Hanoi in search of infrastructure funds

The capital city of Hanoi has created favourable conditions for luring investment in infrastructure under the build-transfer (BT) mode, but municipal authorities require that BT investments be transparent and comply with the law. - Photo kinhtedothi.vn

Deputy Director of Hanoi Planning and Investment Department Vu Duy Tuan, told Kinh Te & Do Thi (Economy and Urban Affairs) newspaper that “the city’s limited budget cannot afford infrastructure transport projects, so attracting investment from other sources was necessary.”

Thus, the municipal People’s Committee had introduced policies to incentivise capital mobilisation through public-private partnerships (PPP) or BT. This year, city authorities have given approval for pre-feasibility studies on five BT projects.

Some projects were mapped out by authorities while others had been proposed by businesses. The authorities would evaluate the feasibility of the projects and then open public bidding, Tuan explained.

“Any project must be tendered. Investors would be given some priority points of tenders, as per legal regulations, if they used their own money to draw up feasibility studies”, he said. All projects would be monitored by Government inspectors.

Recently, BT infrastructure projects have attracted heavy criticism, most notably for a lack of transparency, which leads to corruption risks. The city also had to give up many land lots, including several hectares in prime locations, for private project developers, causing a lack of land for the city and concerns over wastefulness.

However, the Department of Planning and Investment has given a different explanation. Most land areas granted for BT projects were used for community purposes.

Luong Hoai Nam, the department’s official, said, “In fact, the city would not grant all land area as counterpart capital to investors for building commercial houses.” He cited a BT project involving a road from the Hong (Red River) dyke to Gamuda Garden New Residential Area in Hoang Mai District as an example. The project was capitalised at VND900 billion (US$39.2 million), of which the BT proportion was more than VND848 billion ($36.9 million) and the rest was the city’s land as counterpart capital equal to 20ha (now adjusted to 18.72ha) in Vinh Hung, Linh Nam, Tran Phu and Yen So wards.

However, the private investor would only have 3.12ha for commercial buildings while the remaining 15.66ha would be for other public purposes such as traffic, green space, schools, hospitals, cultural centres or settlement houses, Nam added.

All public, infrastructure and residential reallocation works must be transferred to the city for management after the construction has been completed by the investor, Nam affirmed.