VEC continues its mission of opening great roads

Two decades have passed, and Vietnam Expressway Corporation (VEC) is still looking for a new direction and new opportunities to promote its leading role in investment and development of national expressways.

Mr. Truong Viet Dong, Party Secretary, General Director of VEC.

Faced with the constant traffic congestion on some national highways, the most serious being at the gateways to Hanoi, in 2000, the Ministry of Transport (MOT) used the surplus capital after bidding from the National Highway 1 Upgrade Project (ODA capital from the World Bank, ADB and Japan) to test the construction of the first two expressways in Vietnam, the Phap Van - Cau Gie section and the Hanoi - Bac Ninh section. The project, put into operation in 2001, completely solved traffic congestion in the two directions of the North and South gateways to the capital.

Pioneering model of attaching responsibility to the product

Seeing the effectiveness and benefits of investing in highway construction, the Ministry of Transport proposed to the Government to deploy the following highway sections: Ho Chi Minh City - Trung Luong, Lang - Hoa Lac, Da Nang - Quang Ngai, Hanoi - Hai Phong... A plan for the construction of Vietnam's highway network by 2010, 2015 and 2020 was proposed.

The most difficult problem was where to find the capital to implement this ambitious plan. From here, the idea of ​​establishing a company to invest and develop the highway was formed.

The views and methodologies related to this issue are discussed, agreed upon and determined very specifically by the competent authorities.

Firstly , industry and infrastructure are a unified entity for economic development and international competition. A country that wants to industrialize must have an advanced, modern transportation infrastructure one step ahead.

Second , expressways are the center of advanced and modern traffic infrastructure. Only expressways can meet both the requirements of mass transport and traffic safety in the development period.

Third , developing social capital is an important tool for socio-economic development and people's lives.

Fourth , investing in highways has long-term socio-economic benefits but requires a large amount of capital and a long payback period, so the government needs to have investment support policies. In the initial stage, the government directly participates in investment.

From the above perspective, the Project to establish VEC has clearly defined the development roadmap for each stage. The first stage mainly relies on State capital - budget capital and capital from bond issuance. In the next stage, the State supports in structuring and guaranteeing loan sources. In the development stage, VEC collects tolls to recover capital and accumulates profits to invest in building the expressway network according to the proposed plan.

The project has received consensus from many agencies and units. According to the approval document of the Prime Minister dated October 6, 2004, the Ministry of Transport issued a decision to establish the Vietnam Expressway Development Investment Company.

The birth of VEC is an experiment of the Government and the Transport sector. From the classic model of waiting for the budget to be poured in, investing in the project and then transferring it to the operating unit, VEC has to search for and mobilize capital sources, then deploy investment in the routes in the most effective way to be able to recover capital soon, creating resources to reinvest in other expressway projects. The initiative to attach responsibility to the invested products is one of the new features of the VEC model.

Series of large-scale projects from small charter capital

With the characteristics of an unprecedented model aimed at an infrastructure sector that requires a huge amount of investment capital and a long payback period, VEC's model is both a bold breakthrough and a major shift in investment thinking, but also places a heavy responsibility on the Corporation.

In the early days of operation, VEC faced a series of difficulties: The initial capital allocated to form charter capital was limited compared to the assigned tasks; The economic recession in 2008-2009, high inflation affected capital mobilization; Having to build and shape the organization, at the same time having to prepare for investment, arrange capital, race against time to implement the construction of the first projects...

Faced with great tasks and challenges, with the close attention of the Government, relevant ministries and branches, with a sense of responsibility and unity, the collective leadership, staff and workers of VEC have gradually perfected the organizational model, successfully calling for investment capital promotion for many key projects.

In about 10 years (2004 - 2013), from a starting charter capital of only 1,000 billion VND, with the Government's guarantee, VEC arranged capital sources to invest in expressway projects, with a total investment of up to 108 trillion VND.

From the first project, the Cau Gie - Ninh Binh Expressway, which was assigned by the Ministry of Transport as the investor to build with the project investment capital structure including charter capital of 1,000 billion VND; Capital issued from project bonds guaranteed by the Government, VEC has confidently accepted larger-scale expressway projects.

Noi Bai – Lao Cai Expressway Project – one of the largest expressway projects in Vietnam, with a total length of 245km passing through 5 provinces and cities: Hanoi, Vinh Phuc, Phu Tho, Yen Bai, Lao Cai. Total investment is over 30,000 billion VND.

