Workshop on VGF mechanism for PPP projects in Vietnam

(PPP) On the morning of June 28, 2017, the Department of Planning and Investment (PPP) participated in discussions on issues related to the VGF workshop for PPP projects in Vietnam which was organized by the Procurement Management Department, Ministry of Planning and Investment in cooperation with Japan International Cooperation Agency (JICA).

In order to perfect the mechanism and ODA from JICA for PPP projects in Vietnam in the coming period, the Procurement Management Department of the Ministry of Planning and Investment held a seminar on the mechanism of ODA utilization from JICA for PPP projects in Vietnam to discuss directly with the relevant agencies comments on the proposed study on the proposed mechanism for implementing VGF for PPP projects, with the participation of representatives from the Ministry Finance, Ministry of Transportation, Ministry of Construction, Ministry of Health, leaders of Hanoi, Ho Chi Minh City, Da Nang, Binh Duong, QuangNinh and Hai Phong.

The conference scene on the morning of June 28

Overview of PPPs and the State Financial Mechanism:

In recent years, projects under PPP scheme are expected to be a solution for promoting the development of infrastructure and providing public services with the participation of the private sector, bringing benefits to the people and society. Possible benefits include early provision of new public services, upgrading existing ones, increasing efficiency in government spending, and reducing the burden born by the State budget by attracting capital. Therefore, the support of the Government, especially financially in such forms as PDF, VGF / Subsidies, Guarantees etc. is extremely necessary to increase the attractiveness of PPP projects for private investors. In particular, VGF is the direct support of the state capital to private investors, creating incentives for private investors to invest in infrastructure. Providing VGFs in a reasonable manner will contribute to the feasibility of the project, especially for infrastructure projects where revenues collected from future users are not sufficient to cover project investment costs.

In this regard, the Department of Planning and Investment and JICA had meetings prior to the workshop and the Department also made many suggestions to improve the mechanism through reviewing the Law on Public Investment and Decree 136/2015 / ND-CP dated 31/12/2015 of the Government guiding the implementation of some articles of the Public Investment Law. At the conference on June 28th, according to JICA report, research results on how to set up a VGF mechanism is effective and close to current regulations. The proposed mechanism is basically as follows: VGF was developed as one of the targeted programs in the medium term public investment plan; Develop a separate VGF budget line to allocate the VGF budget within the framework of the medium-term public investment plan; MPI acts as the governing body of the VGF program; Establishment of the VGF Program Management Board under MPI, responsible for the management of the VGF program.

Suggestive JICA's latest VGF mechanism

According to the conclusion of the meeting, the Ministry of Planning and Investment will continue to cooperate with JICA and work with relevant agencies, including the Department of Planning and Investment of Ho Chi Minh City as an important lead to urgently perfect the mechanism for the VGF, in order to create more favorable conditions for private investors to engage in public benefit projects.

- Public Private Partnership Office, 06/2017 -