HANOI, June 9 (Engineering Daily) -- With a growth rate of 6% per year, Vietnam has been evaluated as one of the fastest economic development in the world. Therefore, the need of infrastructure development, in particular transport, is the most critical issue. Hence, the construction of transport infrastructure requires a huge capital, but State budget is limited. The calling for foreign investment is considered as one of effective solutions.
Currently, there are two forms of foreign investment capital attraction into Vietnam including the official development assistance (ODA) and the foreign direct investment (FDI). The fact is that ODA is getting lower after Vietnam is considered as country at average income level, and the ceiling for sovereign debt is controlled… In addition, FDI capital into Vietnam is increasing but mainly focused on the industry, processing and textiles. Only a very small amount of FDI is invested in transport. The introduction of Public Private Partnerships (PPP) was expected most important measure to attract foreign capital investment on national transport infrastructure development.
According to statistics of Ministry of Transport (MOT), in the period 2001-2015, foreign capital accounted for 32% of total investment in the transport sector including 28% of ODA fund and only 4% of FDI. According to calculations of MOT, in the period 2016-2020, the demand for investment in the transport sector is about VND 1,015 billion, in which state budget can meet only two-thirds, and the remaining 300.000 billion will be mobilized from extra-budgetary sources, especially from abroad. Meanwhile, FDI into Vietnam during the recent three consecutive years (2013-2015) has surpassed $ 20 billion, therein, South Korea was taking the lead, accounting for 30% of total investment in Vietnam. However, FDI is mainly invested in the garment, textile, and industry. For example, Japanese FDI, 2015 statistics shows that there are 9 projects in the field of construction and zero FDI project in the transport sector, in the total number of 299 projects; with a capital corresponding to the $ 355 million (38%) and 0 dollars for a total capital of $ 1,285 million. Thus, promoting FDI in transportation is necessary. It also provides an opportunity for foreign investors to boost capital in transport projects.
Other opportunity for foreign investors is that Vietnam officially became a member of the TPP. The members account for 38.8% of exports, 22.2% of imports and 38.3% of Vietnam's FDI capital. Recent assessment of the World Bank shows that the TPP is expected to generate substantial benefits for Vietnam on trade, investment, growth and job creation.
In addition, being aware of big amount of capital for transport, MOT has proposed the transport socialization to the government, whereby, investment capital mobilization for transport through PPP. According to Decree 15/2015 / ND-CP, the PPP investment is a form implemented on the basis of contracts between state competent agencies and investors and business to implement, manage and operate the infrastructure projects and provide public services. The provisions on investment under the PPP form do not discriminate foreign investors from domestic ones. Foreign partners may joins in the form of PPP (by business projects) if being content with the provisions on the conditions and the scope of business activities for foreign investors.
Those foreign investors involving in the project will benefit the general investment incentives such as tax exemption and reduction of land using fees. Investors are guaranteed the same rights as the mortgage assets (including land use rights), the right of operating the project, and are ensured the balance of foreign currency, the provision of public services, and the property rights.
In summary, the potential and the need of capital for transport infrastructure are huge, expanding opportunities for foreign partners to jointly participate. With the legal framework for attracting investment (Decree 15/2015 / ND-CP), Vietnam is hoping to receive investment from the traditional investors such as Japan, Korea and etc. to join together for planning, design and construction of a transport infrastructure modernization and development.
