VietNamNet Bridge – The Ministry of Planning and Investment (MPI) on Tuesday proposed the Government to drop the investment format of Build-Transfer (BT), in particular those projects that the State has to pay money back to the developers after completion.
At an online meeting of the Government on Tuesday, Minister of Planning and Investment Bui Quang Vinh reacted noisily at proposals by some provinces to allow for BT infrastructure projects in 2014 as such localities are short of funds.
“I’ve just heard Minister (of Transport) Thang giving approval for such-and-such provinces to develop projects under this format. (We) must be very prudent and must stop it at once,” Minister Vinh said.
The BT format is normally conducted via one of two ways: either land in exchange for infrastructure, or the State paying back the investment capital to the developer after the project is completed and transferred, according to Vinh.
The former way can still be allowed, but there is little land left to be allocated for the investor, and as the property market is frozen, this way is less attractive to investors, the minister said.
The other way, according to Vinh, must be exercised in a highly-cautious manner. “In reality, this means the State borrows funds and pays back instantly, so many developers without capital have sought bank loans to implement projects,” he said, warning that investors borrow funds at all costs.
Therefore, according to him, BT projects are very costly, and the State has two pay twice the cost of a road. Vinh, therefore, suggested that this investment format be stopped right away.
Vinh said his ministry will propose the Government amend Decree 108/209 regulating the investment formats of Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO) and BT.
Throwing his weight behind Minister Vinh’s proposal, Prime Minister Nguyen Tan Dung said this format should be terminated soon to improve investment efficiency.
This will help prevent the situation of enterprises lobbying for projects from provincial governments, and provincial governments in turn lobbying for approval from central authorities although there is neither land left to offset investors nor money to pay them, said the Government leader.
PM Dung asked the MPI to tighten control over public investment and submit draft amendments to the decree regulating such investment formats.
A BT contract is signed between a State agency and an investor to develop infrastructure works. After completion, the investor transfers the work to the State, and is entitled to a plot of land to recoup the invested capital, or is given back a sum of money stated in the contract.
Hanoi City is home to the biggest number of BT projects, at 63 as of end-2012. However, only 12 such BT projects were in progress, while 20 other projects had found investors.