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10/9/2019

Why is the PPP project not attractive to foreign investors?

Deputy Minister of Planning and Investment Nguyen Duc Trung said that the current PPP projects are not attractive enough for foreign investors; therefore, the Investment Law project in the form of PPP offer guarantee mechanisms such as foreign currency exchange guarantee, risk- sharing mechanism guarantee.

Why is the PPP project not attractive to foreign investors?

Deputy Minister of Planning and Investment Nguyen Duc Trung said that the current PPP projects are not attractive enough for foreign investors; therefore, the Investment Law project in the form of PPP offer guarantee mechanisms such as foreign currency exchange guarantee, risk- sharing mechanism guarantee.

At the regular Government press conference in August 2019,  on 4th September responded to the press from Dau Giay-Phan Thiet project to  building of the draft law on PPP in the form of public-private partnership to submit to the National Assembly next meeting, Deputy Minister of Planning and Investment Nguyen Duc Trung said that the Dau Giay - Phan Thiet highway project , formerly a pilot project of PPP investment with State support. At that time, this project had a large total investment of about 750 million dollars. The state supports about $ 250 million from the World Bank's guaranteed capital. The investor including Bitexco and the second investor will spend 500 million USD, in which only Bitexco must allocate 60%, about 300 million dollars to implement the project.

"However, the negotiation process for this project was not successful and by March 2018, the Prime Minister decided to stop piloting the project under this mechanism," Mr. Trung emphasized.

 

Speaking to the Investment Law project in the PPP form, Deputy Minister Nguyen Duc Trung said that the Government is currently submitting to the National Assembly for approval. Accordingly, the National Assembly will comment on the 8th session in October 2019 and is expected to approve in the 9th session in May 2020.

The Law on Investment in the form of PPP on the basis of inheriting the current regulations to implement PPP projects, formerly Decree 108, then Decree 15, Decree 63/2018 / ND-CP. These decrees are the legal framework for implementing PPP projects during the past time, 336 PPP projects have been implemented, including 140 BOT projects.

According to Mr. Nguyen Duc Trung, despite the existing problems, PPP projects in recent years have contributed to completing the infrastructure system for the development of the country as well as people's needs of life. However, in order to improve the legal framework, the Government realized that the current legal framework only encapsulated in decrees, so it did not guarantee the highest legal framework to adjust PPP activities. In addition, the current PPP projects are not attractive enough for foreign investors, so the latest draft includes guarantee mechanisms such as foreign currency exchange and risk- sharing mechanism guarantee.

“This is a really necessary mechanism to attract investors to implement PPP projects because the nature of PPP projects is public investment but we do not have the resources, it is difficult to call for private investors. Moreover, in all projects, the Government must participate to ensure the ability to implement the project effectively” Mr. Nguyen Duc Trung said that after stopping the pilot of Dau Giay - Phan Thiet project, , it was included in one of 8 component projects in the form of BOT under North-South expressway project under Resolution 52 of the National Assembly with a total investment of 14,300 billion and the State participates about 2,500 billion to ensure the financial plan for the project.

Source: thoibaonganhang.vn