HANOI: Vietnam’s increased demand for infrastructure development in the coming years requires government policies that encourage the private sector’s participation, say economists and policymakers.

According to estimates from the Asian Development Bank, by 2030, Vietnam’s basic infrastructure investment needs will amount to around US$480bil (RM2.1 trillion).

Infrastructure projects play a key role in spearheading the country’s socio-economic development, especially those in the transport and industrial sectors.

To speed up the process, the government has implemented several legal frameworks and policies, including the Law on Investment in the form of public and private partnerships (PPP) in 2020 and several decrees and regulations.

Such moves aim to provide comprehensive guidelines and regulations on how to form public and private partnership projects.

However, there are still shortcomings and limitations, according to economists.

Vu Tien Loc, chairman of the Vietnam International Arbitration Centre and former chairman of the Vietnam Chamber of Commerce and Industry, said: “The private sector’s participation would be the solution to the country’s infrastructure problems, given the state’s limited budget.”

In addition, PPP projects typically offer opportunities to introduce more efficient financial and construction management, as well as more advanced technologies.

Current regulations, however, have not managed to find a balance for PPP projects on responsibilities, interests and risk sharing among the players, something that is seen as a major setback in attracting private investors.

Le Dinh Vinh, of the law firm Vietthink, said many PPP projects faced prolonged land transfers, compensation, clearance and resettlement issues.

“It’s often difficult for investors to gain access to long-term credit or benefit from lower interest rates. There have also been grievances raised over the slow disbursement of state capital,” Vinh said.

According to Vinh, investors often face more risks in the planning and construction phases. Even when a project is completed, risks continue with capital return, contract modification and revenue-sharing mechanisms often cropping up.

In addition, policy changes, inflation, exchange rates and taxes remain factors that hurt investors’ bottom lines.

Another common issue investors have with the current PPP framework is a lack of unity, clarity and transparency across economic sectors and localities.

In many instances, the state’s representative still views private investors not as partners but as subjects for micromanagement. — Viet Nam News/ANN