By
Minh Hue
Sat, October 28, 2023 | 7:00 am GMT+7
On October 27, 2023, the National Assembly convened to discuss crucial funding mechanisms for public-private partnership (PPP) road projects in Vietnam. The proposal aims not only to enhance infrastructure building but also to address foundational challenges in financing these essential projects.
Workers working on the Quang Ngai-Hoai Nhon Expressway project. Photo courtesy of Vietnam News Agency.
Minister of Planning and Investment Nguyen Chi Dung, speaking on behalf of the Prime Minister, presented a compelling case to increase state capital participation in these road projects from 50% to a remarkable 70% of total investment. This shift highlights the necessity for government intervention in projects that, despite significant capital requirements, demonstrate low current transport demand.
One of the most pressing issues identified by Dung was the high proportion of site clearance costs within certain projects. Insufficient state capital can discourage potential private investors, making these critical road projects less appealing. Increasing the government’s investment stake is projected to attract private sector funding, fostering a more balanced partnership that is vital for the success of such large-scale initiatives.
Another key component of the proposal is empowering provincial people’s committees with the authority to oversee expressway and national highway projects utilizing their local budgets. This adjustment is designed to promote regional capabilities, instill a sense of responsibility among local leaders, and encourage cohesive infrastructure planning across localities. By shifting more power to local governments, the initiative seeks to streamline decision-making processes and mobilize resources for road projects that span multiple provinces.
The Prime Minister is considering allowing these local committees to act as principal investors. This measure could enable them to utilize their budgets not only for local projects but also to support neighboring provinces in constructing roads critical to inter-provincial connectivity, thereby enhancing overall infrastructural synergy.
Additionally, the government has recognized the need for a special mechanism in the mining sector for common construction materials. A pressing shortage of building materials has plagued ongoing projects, contributing to rising costs. Establishing specific mechanisms aimed at overcoming these shortages is deemed necessary until the end of 2025, ensuring that material availability aligns with project timelines and budgets.
During discussions, assembly members converged on the idea that special mechanisms for funding expressway and national highway projects are indeed essential. However, concerns were raised regarding the implementation efficacy of these measures. Lawmakers called for a more nuanced evaluation of the mechanisms’ projected impacts, emphasizing the importance of careful assessment to optimize the outcomes of these funding strategies.