WB recommends infrastructure development fund for southeast Vietnam

By Le Tuyet   October 7, 2023 | 06:43 am PT
WB recommends infrastructure development fund for southeast Vietnam
The construction site of Nhon Trach Bridge crossing the Dong Nai River in Dong Nai Province that borders HCMC, May 2023. Photo by VnExpress/Phuoc Tuan
The World Bank has proposed setting up a fund to serve infrastructure development in the southeast region, home to Ho Chi Minh City and neighboring industrial hubs.

According to the proposal, the fund's capital will come from the central government and governments of localities in the region, which are Ho Chi Minh City and the provinces of Dong Nai, Binh Duong, Ba Ria – Vung Tau, Tay Ninh and Binh Phuoc.

In addition to the equity capital, the fund could raise capital from issuing bonds and official development aid loans, the WB said at a workshop held in HCMC on Friday.

In addition to the above method, the WB research team also proposed four other options to develop the region's infrastructure: 1) expanding the function of the current local development investment funds, 2) establishing a regional infrastructure development fund on the basis of merging a number of local development investment funds, 3) upgrading the Ho Chi Minh City State Financial Investment Company, and 4) restructuring the Vietnam Development Bank (VDB) to provide capital to localities to implement regional projects.

According to the WB, the establishment of a regional infrastructure development fund as a new policy bank could overcome the shortcomings of the local development investment fund model and the Vietnam Development Bank (VDB).

The VDB is a credit institution under the Government of Vietnam, established in 2006 as a policy bank with the goal of contributing to the process of hunger eradication and poverty reduction through loans for irrigation and rural transportation construction, and infrastructure construction.

Spreading 23,560 sq.km, the southeast is home to 18.7 million people, contributing 32% to the nation’s economic growth.

However, this region has been facing many challenges including the lack of intra-regional and inter-regional infrastructure networks leading to traffic congestion, water pollution, development gaps between localities, and scattered financial resources.

Attending the workshop, economist Tran Du Lich said the infrastructure development fund must focus on highways, inter-regional urban railways, seaport infrastructure, waste treatment, and clean energy.

Those are fields that require a huge amount of capital, and the fund needs to be organized differently from current local development funds, he said.

He added that the fund needs to have an independent mechanism, managed by a professional team, and not administrative officials.

Lich also said the fund's capital source should not entirely rely on the national budget, but instead should be raised from various sources from both inside and outside Vietnam.

To do so, the fund must have the right to issue international and domestic bonds as well as an investment mechanism, according to the expert.

Prime Minister Pham Minh Chinh said earlier that implementing research to form a regional infrastructure development fund would be a task of the Coordination Council for the SoutheastRegion, which was established in July.

Chaired by the PM, the council works to renovate the coordination mechanisms for regional development, promoting rapid and sustainable economic and social development of the region, protecting the environment and ensuring national defense and security.

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