However, in the past, there have been many investment projects in this form that are at risk of bankruptcy and exposing many "gaps. What are the possible reasons for this?
The Trung Luong - My Thuan Expressway project was launched in 2009, with the goal of completion in 2018 to shorten the travel time from Ho Chi Minh City to the Western provinces. However, after 10 years of construction, the work was very low in volume because there were times when construction was stopped and the main reason was the inability to borrow credit capital from banks.
From April 4-2019, Deo Ca Group has joined the project to supplement the operating capacity for the project business. The Government has also allowed the transfer of the competent state management agency from the Ministry of Transport (MOT) to Tien Giang Provincial People's Committee, thus restarting the project.
This project has also been checked and reviewed twice by the State Audit Department and this Agency has detected and left out an investor with a contribution of 0 VND, which is Yen Khanh Company, to restructure the project business partnership.
The total approved project investment capital has increased to VND 12,668 billion, of which the direct support budget was VND 2,186 billion, the equity and other mobilized capital committed by the project enterprise reached a minimum of 3,400 billion VND, and 4 banks have pledged to contribute capital of 6,686 billion VND for this project.
Thanks to the difficulties and obstacles being solved, this project has now reached a volume of over 35%, an increase of 3 times compared to 10 years of previous construction. The project enterprise has also pledged to the Government to put this 51.1km route into operation in 2021.
Sharing his opinions on this project, Chairman of The People's Committee of Tien Giang Province Le Van Huong said: “When we were assigned by the Government to be a representative of the authorized state agency of this project, we were very worried because this is a large-scale and important project of the region.
We found that the Cai Lay's BOT (build-operate-transfer) project was opposed by the people because during the period between the time when the project was set up to be constructed and when it started operating, the people – those who directly use the services – knew very little about this project.
That's why when this project was put into operation, it faced opposition from the vehicle owners. From the experience learned from this project, right from the moment the Government assigned the state agency competent to the Trung Luong-My Thuan Expressway Project, the first requirement we set for the project business was to disclose the project information transparently from the start and this approach is being supported by the people. ”
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The life cycle of an investment project in the form of PPP usually lasts for decades, so the psychology of investors is to have a stable policy for the whole life of the project. Grasping this mentality, in the middle of September 2019, Chairman of The Tien Giang People's Committee Le Van Huong signed a commitment to banks, stating that when the Trung Luong - My Thuan Expressway is completed and put into operation to collect the return on investment within the scope of its authority, Tien Giang will not change the traffic planning such as investing in roads with similar routes that affect the traffic volume of the project and not issuing other policies affecting the financial plan for the debt payment cash flow of the project.
In case of implementing the Government's guidelines and the Ministry of Transport on the transport planning that affects the project, Tien Giang will report to the Government and the Ministry of Transport with the sponsoring banks and project enterprises to ensure the feasibility of the project financial plan. This is also the first time in the history of BOT transport that a competent state agency has made the above commitment to syndicated banks and project enterprises.
Assoc.Prof. Dr. Tran Dinh Thien, former Director of Vietnam Economic Institute, said that PPP could be considered as a state project that "orders" investors to participate. The general principle for this project is to harmonize the interests of the parties: The State, the investors, and the service users. The principle of transparency must ensure incentives for investors but must also be transparent and avoid the "front yard, back yard" phenomenon.
“In fact, when the PPP Law has not been enacted, PPP projects may still be implemented, but the policy mechanism may be incomplete, so there will potentially be more risks for investors and ultimately for the State and for users since PPP projects are public works and services.
The sooner we enact the law, the more opportunity we will have to attract more private capital, making it more effective and methodical; especially, it will contribute to solving the resource problem for the goals set out in the socio-economic development strategies and plans in the coming period”, Mr. Thien added. “It is necessary to promulgate the PPP Law to solve the current problems and to open a new stage in the deployment of PPP investment attraction, ensuring equity, transparency, stability, reliability and economic efficiency.
PPP projects, in the long run, can sometimes last between 25-30 years with unpredictable risks during the project contract implementation. According to the evaluation of some foreign investors within the framework of the Vietnam Business Forum (VBF), if disputes arise during the implementation of PPP contracts, the current regulations on the applicable law will not have created a level playing field in the relationship between the competent state agencies and investors, or between the domestic investors and international investors.
The PPP Law project was commented on at the 8th Session of the XIV National Assembly and is expected to be approved by the National Assembly at the 9th session in the middle of this year.
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