The Ho Chi Minh City – Long Thanh – Dau Giay Expressway Project is the first ODA-funded project – the first project invested by VEC using mixed capital sources. The total length is nearly 56km, and is the main route connecting Ho Chi Minh City with the Southeast provinces.

The Ben Luc – Long Thanh Expressway project, with a total length of nearly 60km passing through Ho Chi Minh City, Long An, and Dong Nai, is the largest infrastructure project in the South with a total investment of more than 31,000 billion VND.

Expressway project: Da Nang – Quang Ngai – The first expressway project in the Central region with a total investment of more than 31,500 billion VND.

With the growth of VEC, implementing the direction of the Prime Minister, on June 17, 2010, the Minister of Transport signed Decision No. 1666/QD-BGTVT to convert VEC into Vietnam Expressway Corporation.

A section of Phap Van - Cau Gie expressway invested and operated by VEC.

Seven valuable lessons

Looking back at production and business activities over the past 20 years, we can see some valuable lessons.

Firstly , it is necessary to identify specific tasks, remove difficulties, and effectively mobilize business resources to focus on implementation.

Second , recognize the important role of building a stable legal corridor, creating conditions for VEC to operate stably and develop.

Third , we must innovate our awareness, thinking and actions to promote our internal strengths, exploit all available resources and make good use of opportunities from the rapidly developing national highway network.

Fourth , develop programs, plans, and solutions suitable to the actual conditions of the unit to meet the diverse needs of people and businesses, strictly comply with legal regulations and the management of management agencies.

Fifth , it is necessary to perfect the organizational structure, assign tasks, perfect the system of documents and internal regulations, and maintain discipline and order in the unit.

Sixth , regularly review the staff, have plans to train, foster, and practice staff, and promptly supplement new factors; Maintain unit solidarity; Pay attention to training, fostering, and developing human resources, especially highly qualified human resources.

Seventh , focus on research to develop strategies for applying science and technology, especially applying information technology to production, implementing digital transformation, and improving competitiveness.

There are still problems…

The 13th Party Congress documents identified three strategic breakthroughs, including the breakthrough of "Building a synchronous and modern infrastructure system in both economic and social aspects; prioritizing the development of a number of key national projects on transportation and climate change adaptation" to fundamentally overcome development bottlenecks, strengthen connectivity with the region and the world, and set the goal of developing transportation infrastructure one step ahead to promote the country's socio-economic development "Focus on developing the expressway network. By 2025, the North-South expressway will be open, by 2030 there will be about 5,000km of expressways".

On September 1, 2021, the Prime Minister issued Decision No. 1454/QD-TTg approving the Road Network Planning for the 2021-2030 period, with a vision to 2050. It sets the goal of building 5,000km of expressways by 2030, forming 41 expressways with a total length of 9,014km.

The workload is huge, requiring appropriate policy mechanisms to ensure State management, promote enterprise initiative and maximize resource mobilization for investment and development.

The period 2021 - 2025 is the period when VEC's management and exploitation work has many advantages such as: increasingly deep international integration is an opportunity to develop tourism, traffic volume on expressways increases; Mechanisms and policies on highway management and exploitation are completed.

The Politburo and the National Assembly have approved the policy of converting borrowed capital for re-lending and government guarantees into state budget allocations to create a source to increase charter capital for VEC.

In particular, after transferring the ownership representative from the Ministry of Transport to the State Capital Management Committee at Enterprises, VEC will be eligible to participate in bidding for infrastructure investment projects under the PPP form managed by the Ministry of Transport according to the provisions of Law No. 64/2020/QH14 on investment under the public-private partnership method.

The obstacles related to the policy mechanism for VEC have been initially resolved. However, the procedure for handling the next steps still has many stages and steps to be processed, requiring a long time to implement.

The system of standards and norms for highway management and exploitation is incomplete, especially in the field of vehicle load control (there are no operational norms, no standards for the weighing system after ETC is put into operation).

VEC's charter capital is very low (VND1,115 billion) compared to the very large investment scale of expressway projects. Mobilizing capital from commercial banks and credit institutions to invest in projects faces many difficulties.

Promote linkages and participate in public-private partnership projects

After 20 years of construction and development, VEC has "spread its wings", keeping up with the flow of the times, expanding its operations to many provinces and cities across the country: Hanoi, Vinh Phuc, Phu Tho, Yen Bai, Lao Cai, Ha Nam, Nam Dinh, Ninh Binh, Da Nang, Quang Nam, Quang Ngai, Ho Chi Minh City, Dong Nai, Long An, Can Tho, Vinh Long.

