HCM City needs to mobilise more investments for infrastructure development projects (File photo)
HCM City (VNA) – With public funding only able to meet a fifth of
the 1.8 quadrillion VND (80 billion USD) required for development works in HCM
City’s in 2016 – 20, municipal authorities are striving to involve the private
sector.
According to Su Ngoc Anh, Director of the city Department of Planning and
Investment, many new measures and policies have been put in place to mobilise
private resources, but challenges remain.
He explained that investors must bring in 15-20 percent of the funding required
for a project, with loans from banks and other credit organisations making up
the rest.
Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam, HCM City
branch, said bank funding for socio-economic projects, especially in
infrastructure, is linked to their effectiveness.
Therefore, investors and relevant authorities must ensure the effectiveness of
projects when they are completed, he said.
Pham Manh Thang, Deputy Director General of Vietcombank, said the bank has
provided loans of over 100 trillion VND for 61 projects, including 23 in the
education sector, 16 for transport infrastructure (roads, bridges), nine for
urban development, and seven for hospitals.
In the context of inadequate public funding, making use of
public-private-partnerships (PPP) is vital, he said, but admitted the PPP form
faces legal hurdles.
Thang said another problem is that most local banks are small, with most of
their deposits being short-term, limiting their capacity to provide medium- and
long-term loans.
The central bank is amending regulations through a road map, limiting the rate
of short-term deposits that can be used to provide long-term loans, and this is
expected to act as a hurdle to lending for infrastructure works.
Some major PPP projects in energy and transportation undertaken with foreign
investment have shown that overseas creditors demand specific guarantees
related to revenue and foreign exchange risks.
Thang said relevant agencies should create regulations for public dissemination
of information about PPP projects.-VNA