Transport infrastructure projects in central Vietnam beckon foreign investors

By Dam Tuan   August 5, 2016 | 04:30 pm PT
The government estimates the country will need $50 billion over the next five years.

A large number of strategic traffic infrastructure projects including expressways, a railway station and a seaport in Vietnam’s central provinces have seen a rising wave of foreign investor interest.

Official Development Assistance (ODA) was the main contributor to Vietnam’s infrastructure investment in the past, but that source of funding is drying up, so the country is looking to attract foreign investors, according to the Ministry of Planning and Investment’s newspaper.

The Nha Trang – Phan Thiet Expressway is one of those projects to have attracted a lot of attention from domestic and foreign investors, and high-profile Japanese investor Nippon Engineering is looking to carry out a feasibility study for the project.

Nippon Engineering said that a preliminary project proposal has been submitted to Japan’s Ministry of Economy, Trade and Industry for consideration with an application for funding to carry out the feasibility study on the expressway project, which is expected to cost VND25.43 trillion ($1.14 billion).

Expressway is one of the primary projects attracting foreign investors in central provinces. Photo from VnExpress Photo Contest/Lo Van Trung

The Nha Trang - Phan Thiet Expressway has drawn a lot of attention from foreign investors. Photo by Lo Van Trung/VnExpress Photo Contest

It has also been suggested the 235km-long Nha Trang - Phan Thiet Expressway should be put on the list of ODA projects to be funded by the Japanese government from 2016-2018. Under the plan, the second phase of the project would be funded by the Japanese government with $416.8 million, while the first and third phases will be invested under the Build-Operate-Transfer model.

Vietnam’s Ministry of Transport has also asked other units to complete investment proposals for a series of large infrastructure projects in central provinces to entice foreign investors under the Public-Private-Partnership (PPP) model.

The list of PPP projects in the region includes the Quang Ngai – Quy Nhon Expressway ($1.43 million), an expressway connecting Quang Ngai to Dung Quat Sea Port II, a new terminal at Da Nang International Airport ($380 million) and other maritime projects in Da Nang.

The Ministry of Transport says Vietnam needs over VND1,000 trillion (nearly $50 billion) for traffic infrastructure development from 2016 – 2020, of which capital for projects in strategic locations in central provinces will take up 30 percent.

The government estimates that its budget will only be able to meet 11 percent of this figure, and with falling ODA and rising debt, PPP investments will need to play a primary role.

Deputy Minister of Transport Nguyen Nhat said that to enhance the attractiveness of infrastructure projects and attract foreign investors, the government should revise the risk-sharing mechanism for PPP projects.

In a recent meeting organized by the Ministry of Transport, Deputy Prime Minister Trinh Dinh Dung said that the government will get more involved in PPP projects with funds to support site clearance and reduced borrowing interest rates and road tolls.

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