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The development of the PPP Law must aim to call for foreign investors.

Fear of PPP?

As one of the most famous investors in a series of large PPP projects, Mr. Pham Quang Dung, the Chairman of Tasco Joint Stock Company, said that there were many shortcomings that existed in the PPP contract. It is the current legal framework that does not provide a mechanism for sharing risk among stakeholders. This is also the reason for many potential foreign investors who are interested in infrastructure development in Vietnam but still "hesitant" to join PPP projects.

Developing the PPP Law is very necessary, but without the risk-sharing mechanism, it will not attract potential investors. "In fact, during the renovation period, the Ministry of Transport and the Ministry of Planning and Investment always call for foreign investment in infrastructure services but almost no foreign investors participate. Because the 'bottleneck' is a risk-sharing issue, while local firms do not have enough capital to invest", Mr. Dung said.

More specifically, Dung analyzed, firstly, Vietnam did not have a minimum level of guarantee. The State calls for investment, but in investment there will still be risks, and revenues will not reach as expected and conditions in the contract has too many risks for investors. The second one is credit guarantee and the third one is to guarantee the exchange rate, because the VND fluctuations will also affect the profitability of investors. If these three issues are not resolved, it is difficult to call for foreign investors to participate, so the State must share this risk and the development of the PPP Law must aim to call for foreign investors.

In addition to the problems of risk guarantee and many inadequacies in the current regulations which make it difficult for investors, Mr. Dung said that the Enterprise Law currently requires enterprises to contribute enough capital to implement the project, but with large-scale infrastructure projects, if investors are forced to contribute money immediately, it will waste thousands of billions of VND. "Recently, the National Assembly has temporarily agreed to allow investors to pay equity under the project progress because the capital in one place is very inadequate. If we have to leave a place for 5-7 months, a year, even if we have to wait 2-3 years, it is very wasteful", Mr. Dung said. Accordingly, this regulation should be put into law immediately, and enterprises should implement PPP project equity according to project progress.

Hoping for equality

In addition to the above-mentioned shortcomings, many investors also believe that demonstrating the rightness and performance in accordance with the contract is what businesses expect and hope for in the upcoming PPP Law.

Mr. Luu Xuan Thuy, the Deputy Director General of Deo Ca Company said that the contract itself stated clearly that the form of cooperation is the form of public-private partnership, demonstrating the equality of the parties. "However, in practice, many State agencies still apply level relationships, give administrative orders to intervene in the project, even change contract terms that make it difficult for businesses. These shortcomings make investors, especially foreign investors afraid to invest in PPP projects ", said Mr. Thuy.

In the same view with Mr. Thuy, Mr. Pham Quang Dung said that his company had been implementing a BT project in Hanoi for 10 years. And the BT contract clearly states that when investors make BT works, the State will allocate a land area for real estate projects to repay. Under the contract, the value of the land value-altering project is clearly defined as "the value shall not change over the life of the contract". But after 10 years of project work, Hanoi consulted the Ministry of Planning and Investment, and the Ministry of Finance to review this issue. "Until now, Hanoi has not finalized the BT contract. Real estate projects are up and down, there are times when businesses sell under the price to survive", Mr. Dung said.

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Therefore, Mr. Dung hopes that the PPP will ensure the principle of equality. It means that the contract is signed, the State must comply with the commitment as a party to the PPP contract, can not force enterprises to follow the policy changes. The lower-ranking state agency is responsible for the failure of the PPP project.