Joint effort
Investment in transport infrastructure projects in the BOT mode has been on the rise, with the participation of both local and foreign investors.
On 18 May a consortium including Cong Thanh investment and Construction JSC and the Phuong Thanh Investment officially received an investment license for a project to build Ha Long – Van don Highway and upgrade a section Of National Highway No 18 from Ha Long city to Mon Duong. The project is being implemented in the build-operate-transfer (BOT) mode with total Investment Capital of VND 14 trillion ($645 million)
The BOT model has been attracting many investors in recent times, especially after the government and Ministry of transport (MOT) decided to promote the progress of many infrastructure projects by encouraging the involvement of the private sector.
According to figures from MOT there are 50 BOT projects now underway, including 37 in road transport, six in aviation, three in inland waterways, three in railway, and one in maritime transport. Total investment capital for the 50 projects stands at some VND 160 trillion ($7.37 billion). It’s expected that eight of these projects will be begin construction in the second quarter of this year.
In the first quarter MOT mobilized more than VND 16 trillion ($737 million) to invest in four projects under the BOT mode. According to the Deputy Minister of Transport Nguyen Hong Truong, available funds from the State Budget are limited so private sector investment in the road transport sector is very much a necessity.
In addition to Vietnamese investors, foreign investors have also been active in transportation infrastructure projects in the country. Through investment in infrastructure requires large amount of capital and involves a long wait for any return on investment, the sectors still holds many opportunities for investors.
A number have summited investment plans to MOT recently. Aeroports de Paris Management, a company specializing in aviation operations and development under France’s Aeroports de Paris, has proposed investing @2 billion in the Long Thanh International Airport project in Dong Nai province, which will serve nearby HCM city
Samsung has also expressed an interest in the planned airport. The corporation said it hopes to participate in the construction of terminal, in providing ground services, and in operating duty-free shops at the airport.
Other sectors in transportation have also attracted investors proposing to buy share of major projects. The Vietnam – Oman Investment JSC (VOI) recently proposed it purchase 19.68 percent of Hai Phong port, which is now under State management via Vinalines. Vinalines has proposed transferring a maximum of 29.58 percent in the port to the VOI while continuing to hold 65 to 75 percent of the Port’s charter capital, as required by Vietnamese Government
The right to collect tolls in Ha noi – Hai Phong Expressway, which is scheduled for completion in late 2015, has been sold to Indian infrastructure company IL&FS. According to Mr. Danny Samuel, Head of Corporate Business Strategy at IL & FS, under the contract it will buy a 49 percent stake in the project while the remaining 51 percent will be retained by the Vietnam Infrastructure Development and Finance Investment Company (ViDiFi). The money will be transferred to ViDiFi at the end of 2015.
The private sector invested nearly VND 43 trillion ($1.89 billion) in transportation projects last year, far less than what is required to develop the country’s infrastructure. Vietnam’s annual capital demand for road development were estimated at VND 202 trillion ($9.3 million) by 2020 in an Mot report.
As the legal framework to attract investment in the sector improves gradually the outlook is becoming rosier. However, since the Government issue the Decision No 71/2010/QD-TTg dated September 11, 2010 on regulating an investment was issued, effective from April 10, 2015, which is designed to attract more investors to the sector and make the process easier.
[Source : Vietnam Economics Times No.256 June 2015]