City in severe shortage of capital for traffic infrastructure
By Van Nam - The Saigon Times Daily
HCMC – The capital demand for traffic infrastructure development in HCMC is estimated at US$39 billion from now to 2020, or some US$3-4 billion a year, while the local budget can provide a mere US$500 million each year, a local leader said on Tuesday.
Nguyen Huu Tin, vice chairman of the HCMC government, said a metro line alone requires no less than US$1.5 billion. As such, it will cost nearly US$10 billion to fully develop five metro lines in the city as planned, said Tin at the 10th meeting of the HCMC Party Committee opened on Tuesday.
Meanwhile, the city’s budget each year sets aside some VND10 trillion only, or US$500 million, for traffic infrastructure and thus cannot address the capital need of US$3-4 billion per year, stressed Tin at the meeting.
He also highlighted the mounting difficulty in securing international aid for infrastructure.
“Official development assistance (ODA) was previously borrowed by the Government, and then allocated to the city with low interest rates. But since 2013 onwards, a new mechanism will apply, in which the city will have to borrow and repay loans, with higher interest rates and no incentives,” stated Tin.
Some urban infrastructure projects have been funded by ODA capital, such as East-West Highway, Nhieu Loc-Thi Nghe Canal environmental sanitation and Tan Hoa-Lo Gom Canal water drainage.
ODA is available, but not much, so the city needs to mobilize capital from local and foreign enterprises into infrastructure projects under the investment formats of BOT, BT or BOO.
HCMC has developed several projects under BOT and BT models, but investors often run into problems with cumbersome policies.
For example, Phu My Bridge is considered a breakthrough of the city to mobilize different resources. However, the paradox is the investor put capital into the project, yet the State wants to take control under prevalent regulations, said Tin.
Other capital mobilization channel being the BT investment format (land in exchange for infrastructure) also faces difficulties in identifying land use fees, negotiating contracts and calculating land prices. The HCMC government will report to the Government and central agencies on this issue to seek solutions.
At the opening session of the meeting on Tuesday, vice chairman Tin also brought forward some problems and shortcomings in planning in HCMC.
Planning, capital mobilization and State management are three main solutions for the city to accomplish the ten objectives of developing road infrastructure system to serve the nation’s industrialization and modernization process.
Planning will be a focus in the coming time as the city’s planning is still moving at a slow pace, failing to support economic growth, investment and infrastructure reform.
So far, only the general planning for the city has been completed, while the districts are making plans of the 1:5,000 scale.
Furthermore, socio-economic planning and space planning should have been done before traffic planning was carried out. Therefore, the municipal authority has to adjust and connect the plans together.