City seeks funds for traffic infrastructure via bond issue
By Van Nam - The Saigon Times Daily
HCMC – HCMC will issue municipal bonds to raise funds for infrastructure projects, in which traffic infrastructure alone demands some US$39 billion from now to 2020, said the city’s top leader.
“Reality shows that urban infrastructure in HCMC is now asynchronous, full of shortcomings, hindering economic growth and living standard improvement,” said HCMC’s Party Secretary Le Thanh Hai at the 10th meeting of the city’s Party Committee that wrapped up on Wednesday.
Capital is the key factor in urban infrastructure development, Hai stated, whereas the State budget allocations are insufficient.
Therefore, in the coming time, HCMC will form a research group, asking for the Government’s permission to mobilize capital under the formats of BOT, BT and PPP, which the city has been piloting over the past time. In addition, the city will issue urban bonds via finance investment companies to seek funds for urban projects.
Speaking to the Daily, Nguyen Thanh Tai, advisor to the HCMC government on traffic safety, said municipal bond issuance would help the city raise funds for investment, and especially mobilize capital from all sources within its citizens.
He informed the Government had approved for the city to issue bonds via large-scale projects.
Regarding capital allocations for traffic projects, Party chief Hai said the city would categorize the projects into wholly State-funded projects, partially State-funded projects and private-invested projects, and thus provide each group of projects with appropriate mechanism and policy.
Talking about the difficulties in the second half, Hai said although inflation had been restrained, signs of deflation had emerged. CPI slowdown due to weakened purchasing power has caused production stagnation and business bankruptcy.
Moreover, the frozen real estate market will continue to slow down construction tempo, immobilizing a huge amount of capital. Meanwhile, the stock market remains uncertain.
“To solve the difficulties of enterprises, the city will take more drastic measures to remedy the paradoxical situation in which banks have abundant money yet enterprises lack capital,” said Hai.
Municipal bond is a type of investment bond with terms of one year or longer that local authorities entrust the Treasury or legal entities formed by the localities to issue in a bid to mobilize capital for public structures such as roads, ports, schools and hospitals.
Experience of developed countries shows that municipal bond issuance is a good option for investment capital mobilization. However, in Vietnam, capital mobilization via this vehicle is still limited and unpopular.