City infrastructure projects struggle to find investors

At the meeting, Nguyen Thi Hien Luong, deputy director of the department, said this year’s State budget for capital construction is about VND3 trillion, official development assistance (ODA) loans some VND2.1 trillion and other sources roughly VND3.9 trillion. As the city’s government is only able to arrange more than half of the planned capital amount from the budget, it is calling for investors to join forces to realize the schemes. The issue was discussed at a meeting on Tuesday between the HCMC Department of Transport and the municipal People’s Council’s Budget Economic Commission reviewing this year’s capital construction in the traffic sector.

The city is currently trying to attract investment into infrastructure projects under BOT, BT or PPP but investors are lukewarm to such investment formats.

Regarding the BOT format, it is not feasible to set up more toll collection stations for investors to recoup capital in the context of multiple stations having already been operational in the city.

As for BT projects, the city already ran out of land resources set aside for investors for investment recovery while the city cannot afford high interest rates if it is to reimburse capital to investors.

The solution with PPP is not any brighter. Even though the Government has issued a decision providing for the pilot mechanism for PPP projects, investors have still remained indifferent.

Given current negative economic conditions, many investors have even withdrawn from the planned projects.

For instance, Petroland has withdrawn itself from the belt road No.2 project, while South Korea’s GS has pulled out of the elevated road No.1 scheme. Investors of a slew of underground parking projects have even petitioned the city to either extend the construction pace or stop the projects, Luong told the meeting.

A representative of the city’s Department of Finance noticed many projects have fallen behind schedule by many years. The foot-dragging schemes will see their total investment capital shoot up as a consequence, he noted.

The representative also proposed that relevant agencies revise criteria in screening contractors to select qualified ones to avoid projects being delayed or moving slowly.

At present, a contractor can win six to seven works at the same time but fails to carry out all the schemes due to capital shortages and this phenomenon is often seen in those projects using State budget capital.

Luong, meanwhile, described difficulties of site-clearance as the main reason for slow construction pace of the on-going schemes. She believed that all projects will be developed on schedule if such a problem is tackled, citing the cases of the Rach Chiec Bridge project and the Saigon 2 Bridge project as examples.