Last year saw great interest among international companies in Vietnam’s transport sector. However, regulatory barriers continue to hinder their next steps. Minister of Transport Nguyen Van The discussed with VIR’s Bich Thuy strategies to garner private funding in the sector and the opportunities for foreign investors in 2019.
What is your overview of the transport sector’s operations in 2018 and what were the highlights in both private and foreign investment attraction?
Last year was a difficult one for the sector. Social demands required us to develop key transport projects so as to create a driving force for the future development period. In terms of investment, we focused on making preparations for the country’s key transport projects, namely the Eastern Cluster of the North-South Expressway and Long Thanh International Airport.
The National Assembly (NA) has approved the investment plan of all 11 sections of the Eastern Cluster of the North-South Expressway and is in the process of making the next steps.
For the Long Thanh project, we are working with cities and provinces that the project affects in order to complete site clearance. As we have planned, compensation will be carried out and the final report of the project’s feasibility study will soon be finished.
We also carried out other transport initiatives planned for 2018, at a time when the transport sector received VND26 trillion ($1.13 billion) for projects. We estimated to disburse over 90 per cent of the total sum by the end of 2018, while the remainder was disbursed in January.
Last year, we also focused on drafting and completing regulatory frameworks. We created and issued 100 per cent of decrees, circulars, and others as earlier set. This is important work, enabling us to attract more investment in the sector.
Foreign investment attraction, especially in road transport, remains a difficult task. To date, we have not had any road projects that offer international bidding. The Eastern Cluster of the North-South Expressway is the first road project that the Ministry of Transport (MoT) has gotten the green light for, from both the NA and the government, to conduct international bidding, but it is expected that more opportunities will be available for foreign investors. However, the difficulty is that they often want the government to guarantee revenue. We have reported this to the government, but have yet to receive approval so far.
What is the MoT’s orientation in the attraction of foreign investors in 2019 and beyond, and what potential projects are available for them?
We aim to attract private investment in specialised segments such as aviation, seaports, and railways. We are planning to develop new railways in the coming months in which the government will fund the development of rail and signalling systems, while the investment in stations and locomotives will be sourced from the private sector in a model that is applied in many countries.
This will be a decisive year to develop key national transport projects, and we are considering some to attract private investment. They include the Long Thanh project, the Eastern Cluster of the North-South Expressway, and also Tan Son Nhat International Airport.
For the expressway plan, at present, the MoT is conducting bidding for building designs and budget estimation. As planned, we will finish the bidding in February this year. Then in April, we will focus on the design of site clearance for each project section.
We plan to disburse 50 per cent of the total site clearance funding of VND15 trillion ($652.2 million) for the project in 2019. We will also kick off three totally state-funded sections this year. For the eight sections to be developed under the public-private partnership (PPP) format, we will complete the shortlist of potential investors in September. If everything goes smoothly, we will have investors for certain sections by the end of 2019.
We hope that the Eastern Cluster will be a model for other future projects where they are developed in line with market orientations and without state intervention.
For the investment plan for the Long Thanh project, we will conduct international bidding.
At present, only road projects face difficulties related to the government’s revenue guarantee due to risks from new ventures to be developed in the future, while investors in other specialised transport segments such as aviation, railway, and seaports do not, so private investors can develop projects without the revenue guarantee because of low risks.
A potential scheme for private investors is Tran De Port, which has a special and important role to the Mekong Delta region. We are planning to report to the prime minister about this. At present, some domestic investors have expressed interest in this project.
We also want to develop a specialised railway route to transport a high volume of goods and commodities from industrial parks in the southern provinces of Dong Nai, Binh Duong, and Ho Chi Minh City to the Cai Mep-Thi Vai port complex located in the nearby Ba Ria-Vung Tau province. If foreign investors are interested in this project, we are willing to welcome them.
Van Don International Airport has just been inaugurated in the northern province of Quang Ninh by private player Sun Group. What did the MoT learn from this initiative for private investment attraction in the future?
This airport is obvious evidence of how efficient a privately-invested project is. We learned two main lessons from the venture, which was developed by Sun Group, one of the biggest property developers in Vietnam.
The first is about administration procedures. We should look into the reasons why a private investor can develop the project so much more quickly than state-owned enterprises. If a state-run company did this project, it could have taken a longer time, while it took Sun Group only three years. We are reporting to the government and the NA about this so as to review the Law on Public Investment, the Law on Public Procurement, and the regulations on construction to increase their efficiency.
The second is to pay due attention to attracting more private investment in the sector’s projects in the future to tap into their strong financial capacity and good development strategies. Privately-run groups such as Sun Group, Vingroup, FLC Group, and others are outstanding names.
Traffic accidents remained rampant in the transport sector in 2018. What are the solutions that the MoT has been taking to solve it? And how can the MoT work with airlines and aircraft manufacturers to ensure aviation traffic safety?
Traffic accidents remained a concern in 2018. Although the number of traffic accidents, injuries, and deaths decreased, we saw many serious and complicated cases. There are some key reasons for traffic accidents, including low awareness and performance of traffic rules, with the transport network still having some constraints.
Regarding railway safety, we also ordered the Vietnam Railway Authority to build a master plan on ensuring railway traffic safety, with solutions to focus on the development of overpasses, bypasses, and others, as well as application of IT in supervisions at intersections, and installation of lighting, warning, and automation systems. The master plan is estimated to cost over VND7 trillion ($304.35 million). We will report this to the prime minister. We are also working on a plan on new railways and will report it to the NA in 2019.
In aviation, we will intensify work with technicians on the technical quality of aircraft to ensure their operational safety. We will also intensify the inspection and management of professionalism of pilots, and will strictly punish any violations. For airlines which have many technical problems and breakdowns, we will seek special supervision over them, and even ban them from flying altogether.
We will work with international organisations such as the International Civil Aviation Organization and aircraft manufacturers such as Boeing and Airbus on any incidents.
What are the MoT’s priority tasks in 2019 to increase operational efficiency and to unlock private investment in the sector?
The top priority is to ensure the development schedule of the three national key transport projects, namely the Eastern Cluster of the North-South Expressway, the North-South high-speed railway project, and the Long Thanh International Airport project, while improving construction efficiency by increasing the disbursement rate to 100 per cent.
The second is to focus on traffic safety. We will work with relevant agencies on possible solutions and rules for this. We will also focus on upgrading and maintaining roads.
We will also give due attention to legislation to further reduce administrative procedures and especially to have sufficient decrees and circulars to create more favourable conditions for businesses, thus enabling the sector to attract more private investment in the future.