Transport faces roadblocks

The scale of investment and lower rate of returns are the main factors preventing the private sector from investing in transportation projects in HCM City, experts say.

At present, capital for transport infrastructure mostly comes from the State budget, Official Development Assistance (ODA) and donations from international institutions.

The participation of private companies in the field as investors is very limited with only four foreign and local enterprises in the fray: the HCM City Infrastructure Investment Joint Stock Company (CII); Phu My Bridge Corporation (PMC); VinaCapital; and South Korean GS Engineering and Construction.

“Large scale, long-term investment and low profit proportions are the reasons for this situation,” Phan Hong Quan, managing director of VinaCapital’s Viet Nam Infrastructure Limited (VNI), told the Viet Nam Investment Review.

VNI focuses on telecommunications and energy infrastructure projects that have an internal rate of return (IRR) of 15 and 20 per cent respectively, he said.

Investors are also dissuaded by the challenges of ground clearance and the lack of stable government policies related to transportation projects like roads and bridges.

“The time taken for ground clearance is often longer than expected and it would affect our capital recoupment plan,” Quan said.

HCM City authorities say they are always encouraging the private sector to invest in transportation projects so as to reduce the burden on the State budget.

“At present, HCM City mobilises capital from bonds, loans and land funds. To encourage the private sector, the city should release transparent and proper policies,” said deputy chairwoman of the municipal People’s Committee, Nguyen Thi Hong.

“Investing in transportation projects is very attractive because of the huge demand,” said Phan Anh Dung, deputy general director of the Pacific Infrastructure Investment JSC.

However, he said the fierce competition in Build-Operate-Transfer (BOT) investment model made it difficult to find good projects. While Build-Transfer (BT) projects were more feasible, “investors should be careful because land prices in the contract are affected by real estate market prices,” Dung added. — VNS

Tags: Vietnam transportation