HCMC seeks transparent land-infrastructure exchange

08:59 | 18/12/2017 Investment

(VEN) - Ho Chi Minh City (HCMC) will organize bidding for all build-transfer (BT) projects, auction lots of land and found investment funds of public-private partnership (PPP) projects to ensure proper exchange of land for infrastructure and protect the interests of residents, investors and the state.

hcmc seeks transparent land infrastructure exchange

The Hanoi Highway expansion project in Ho Chi Minh City

Controversial land exchange

From 2015-2017, HCMC mobilized about VND20.4 trillion from the private sector for BT infrastructure development projects. Completed BT projects in the city include Phu My Bridge, Saigon 2 Bridge, Hanoi Highway, Pham Van Dong Road, and the Tham Luong- Ben Cat Canal wastewater treatment plant.

However, some assessments indicate that the BT investment mode exposed a number of problems, as it is based on exchange of land for infrastructure that remains controversial and vague.

In addition, the Ministry of Finance points out that BT project implementation is governed by six different laws, burdening both investors and state management.

Dr. Huynh The Du, a lecturer on public policy and Academic Director of the Fulbright Economics Teaching Program, Vietnam, brings up another point: although it is risky, exploiting land value is still the best way for HCMC to raise capital for infrastructure development. Referring to BT project implementation, he said land is usually exchanged for infrastructure, while contractors are appointed and mainly rely on bank loans, and therefore the pace of projects is influenced by interest rates changes.

Investment diversification

In the 2016-2020 period, HCMC needs estimated capital of about VND850 trillion for infrastructure development, only 20 percent of which can be met by the city coffers. It is thus vital for the city to carefully consider how to use land to raise capital. All available land plots in the city, especially those in a good location, will be put up for public auction.

The city will also develop infrastructure under the PPP models.

HCMC leaders have told the city Department of Natural Resources and Environment to build a list of lots of land available for auction, while asking the city Department of Finance to prepare plans for diversifying investor payment methods.

A representative of the Ministry of Planning and Investment’s Department of Justice said the ministry is drafting a decree on amending and supplementing Decree 15/2015 on PPP for submission to the government for approval.

While exploiting land values remains the best way for Ho Chi Minh City to raise capital for infrastructure development, the exchange of land for infrastructure must be explicit and ensure the interests of people, businesses and the state.

Ngoc Thao