07 July 2017

HCMC chooses PPP as key fund-raising vehicle

HCMC chooses PPP as key fund-raising vehicle

Van Nam

HCMC – The HCMC People’s Council on July 6 opted for public-private partnership (PPP) as a key fund-raising vehicle given the lack of capital for vital infrastructure development projects.

The council on July 6 allocated VND171.8 trillion (US$7.5 billion) for urgent infrastructure projects to be carried out in 2016-2020. Of the total amount, around VND22 trillion will come from the central State budget, and VND150 billion from the city’s budget.

The city will use around VND11.2 trillion as reciprocal capital for projects funded by official development assistance (ODA) loans, and another VND9.2 trillion for funding public-private partnership (PPP) projects.

According to a council resolution on the city’s socio-economic development tasks in the second half of this year, the local government will have to take measures to disburse State capital and prop up private investment.

PPP is a viable vehicle to lure private capital to meet the growing demand for infrastructure development. Private finances will be used for numerous projects, including traffic infrastructure, flood control, rehabilitation of major canals, and construction of new residential blocks.

According to the resolution, the city aims for gross domestic product (GDP) growth of 8.4-8.7% this year, with total factor productivity contributing 36% or higher to GDP and development investments 35%.

The city will have to make effort to realize the budget collection target. The central Government has assigned the city a budget collection target of VND 347.88 trillion this year, up 16% over last year.

However, the above targets are hard to obtain in the current circumstances. During the previous session of the city council, many voiced concerns that the city is facing a slew of difficulties.

In particular, the city has seen slow growth in supporting industries. Its tourism sector has yet to reach its full potential. The business environment and competitiveness of the city have improved at a slower pace than expected.

Traffic congestion, flooding and environmental pollution are among the pressing issues which the city cannot solve overnight.



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