Finalize plan to issue 100,000 billion VND bonds for major transportation project
Issuing an additional VND100,000 billion in government bonds for key national transport projects will be an important driving force for the transport sector to move closer to the goal of completing 5,000 km of expressway by 2030.
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| Construction of Tuyen Quang - Ha Giang Expressway, section through Tuyen Quang |
Great resources
“We are closely monitoring the implementation of the Prime Minister’s recent directive to issue an additional VND100 trillion in government bonds for investment in key national projects. We hope that this policy will soon be implemented so that capital can be channeled into traffic construction sites, including important expressway projects,” said Mr. Tran Chung, Chairman of the Vietnam Association of Road Construction Investors (VARSI).
Previously, in Official Dispatch No. 4292/VPC-KTTH dated June 20, 2024, Prime Minister Pham Minh Chinh said that in Resolution No. 82/NQ-CP dated June 5, 2024 on the regular Government meeting in May 2024; Notice No. 231/TB-VPCP dated May 18, 2024 and Notice No. 250/TB-VPCP dated May 31, 2024, the Government and the Government Standing Committee assigned the Ministry of Finance and the Ministry of Transport to closely coordinate and urgently study and propose the issuance of an additional VND 100,000 billion in government bonds to invest in key national projects.
To implement the above policy, the Prime Minister assigned the Minister of Finance to urgently preside over and coordinate with the Ministry of Transport, the Ministry of Planning and Investment and relevant ministries and agencies according to their assigned functions and tasks to focus on reviewing and completing the report on the implementation of the above tasks. "Assign Deputy Prime Minister Le Minh Khai to directly direct this content in the spirit of focus, key points, and immediate effective handling, especially projects that have completed procedures and are in need of capital in the transport sector, new growth drivers and definitely not spread out", the Prime Minister stated.
In early June 2024, Minister of Planning and Investment Nguyen Chi Dung signed Official Dispatch No. 4243/BKHĐT-PTHTĐT to the Prime Minister on the investment plan to upgrade the expressway routes to a complete scale. One of the most notable proposals that the Ministry of Planning and Investment proposed to the head of the Government was to allow the issuance of a government bond package of about VND 165,000 billion to invest in transport infrastructure projects.
The Ministry of Planning and Investment has proposed the following viewpoints, principles, and criteria for investing in upgrading the diverging expressways to a complete scale:
Firstly, invest in expanding 2-lane sections (completed, under investment) to a complete 4-lane scale to ensure traffic safety and synchronization on the entire route. Prioritize sections with serious traffic safety problems (accidents often occur), especially on the North-South expressway in the East, sections with high traffic volume causing prolonged congestion, and PPP projects that have been put into operation (with the ability to arrange capital sources and favorable investment procedures).
Second, invest in expanding all expressway sections with limited 4-lane scale, 4-lane complete scale currently in operation to the planned scale on the North-South expressway axis in the East and expressway sections connecting at the gateway to major city centers, reducing congestion and economic and social concerns.
Third, in accordance with capital sources, capital balancing capacity and capital disbursement capacity in the medium-term and annual public investment plans of the central and local budgets; for PPP projects expected to receive public investment capital and capital mobilization plans for investors participating in PPP projects.
Fourth, comply with legal regulations on public investment, PPP investment, state budget...
Based on the viewpoints, principles and criteria for investing in the expansion of the expressway, the Ministry of Planning and Investment proposed a list of 28 investment projects (23 public investment projects, 2 PPP investment projects and 3 projects managed by the Vietnam Expressway Corporation - VEC), with a total demand of VND 247,660 billion.
According to preliminary calculations, the capital demand for investment in upgrading and expanding 23 projects, including 21 North-South expressway projects and 2 component projects of the Tuyen Quang-Ha Giang expressway is 181,403 billion VND. The capital demand for expanding 2 projects Hoa Lac-Hoa Binh (currently adjusting investment policy) and Ho Chi Minh City-Trung Luong-My Thuan is 43,162 billion VND. The capital demand for expanding 3 expressways managed by VEC, namely Hanoi-Lao Cai, Yen Bai-Lao Cai section; Ho Chi Minh City-Long Thanh-Dau Giay and Cau Gie-Ninh Binh is 23,095 billion VND.
The Ministry of Planning and Investment said that with central budget capital, the medium-term public investment plan for the 2021-2025 period, the central budget source is expected to balance 15,506 billion VND from the capital source to increase central budget revenue in 2022 and is expected to increase central budget revenue in 2023 for 5 projects including: Cam Lo - La Son, La Son - Hoa Lien, Tuyen Quang - Ha Giang section through Tuyen Quang province, Tuyen Quang - Ha Giang section through Ha Giang province and Cao Bo - Mai Son.
“The remaining capital for 18 projects to upgrade and expand the North-South expressway in the East from 4 limited lanes, 4 complete lanes to the planned scale is about 165,897 billion VND,” said a representative of the Ministry of Planning and Investment.
