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Friday, July 19, 2024

Impediments to PPP projects

By Truong Trong Hieu

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Few efficient public-private partnership (PPP) projects have been executed since the introduction of this investment format under the Investment Law two years ago. However, new signs have been seen following the National Assembly’s resolution giving HCMC a wider avenue, on a trial basis, to implement PPP projects, but impediments are still awash when scrutinizing PPP projects elsewhere. What are PPP projects? By nature, PPP projects are public investment ones which the State uses its own budget to implement for the society’s welfare or public benefits, such as projects to develop crucial infrastructure to meet the demand of the economy at large. As most of such projects have a very low rate of return, the State has to use taxpayer money to finance their development, instead of relying on private sector capital. However, given its limited resources, such as short-term financial constraints due to the high demand for public investment, or limited capacities to develop, implement and manage such projects, the State has to rely on external resources. When private investors are engaged in PPP projects, the nature of public investment is still retained. Key properties vested in PPP projects like priority and incentives stay put, since if they are removed, […]
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