Public-Private Partnership model discussed
Local and international experts on May 10 met in Hanoi to discuss enhancing the effectiveness of public investment and measures to minimise risks in the public-private partnership (PPP) model.
Nguyen Dang Truong, Head of the Public Procurement Agency under the Ministry of Planning and Investment, said in past years, transitioning from traditional public investment to the PPP model transformed the role of the public and private sectors.
The PPP model requires an equal balance between the project’s socio-economic benefits for the public and its commercial interests for the investor.
“With that in mind, the sides show change their perception of the new role as well as skills and specific expertise, particularly assessing the effectiveness of the project implemented by traditional investment with those having the participation of the private sector and risk-sharing among parties,” said Truong.
Given how new the PPP model is in Vietnam, equipping ministries and localities with the knowledge to assess the effectiveness of PPP projects as well as minimise risks for the project are important.
Truong stressed that to mobilise capital necessary for infrastructure, the PPP model is an effective method and has been included into the government’s action plan.
Besides attracting more capital, the PPP model also brings other benefits such as reasonable sharing between the State and private sector, increased effectiveness in operation and management, better-managed projects, increased accountability and transparency in investment costs.
Ian Hawkesworth, Head of the Organisation for Economic Co-operation and Development (OECD)’s Public-Private Partnerships and Capital Budgeting, said that Vietnam needed to create a clear legal framework to serve as a basis for selecting PPP partners, aiming to increase investment capital value and the transparent use of capital to minimise risks.
The PPP model requires an equal balance between the project’s socio-economic benefits for the public and its commercial interests for the investor.
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According to initial calculations, the demand for capital for the development of necessary infrastructure in Vietnam is around US$40 billion each year, with finance from traditional channels fulfilling from 50% to 60% of this.
Vietnam will also have to cope with receiving less official development assistance as it has been classified a middle-income country.Given how new the PPP model is in Vietnam, equipping ministries and localities with the knowledge to assess the effectiveness of PPP projects as well as minimise risks for the project are important.
Truong stressed that to mobilise capital necessary for infrastructure, the PPP model is an effective method and has been included into the government’s action plan.
Besides attracting more capital, the PPP model also brings other benefits such as reasonable sharing between the State and private sector, increased effectiveness in operation and management, better-managed projects, increased accountability and transparency in investment costs.
Ian Hawkesworth, Head of the Organisation for Economic Co-operation and Development (OECD)’s Public-Private Partnerships and Capital Budgeting, said that Vietnam needed to create a clear legal framework to serve as a basis for selecting PPP partners, aiming to increase investment capital value and the transparent use of capital to minimise risks.