This is the reason why the Ministry of Planning and Investment proposed that the Government allow the issuance of a government bond package of about 165,000 billion VND to invest in transportation projects, with the top priority being to invest in expanding limited 4-lane and complete 4-lane expressway projects on the North-South expressway according to the planning scale, ensuring to meet the actual demand for passenger and freight transport in the future with a long-term vision of over 20 years.
Clear criteria for building a portfolio
It is known that the Ministry of Transport and the Ministry of Finance are urgently implementing research to develop a list of projects expected to issue government bonds.
In addition to the fact that the issuance scale is limited to 100,000 billion VND and because the government bond capital issued to directly invest in key national projects must pay interest, it is necessary to carefully calculate and research to select a project portfolio to ensure investment efficiency.
According to the leader of the Ministry of Transport, the Ministry plans to list projects that meet the following criteria: they must be works and projects of key significance, in line with the planning and resolutions of the Party and State; convenient investment procedures, able to be implemented so that disbursement can be made immediately upon issuance of government bonds, avoiding waste; expressway sections with high traffic volume, contributing to reducing traffic congestion and accidents with priority number 1 being gateway routes to major city centers, the North-South expressway in the East, vertical and horizontal expressways; expressways with 2 lanes need to be expanded according to the direction of the National Assembly and the Prime Minister in Official Dispatch No. 16/CD-TTg dated February 21, 2024.
“Based on these criteria, the Ministry of Transport will continue to closely coordinate with the Ministry of Finance and the Ministry of Planning and Investment in the process of developing criteria, investment plans, and disbursement needs for key national projects using government bond capital, ensuring progress, quality, and investment efficiency,” said the leader of the Ministry of Transport.
In Official Dispatch No. 7273/BTC-DT sent to the Prime Minister in mid-July 2024, Mr. Nguyen Van Khang, Deputy Minister of Finance, said that issuing government bonds is a source of domestic borrowing from the central budget, used to offset development investment expenditures and other purposes as prescribed; there are currently no regulations on issuing government bonds for a specific project or package.
The Ministry of Finance believes that in the case of issuing government bonds for a list of specific projects as proposed by the Ministry of Planning and Investment, it is necessary to report to the competent authority for approval of the policy before reporting to the National Assembly for consideration and decision.
In addition, in Notice No. 231/TB-VPCP, Notice No. 250/TB-VPCP and Resolution No. 82/NQ-CP, the Government Standing Committee and the Government assigned research and proposal to issue an additional VND 100,000 billion in government bonds for investment in key national projects.
However, in Document No. 4243/BKHĐT-PTHTĐT, the Ministry of Planning and Investment proposed to issue a government bond package of VND165,000 billion, VND65,000 billion higher than the Government's direction. Therefore, relevant ministries and branches need to clarify the need and implementation capacity, and disbursement from this issuance source in each year and each period.
The leaders of the Ministry of Finance also requested the Ministry of Transport and the Ministry of Planning and Investment to specifically report to the Government on the ability to absorb and disburse capital for each project each year to determine the need to issue government bonds in 2025 and each year in the period 2026-2030 to avoid the situation of issuance but not disbursement, having to transfer sources and pay interest, causing waste and loss of the state budget.
According to the representative of VARSI, the concern of the Ministry of Finance is understandable, but in reality, the implementation of the North-South expressway projects in the East was carried out with the spirit of "only discussing work, not backtracking", "overcoming the sun, overcoming the rain"; "eating quickly, sleeping urgently", "working in 3 shifts", the construction progress of the expressways was only 18-20 months.
“If investment preparation is carried out quickly and the problems of land and materials are well resolved, the disbursement target of VND 100,000 billion in the 2025-2026 period is not an insurmountable challenge,” analyzed a representative of VARSI.
Projects in operation: (1) Cam Lo – La Son; (2) La Son – Hoa Lien; (3) Cao Bo – Mai Son; (4) Mai Son – National Highway 45; (5) National Highway 45 – Nghi Son; (6) Nghi Son – Dien Chau; (7) Dien Chau – Bai Vot; (8) Nha Trang – Cam Lam; (9) Cam Lam – Vinh Hao; (10) Vinh Hao – Phan Thiet; (11) Phan Thiet – Dau Giay.
Projects under construction: (12) Tuyen Quang – Ha Giang section through Tuyen Quang; (13) Tuyen Quang – Ha Giang section through Ha Giang; (14) Bai Vot – Ham Nghi; (15) Ham Nghi – Vung Ang; (16) Vung Ang – Bung; (17) Bung – Van Ninh; (18) Van Ninh – Cam Lo; (19) Quang Ngai – Hoai Nhon; (20) Hoai Nhon – Quy Nhon; (21) Quy Nhon – Chi Thanh; (22) Chi Thanh – Van Phong; (23) Van Phong – Nha Trang.
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