Infrastructure The Biggest Bottleneck
By Thanh Trung
Donors say it is time for Vietnam to implement a detailed strategy for infrastructure development instead of just making promises
At the Vietnam Business Forum (VBF) 2009, an annual event that took place before the donors’ meeting in Hanoi last week, Thomas Siebert, chairman of the American Chamber of Commerce (AmCham), suggested on behalf of the U.S. business community that Vietnam should improve its infrastructure.
According to him, the lack of high-quality infrastructure and logistical services is both a pressing concern and an impediment, especially to potential American investors. Indeed, this important issue has been brought up in every meeting between AmCham and the Vietnamese authorities since May 2006.
Siebert added that due to this problem, foreign projects in such sectors as export and industrial production are under threat. The participation of the private sector in financing, establishing and managing infrastructure is necessary, especially in power generation and deepwater port construction.
Various problems were mentioned at the forum, including inadequate infrastructure and the delay in constructing bridges, inter-provincial roads and overland infrastructure. The Japan Bank for International Cooperation (JBIC) provided Japanese enterprises’ assessment of Vietnam’s business environment. JBIC expressed five main concerns about Vietnam in 2009. Like in 2008, poor infrastructure was considered the most pressing problem in 2009. This year, 33.8% of the respondents considered this the greatest obstacle hampering their business, as compared with 43.1% in 2008. Noriyasu Yuge, representative of JBIC, said that 80% of Japanese companies considered roads as the first factor that needs improvement, followed by power supply (60%) and ports (40%).
In an interview with the Saigon Times, Simon Andrews, regional director of the International Finance Corporation (IFC), which joined forces with the World Bank and the Ministry of Planning and Investment to host VBF 2009, emphasized that Vietnam’s ranking (93/183) in the report on business environment in 2010, compiled by IFC and the World Bank, indicates the need for more action in this respect.
Meanwhile, Tony Foster, who oversees the VBF’s subcommittee on power and energy, highlighted the importance of public private partnerships (PPPs) in developing infrastructure in Vietnam. He said that inefficacious public projects such as those involving the HCM City-Long Thanh-Dau Giay Expressway, the expansion of National Highway 51 and the 68-km Bien Hoa-Vung Tau Expressway connecting big industrial parks in Dong Nai with Cai Mep-Thi Vai Port have spelled trouble for the development of private seaports. According to him, these problems mean that it may take up to four years to complete the construction of Lach Huyen Port and the related overland infrastructure.
Deputy Minister of Transport Nguyen Hong Truong estimated that Vietnam would need a staggering US$120 billion over the next 10 years to improve infrastructure nationwide. Foster proposed that the Government should encourage the private sector to participate in infrastructure development through public-private partnerships (PPP). However, he said this model will succeed only if the policy is clear, the market for PPP is competitive and reasonably priced, and the legal framework is well-developed, with the vague regulations currently governing build-operate-transfer projects phased out. Foster warned that without appropriate institutions, PPP would not thrive.
He told the Saigon Times that the Government should flesh out a detailed, coherent and long-term strategy for infrastructure development, instead of making vague promises.