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Intellasia East Asia News – The PPP model needs more balance and equality for private investors

Vietnam’s growing demand for infrastructure development in the coming years requires government policies that encourage private sector participation, economists and lawmakers said.

According to estimates by the Asian Development Bank (ADB), by 2030, Vietnam’s basic infrastructure investment needs will amount to around $480 billion.

Infrastructure projects play a key role in spearheading the country’s socio-economic development, especially those in the industrial and transportation sectors.

To speed up the process, the government has put in place various legal and policy frameworks, including the Law on Investment in the Form of Public-Private Partnerships (PPP) in 2020 and various decrees and regulations.

Such movements aim to provide comprehensive guidelines and regulations on how to form public-private partnership projects.

However, there are still many shortcomings and limitations, according to economists.

Vu Tien Loc, Chairman of the Vietnam International Arbitration Center (VIAC) and former Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that private sector involvement would be the solution to the country’s infrastructure problems, given the limited state budget.

In addition, PPP projects often offer opportunities to introduce more efficient construction and financial management, as well as more advanced technologies.

However, current regulations had failed to find a balance for PPP projects in terms of shared responsibilities, interests, and risks among stakeholders, a major setback for attracting more private investors.

Le Dinh Vinh, a lawyer with the Vietthink law firm, said many PPP projects faced protracted problems of land transfer, compensation, authorization and resettlement.

It is often difficult for investors to gain access to long-term credit or to benefit from lower interest rates. There have also been complaints about the slow disbursement of state capital.

According to Vinh, investors often face more risk in the planning and construction phases. Even when a project is complete, risks remain with return of principal, contract modification, and revenue sharing mechanisms.

In addition, policy changes, inflation, exchange rates and taxes continue to be factors that can hurt investors’ results.

A common problem investors have with the current PPP framework is the lack of unity, clarity and transparency between economic sectors and localities. In many places, the state representative still sees private investors not as partners but as subjects of micromanagement.

When things go wrong, the interests of investors are often the first to be ignored.

To address such issues, the Loc urged the government to quickly produce a detailed description of the rights and obligations of each party, emphasizing the amount of risk and difficulties they must manage.

It is time for the government to start building a conflict management mechanism for PPP projects to handle potential disputes during and after implementation.

Category: Business, Vietnam

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