HO CHI MINH CITY – Investors think they will face more risks from the public-private partnership (PPP) format in Vietnam than in other countries, said Bill Magennis, lawyer at Allens Pte Ltd.

Therefore, Vietnam should minimize the risks to investors through law amendments, said Magennis at a workshop on PPP held in HCMC on Thursday.

The lawyer with 25 years’ experience of working in Vietnam and participating in multiple build-operate-transfer (BOT) projects here named a number of factors that are deemed risky for investment in PPP projects.

Land is one of the risks as it is not guaranteed that site clearance and compensation have been done for investors to immediately carry out projects. Many projects in Vietnam have been put on hold due to site clearance problems, while in Australia the government always provides investors with cleared sites.

In Vietnam, several State agencies, like the ministries of industry-trade and finance or the central bank, are involved in one project, easily leading to confusion. Foreign investors want only one agency in charge.

For the success of a PPP project, Magennis proposed the Government pay attention to its progress since a lot of projects in Vietnam have fallen behind schedule, pushing up costs and posing more risks.

Financial arrangement before PPP contract signing is also important. Many investment contracts have been signed even when funding is not secured, he explained.

Jonathan Pincus, economist from the U.S. Harvard Kennedy School’s Vietnam Program in HCMC, said his colleague had studied infrastructure development costs in Vietnam. The results show that the cost of building an expressway in Vietnam, such as Danang-Quang Ngai Expressway, is much higher than the cost in China and the U.S. (five times higher than in the U.S.).

This is ascribed to the costs of site clearance and compensation, bridge construction and some other unexplainable costs. Therefore, investors will hardly gain profits from PPP projects, said Pincus.

The aforesaid risks, together with the risks related to exchange rate and future revenue, should be foreseen and then discussed and specified in the contracts signed between investors and the Government, said the above two experts.

The workshop on PPP is part of the 4th Regional Working Group Meeting of the Lower Mekong Initiative (LMI), taking place in HCMC on April 25 and 26. PPP is considered as a promising way for infrastructure development and stronger cooperation between the U.S. and the five Lower Mekong nations including Vietnam, Laos, Cambodia, Thailand and Myanmar.

Source: The Saigon Times

Source URL: http://english.thesaigontimes.vn/Home/business/investment/28884/

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