PPP projects get stuck in absence of legislation
By Le Anh - The Saigon Times Daily
HCMC – A lack of regulations has prompted some 20 projects under the public-private partnership format to come to an almost dead halt, while potential investors remain on the sidelines due to fears of risks, heard a dialogue on Tuesday.
Over 20 infrastructure and public service projects suggested for development under the PPP format are moving at a snail’s pace or not proceeding at all due to an incomplete legal framework, speakers said at the meeting in HCMC.
To remove the problems regarding the legal framework for PPP projects, it is necessary to have a specific law on this investment format, rather than merely a decision by the Prime Minister providing a trial basis for this investment form.
Decision 71/2010/QD-TTg on the pilot PPP investment format was released nearly two years ago, but so far the projects chosen for pilot PPP are still moving slow.
“Among over 20 projects that localities and ministries submitted to the Government, only a few are feasible while the remainder are of low viability. Only the Dau Giay-Phan Thiet Expressway project is now making a feasibility study, while the others are still in the pre-feasibility study stage,” said Nguyen Dang Truong, deputy head of the Bidding Management Department under the Ministry of Planning and Investment.
Vu Thanh Tu Anh from the Fulbright Economics Teaching Program said complicated and time-consuming bidding procedures are hindering the progress of PPP projects.
In addition, site clearance is a nightmare for investors. Meanwhile, risks involving lack of transparency in the business environment, an inadequate legal framework and policy uncertainties often emerge during the project execution, said Anh.
The potential for PPP development in Vietnam is huge, but investors do not feel secure with only Decision 71 as a legal framework, so they prefer BOT projects.
Lawyer Nguyen Hung Quang from the law office NHQuang & Associates stressed the definition of PPP investment format is ambiguous. Therefore, consultants do not have sufficient information to encourage investors to join PPP projects.
Duong Quang Chau, deputy director of the HCMC Infrastructure Investment JSC (CII), said even the projects developed under BOT and BT forms are now struggling with the legal framework, let alone PPP projects.
Participants in the dialogue on Tuesday shared the view that there needs to be a law on PPP investment.
“When making such a law, it is a must to clearly determine which sectors are to be developed under this format, and to adopt policies to ensure profits for investors such as offering them land, tax and credit incentives, credit guarantee, and toll collection mechanism among others,” said Tran Du Lich, deputy head of the HCMC delegation of National Assembly deputies.
“The law should specify the duties of investors as well as the rights and responsibilities of relevant State agencies. In addition, it needs to provide a mechanism for project operation,” Lich said.
He said when there is a way out for PPP projects, BT (build-transfer) format, also known as land in exchange for infrastructure, should be removed. He explained the market-driven mechanism requires transparency in investment via biddings, to avoid the ask-and-give mechanism like before.
Truong of the Bidding Management Department said it would take much time to compile a law. To create favorable conditions for the current PPP projects, the Ministry of Planning and Investment will propose the Government revise Decision 71 or issue a decree on PPP investment.