The estimate was released by the Minister of Transport Nguyen Van The at a recent sideline conference on regional infrastructure and financing of the 6th Greater Mekong Sub-region (GMS) Summit.
Some VND651 trillion will be needed to build road transport infrastructure
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The expected that more than VND300 trillion of the total will come from the private sector, especially from foreign funds.
The investment for infrastructure development is among top priorities in many countries, including Vietnam, The said, adding that Vietnam has planned to continuously finalize the building of its expressway system.
From now to 2020, the country will complete the construction of 654 kilometers out of 1,300 kilometers of North-South Expressway under the public-private partnerships (PPP) model. The state will contribute some 40 percent of the total investment capital.
Besides upgrading the port system, Vietnam will also study to construct a new high-speed railway system from the North to the South.
The projects, when being put into operation, will help to connect Vietnam’s road and railway systems with ASEAN, Greater Mekong Region and Trans-Asia Railways, The said.
At the same time, The noted, the country will also invest to build the Long Thanh International Airport to make it become among large airport in the region.
Transport infrastructure investment will be also promoted in urban areas including Beltways No 2 and No 3 in Hanoi and Beltway No 2 and No 3 in Ho Chi Minh City besides speeding up the construction of urban railways in Hanoi and Ho Chi Minh City.
At the conference, The said that countries in GMS need billions of dollars to meet the increasing demand for infrastructure, but institutional barriers are stopping the private sector from investing.
Apart from China or Thailand, other countries like Vietnam are yet to modernize and fully develop their infrastructure, he said.
Vietnam planned to construct up to 8,500km of expressway to catch up with other countries in Asia. However, less than 10 percent was completed so far with about 3,000km pending and no plans in the near future for more than 6,500km of roads.
The Asian Development Bank (ADB) also estimated that the GMS would need at least $33 billion for infrastructure investment between 2014 and 2020, with only 80 per cent able to be mobilized from the budget of the countries and development banks, leaving them about $6.4 billion short, mostly in transport and energy infrastructure investment.
“Mobilizing private capital will be absolutely needed to bridge this gap,” Supee Teravaninthorn, General Director of the Asian Infrastructure Investment Bank’s Investment Operation Department I, said, adding that “but the private sector doesn’t invest for charity. They need fair competition to invest”.
According to The, Vietnam is calling for more transport investment in the PPP model and the National Assembly is expected to pass a law this year which will serve as a legal basis for PPP investors.
At present, PPP investment is regulated by Decree No.15/2015/ND-CP and Decree No.30/2015/ND-CP. Despite improvements, the risk-sharing mechanism, exchange rates, and revenue guarantees, which are considered the topmost concerns among foreign investors, remain absent from the decrees.
The lack of this regulatory mechanism has discouraged foreign investors from joining transport infrastructure projects in Vietnam. Thus, up till now, no PPP transport infrastructure projects have been successfully done by foreign investors in Vietnam, despite their great interest.
