Will transport projects in Vietnam attract foreign investors?

Will transport projects in Vietnam attract foreign investors?

The Ministry of Transport (MOT) has said that transport projects could be sold to foreign investors, but analysts believe the ministry is being “too optimistic”.

Analysts noted that selling highway projects is similar to selling the rights to collect tolls from vehicles’ owners, which MOT began applying in 2005.

Since 2009, fees have been collected at three toll stations – Hoang Mai (Nghe An province, 1A Highway), Ban Thach (Phu Yen Province, 1A Highway) and Bai Chay Bridge. The toll collection was sold to a private business.

In early 2014, another deal was made, under which the Cuu Long Transport Infrastructure Project Development and Management Corporation, a business under MOT, sold the right to collect fees to Yen Khanh Trade & Service Company on the Saigon – Trung Luong Highway for five years. The deal was worth VND5 trillion.

However, an MOT official noted that it was difficult to look for local buyers because of their limited financial capability.

Earlier, Yen Khanh wanted to buy the fee collection rights from VEC, but it has not mentioned it recently.

An analyst noted that it would be more feasible to look for foreign investors, because they have better financial capability and experience which would produce profits from highways.

However, the analyst warned that foreign investors may not be interested in Vietnamese highway projects.

Foreign enterprises have been involved in Vietnam’s transport projects for many years, but they only act as contractors.

None of the foreign enterprises has been present in Vietnam as a transport project investor, though Vietnam has been trying to call for foreign investment in transport infrastructure for a few years.

A local newspaper quoted a source as saying that Nexco Central, an investor from Japan, intended to invest in the Phap Van – Cau Gie Highway project. However, the contractor eventually decided not to do so.

MOT is now calling for foreign investment in the Dau Giay – Phan Thiet Highway through a series of conferences and workshops in Vietnam and abroad.

A source from MOT said that major investors from Japan, the US and France have shown interest in the project.

MOT reportedly is preparing necessary steps for bid invitations, planning to implement the project with 40 percent of total investment capital, or $450 million, to come from foreign investors, slated for September 2015.

Tran Quoc Viet, chair of the Vietnam Expressway Corporation (VEC), said that it was highly feasible to find foreign investors to buy completed transport projects.

“The thing we need to do to attract foreign investors and buyers is to encourage investors with a reasonable financial mechanism,” he said.

vietnamnet