Proposal to establish a fund for transport infrastructure development

Deo Ca Group - the only private investor participating in the Conference on implementing monetary policy management tasks in 2024 - proposed many solutions to unlock capital sources for transport infrastructure PPP projects.

Construction of Nui Vung tunnel, North-South expressway component project, Cam Lam-Vinh Hao section

Construction of Nui Vung tunnel, part of the North-South expressway component project, Cam Lam-Vinh Hao section

On March 14, Prime Minister Pham Minh Chinh chaired a conference to deploy monetary policy management tasks in 2024, focusing on removing difficulties for production and business, promoting growth and stabilizing the macro economy.

Deo Ca Group was invited to attend the Conference as a PPP investor, contractor, and operator of many transport infrastructure projects. This is also the only private investor invited by the Government to attend this important Conference.

Regarding the implementation of monetary policies to promote transport infrastructure projects, Mr. Nguyen Huu Hung - Vice Chairman of the Board of Directors of Deo Ca Group said that it is necessary to consider changing the regulations on the proportion of State capital participating in PPP projects not exceeding 50% because transport infrastructure projects often have large capital scale and long payback periods. If the State capital contribution ratio is not increased, the projects will not ensure financial feasibility and attract credit capital, especially in the current context, the National Assembly has allowed a pilot of the proportion of State capital participating greater than 50% in some projects.

Mr. Hung said that it is necessary to summarize and legalize many projects to ensure feasibility, which can be implemented in the form of PPP, as a source of seed capital, attracting other capital sources to participate in PPP projects through organizations connecting investors in transport infrastructure with real estate (including civil, industrial...).

Regarding credit capital, a representative of Deo Ca Group said that investors are having to mobilize capital from commercial banks with short terms and high interest rates similar to those in the fields of trade and consumption. Banks are often not interested in this field because the proportion of state capital participation is low and many BOT traffic projects that have been implemented have encountered problems but have not been completely resolved.

Deo Ca representative recommended prioritizing the complete resolution of existing problems of previous BOT projects to create trust for investors and banks that have pioneered lending in the past despite the lack of a policy of state capital participation in PPP projects.

Mr. Hung proposed establishing a "Transport Infrastructure Development Fund" or assigning the Vietnam Development Bank as the focal bank to preside over the appraisal and lending of transport infrastructure investment projects under the PPP method, with loan terms, interest rates, and terms appropriate to the sector.

Currently, some investors have proactively mobilized many other investment resources through organizing connections between transport investors, real estate investors and other types of services... to participate in investing in the PPP model. Specifically, allowing localities to issue mechanisms on TOD (orientation of urban development, services according to transport works) to mobilize state capital to participate in investing in transport infrastructure construction under the PPP method.

“Authorities need to have a form of reward to encourage entrepreneurs and businesses that have overcome difficulties and contributed a lot to the development of transportation, real estate, other services, etc. Organize patriotic emulation movements for each job, each project, each goal to have more ethnic businesses in the coming time,” a representative of Deo Ca Group suggested.

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