Who will buy MOT’s highway projects?
Who will buy MOT’s highway projects?
The Ministry of Transport (MOT) has been warned that it will be difficult to sell highway projects to foreign investors as planned.
Dr. Pham Sanh, a renowned expert in transport conceded this was a solution for capital shortage (the biggest problem facing transport infrastructure projects), but warned that it would be not easy to find foreign investors to buy highways.
Foreign investors will want to know who will impose tolls - themselves or the government?
If foreign investors have the right to set up tolls, an analyst said, Vietnam would not be able to control road taxes, while overly high fees would burden Vietnamese people whose income remains less than $2,000 per annum.
Phan Minh Ngoc, an analyst, in his article in Thoi Bao Kinh Te Saigon, wrote that he believes foreign investors will claim their right to raise the toll periodically to ensure profits and avoid risks.
Meanwhile, many questions remain unanswered.
MOT, at a recent meeting with the Vietnam Express Corporation, said that VIDIFI, the investor of the Hanoi–Hai Phong Highway project, would sell 70 percent of the project to an investor from India. However, Sanh still thinks that foreign investors may not be interested in the highway projects in Vietnam.
“The risks are relatively high, while it is difficult for investors to predict the number of vehicles to be in circulation in the future due to changing policies,” Sanh noted, adding that without the facts, it will be impossible for investors to calculate the investment rates and expected profits.
Dien Dan Doanh Nghiep has commented that the highway projects, or the products Vietnam puts on sale, are not attractive in the eyes of investors in terms of the prices and quality.
Regarding the selling prices, the newspaper quoted an expert as saying that the projects would be expensive for investors because of the high investment rates in Vietnam.
He cited a report as saying that it costs $12 million on average to build one kilometer of highway in Vietnam, much higher than $5 million in China and $4.5 million in the US.
Contractors and investors blame the high investment rates on the expenses needed for site clearance as well as the weak terrain. However, he said he believes the investment capital could be lowered by 30-50 percent.
Meanwhile, the quality of highway is “problematic”. The State Audit has recently discovered problems in the fieldwork, designing and execution of the Ninh Binh - Cau Gie Highway project, which had a negative impact on the quality of the highway.
