aviation Law as a precedent for imposing similar bans on roads?

To begin with, it should be noted that aviation laws stipulate various degrees of violation, with corresponding penalties. Flight bans can be imposed temporarily for serious offenses and permanently for extremely serious offenses, and decisions are made by the Civil Aviation Authority of Vietnam. Moreover, air travel is a sensitive sector, with violations potentially causing dire consequences. It is different from travel along roads, and precedents cannot be applied too liberally.

The case for PPP laws

In response to public outrage, the Ministry of Transport’s directorate for Road will require the Vietnam Expressway Corporation, of which VEC E is a subsidiary, to revoke the ban on two cars proposed by VEC E (VEC says it has not issued the ban). Despite the authorities’ prompt intervention, fundamental issues pertaining to PPP projects, especially those under the BOT and BT (build-transfer) format, have not been satisfactorily resolved from a law-based perspective.

For instance, the essence of BOT and BT projects remains debatable. Is it public or private investment? What is the role of State agencies with respect to public capital and assets, including commercial rights? What are the boundaries set for private investors’ ownership and business rights? What financial mechanisms should be adopted to encourage private investment in infrastructure? Especially sensitive is the issue of information disclosure and transparency in bidding and negotiations.

In reality, BOT projects in the transport sector and BT projects in other fields have proliferated since Decree 15/2015 on PPP investment was implemented in 2015. To deal with the negative impacts of BOT and BT, the decree was replaced by another document in 2018 but the change was limited. The question is, considering the National Assembly’s direct intervention through a resolution to tackle the downside of BOT and BT projects, why has the government yet to introduce a PPP law? The recent controversy indicates that it is time for policymakers and lawmakers to promptly address this issue.


Category: Economy, Vietnam

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