Affirming its role as a "locomotive" in investing in the development of Vietnam's expressway network, based on the Project on the restructuring plan for VEC approved by competent authorities, the Corporation will continue to develop a project to invest in additional charter capital for VEC based on the capital portion decided by the National Assembly to be converted from loans for re-lending, Government guarantees to state budget allocations to submit to the National Assembly for approval.

On that basis, the Prime Minister decided to supplement and increase the charter capital of VEC. The increase in charter capital will create conditions for VEC to access investment capital sources to implement new projects; Complete the construction and submit to competent authorities for approval of the VEC restructuring project.

Aiming at sustainable development, VEC will develop a plan to use idle capital reasonably and effectively to preserve and develop capital in accordance with regulations; Research on restructuring loans, propose financial mechanisms to ensure resources continue to participate in investing in future projects.

In the field of construction investment, in parallel with accelerating progress, putting the Ben Luc - Long Thanh expressway into operation in 2025, completing project adjustment procedures to implement and complete the remaining items of the Da Nang - Quang Ngai route, VEC will focus resources, step up work with competent authorities to approve investment plans to expand the expressways in operation.

Specifically, the project to expand the Ho Chi Minh City – Long Thanh – Dau Giay Expressway, the Ho Chi Minh City – Long Thanh section from 4 lanes to 10 lanes, with a total length of nearly 22 km. The total investment of the project is about more than 14,300 billion VND. Implementation time is after 2035.

The project to expand the Noi Bai – Lao Cai Expressway, Yen Bai – Lao Cai section from 2 lanes to 4 lanes, with a total length of 122km. The total investment of more than 7,200 billion VND is proposed to be allocated from the State budget. Implementation period is from 2024 – 2028.

Cau Gie – Ninh Binh Expressway expansion project, Dai Xuyen – Liem Tuyen section from 4 lanes to 6 lanes. Total length is nearly 20km. Total investment is about 600 billion VND. Implementation period is from 2024 – 2027.

In addition, some routes on the North-South expressway axis will be studied for investment on a complete scale; VEC also studies some expressways that are meaningful to serve the goals of national security and defense, socio-economic development, hunger eradication and poverty reduction, and are difficult to attract other economic sectors to participate.

Expanding its scope of operations, VEC is oriented to research joint ventures and associate with private investors to establish project joint stock companies to participate in expressway projects under the PPP investment form.

Regarding the field of exploitation management, identifying this as the main production and business field, VEC will continue to effectively carry out exploitation operations, striving to increase traffic growth rate and revenue growth higher than 5 years ago.

In particular, the target set by 2025 is to collect tolls to reach 6,000 billion VND/year, traffic accidents on highways will decrease by at least 5% compared to the period 2016 - 2020 in all 3 criteria: number of accidents, number of deaths and number of injuries.

By 2035, VEC aims to manage and operate 1,500km of expressways; effectively organize maintenance and repair work, and promote investment efficiency in projects.

Some other solutions have also been researched and implemented such as: Participating in bidding for exploitation and operation of North-South expressway sections invested by public investment capital; Strengthening support mechanisms for member units to develop markets outside VEC such as: financial guarantees, resource support, machinery and equipment.

Improving the efficiency of investment management, construction and operation of expressways and applying information technology are identified by VEC as key issues in its long-term development strategy.

Digital technology has been and is being strongly applied from project management; toll collection management; intelligent traffic operation monitoring (ITS); vehicle load control and monitoring; asset management and highway operation management...

With specific tasks set out, the collective leadership, officers and employees of VEC are aiming for a brighter picture of production and business with the target of total revenue in the period of 2021 - 2025 reaching more than 32,400 billion VND, after-tax profit of nearly 4,200 billion VND, and payment to the State budget of 3,375 billion VND.

Identifying attracting high-quality human resources as one of the "key" factors for VEC to successfully implement its strategy, in the coming time, the Corporation has oriented to innovate the salary, bonus, and remuneration mechanism of employees, managers, and business operators in a reasonable and highly competitive manner associated with labor productivity and production and business efficiency; Strengthening training, fostering, and improving the professional qualifications of the management team and employees to promptly meet the development of VEC in each stage.