$100b needed for infrastructure construction in next 5-10 yrs

The “real estate and investment opportunities in infrastructure, Vietnam Investment Summit 2010” held between Jun 8 and 9 by Singapore’s Terrapinn Group in HCM City attracted hundreds of domestic and foreign investors.

Alain Cany, president of European Chamber of Commerce (EuroCham) in Vietnam said that the capital demand for infrastructure construction estimated at about $100 billion here is very large. Such a high demand in addition to the friendly policies has created conditions for foreign investors to pay attention. Dang Huy Dong, vice minister of Planning and Investment while speaking in the summit said that in two months, Vietnam will issue a circular regulating details on Public Private Partnerships (PPP) form.

Vietnam Investment Summit 2010 was attended by some new participants namely APG Asset Management Asia from Hong Kong.

Robert Thorpe, managing director of Vietnam Investment Summit said in a statement that his firm manages 25 worldwide investment funds that previously only invested in developed countries and now developing nations including Vietnam.

APG Asset Management also spends 20 percent of its funding on investing in Asia.

Delegates at the summit said that investment funds are driving to small investment deals (worth less than $50 million each) but they will enhance presence in many projects instead of focusing on huge works.

Phu My BOT Bridge Joint Stock Co (PMC) is considered one of successful investment sample in the infrastructure construction. Bertrand Chape, general director of PMC said that his firm pumped a total $150 million (including its ownership capital of $35 million and loans of $115 million) into Phu My bridge project with the fee collection time of 26-30 years. Each year the foreign investor expects to earn 20-30 percent of profit, which is fairly attractive for all investors.

Another example, Dang Thanh Tam, chair of Saigon Investment Group invested 25 trillion dong in building Hanoi expressway. Instead of this, the group received the right of using 600-700 hectares in an urban area along with the expressway, he told.

From above some successful deals in PPP form, vice minister Dang Huy Dong said that the State will give priorities in investment in roads and electricity water supply and then expand to health and education fields. But in his opinion the need is to select one or two pilot projects for applying PPP form.

These PPP projects all are undergoing the development plan of the state and capital financing of banks and exact estimation in investment and profit. If the state does not join the projects, private companies will be hard to invest. Investment process will be publicised and tendered for all companies to access opportunities.

Vice minister revealed that PPP form could be applied on bidding packages of North-South express railway project, such as relating works of station, trade centre, real estate constructions.

Replying to the worries on compensation for ground clearance, Dong committed that Vietnamese states would prepare the available space for investors. Investors will not have to suffer risks in compensation.

Despite the enthusiasm in infrastructure investment opportunities, most investors at the summit complained that the information on North-South express railway project remains too sparse. “Without feasibility study, we can not say anything”, one investor confirmed.

Tuoitre

Tags: Vietnam Infrastructure