Assoc. Prof. Dr. Tran Chung, VaRSI Chairman: Only a number of urgent bidding packages should be appointed

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Assoc. Prof. Dr. Tran Chung, Chairman of the Vietnam Association of Road Traffic Investors (VARSI)

Although the Ministry of Transport has canceled international bidding for eight projects and switched to domestic bidding, it is difficult to finding investors. Why is this?

After the Ministry of Transport canceled the international bidding, adjusted and invited the preliminary selection of domestic bidding, I think that this is an opportunity for domestic investors to show their national pride when participating in constructing important national works. But at that time, I mentioned two major challenges for domestic investors: the institutional mechanism of public-private partnership is incomplete and the difficulty in mobilizing credit capital.

Institutionally, the highest legal document governing this activity is currently in effect at the Decree level. We are focusing on developing a Law on Public-Private Partnership (PPP) to create a safe legal framework, demonstrating the Government's commitment on the principle of benefit and risk sharing to investors. One of the important legal issues for investors is the investor's rights to the project that he invested money and effort to create. How investors are protected depends on determining the content and nature of the rights prescribed by these entities. This is a very important issue that the PPP Law must solve.

The second biggest challenge for domestic investors in this project is the issue of mobilizing credit capital. Commercial banks have repeatedly announced that there is no priority for long-term lending. They also broadcast the message that the BOT lending limit has reached the minimum threshold for capital adequacy ratios. Thus, if there is no diversified model in raising capital, the problem of raising capital to deploy eight North-South expressway projects is the most critical challenge.

However, this problem has been solved through the form of inter-bank syndication at Trung Luong-My Thuan expressway project when the State has specific policies for banks to join the syndication. In the future, in order to mobilize social capital, we should set up a technical infrastructure investment fund like some successful countries that have created a new credit channel for PPP investment projects.

It is said that the transition to full public investment with eight PPP projects will solve two problems: capital and investors. What is your opinion on this issue?

In my opinion, that solution is partially correct. I agree with the proposal of the Government to spend public investment capital on a number of transport infrastructure projects that can activate the demand of the economy, solving a part of investors' capital difficulties, but it is advisable to select a number of projects, not all projects on the North-South Expressway.

In the current period, budget capital is also needed for many new tasks emerging from the Covid-19 pandemic and towards reducing public debt, public-private partnership investment is still one of the effective solutions to develop the country. In fact, many investors have cooperated and passed the prequalification of some North-South expressway projects. I have received proposals from investors to continue implementing PPP for component projects such as: My Thuan-Can Tho, Dau Giay-Phan Thiet, Nghi Son-Dien Chau and Dien Chau - Vot. On behalf of the Vietnam Association of Road Traffic Infrastructure Investors, I recommend that these projects should continue to follow PPP.

The remaining projects, due to national security, environmental security or other economic reasons, the State transfers to public investment.

Previously, the Ministry of Transport proposed two options including the public investment conversion plan for eight PPP projects and 11 North-South expressway component projects will be implemented in the form of public investment. After completion, the concession will be granted with eight projects to recover capital and submit it to the state budget. How would you assess this proposal?

The concession to exploit eight projects to recover state budget remittance from high-speed projects to public investment as proposed by the Ministry of Transport.

It is the Ministry's expectation. The exploiting concession model is also a type of public-private partnership (PPP) contract. But it also needs attractive conditions to attract investors in these subjects. The investors should see the benefits through the financial plan to be ready to invest capital, human resources, equipment, and management skills to focus on the safe operation of the expressway by strict standards.

They also have a very important task of maintaining the route from deteriorating over the life of the contract. Therefore, the criteria will be considered with caution. In addition to important criteria such as vehicle traffic, positive economic forecasts of the region investors are interested in the connectivity of the entire expressway and especially quality of highway construction. I think the quality factor must be of particular interest because this is still a major defect of many public investment projects in general and road works in particular. When these roads meet the standard of expressway quality, I hope that the expressways will attract investors to participate in the bidding for exploitation.

It is argued that the North - South expressway projects have many construction packages, so extensive bidding should be applied to select qualified contractors with professional experience, instead of appointing all contractors to the projects. Could you tell us more about this statement?

The selection of contractors in construction may be in the form of bidding or appointment of contractors. The ultimate goal is to select a construction contractor with full capacity of people, equipment and experience to be able to make a construction product that meets the quality and schedule with reasonable prices.

The Bidding Law No. 43/2013/QH13 in Article 22 stipulates the appointment of contractors for urgent bidding packages. The urgent projects of this expressway that the Government recognizes they need to be implemented quickly and contribute to economic development, especially at this time, it will lose the opportunity to spend too much time on these preparation tasks in which takes the most time is the bidding work to select contractors to implement the project.

The Bidding Law and its guiding decrees have set up the bidding process very methodically, strictly and naturally, which takes time. Perhaps having been "allergic" for years with bidding in the form of "auction", in the mind of an expert in the field of construction quality, I support the method of appointing bids for a number of urgent bidding packages for security and economic objectives, especially in the current period.

Appointing contractors in these cases can saves time, funding and manpower for the bidding and the selected contractors who are being eligible, also under pressure before the inspection, supervision of state agencies, communities and of the competitors of bidding method. So, this process needs to be public and transparent.

If we continue to organize bidding to select contractors to create fair competition, it is necessary to control the situation of "auction", "price squeezing" and "pressing progress".

The consequence of this situation is poor quality of construction. Therefore, the important thing to overcome is the post-bidding management. It must attach the responsibility of the state management agency that organizes the selection of contractors even in the post-bidding stage, we hope that this "incurable" disease of public investment projects can be "cut".

Thank you, Sir!