Breaking the Iceberg of PublicPrivate Partnership in Vietnam
Phạm Văn Đồng
Bsc of Civil Engineering 2006(CTU)
Msc of CME 2009 (TUDelft)
Working at DoT 2009-now
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A story: lack of funding for infrastructure
projects of a city in Vietnam
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Outline
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Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success Factors
(CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy
Project
Lessons learned
Conclusion & Future Research
The process of theory application
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Research questions and Goal
• Research questions:
• What is PPP in Vietnam?
• Is there a framework to assess the success/failure
of PPP?
• What are the problems with Vietnamese PPP?
• Goal:
• Clarify the problems with current BOT projects in
Vietnam, find out what actors and factors (the
iceberg) hinder the good PPP practices in Vietnam
and come up with definite solutions
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Outline
1.
2.
3.
4.
5.
6.
7.
8.
Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success Factors
(CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy Project
Lessons learned
Conclusion & Future Research
The process of theory application
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PPP concept: Definition
What is Public-Private Partnership?
• Is it so simple? I don’t have money to realize the projects, can you
come in?
• No, it is much more complex (Koppenjan 2005):
• Long-term contractual agreement between Public-Private party;
• Planning, construction, and/or exploitation and “co-financing”;
• Sharing or reallocating : risks, costs, benefits, resources &
responsibilities.
• How about: Design-Construction (Maintenance) contract?
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PPP concept: forms of PPP
• Forms of private sector participation
•
Public-Private
Partnership (PPP):
1. Service contracts
2. DBFM(O) and
BOT
3. Joint ventures
Source: Koppenjan (Adapted from Bennet et al., 2000)
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PPP concept: motives
Motives
Public party
Private party
Efficiency
New markets
Inclusion private skills and
knowledge
Reduction of long term
uncertainties
Creation of added values
and innovative solutions
Public contributions to
unprofitable project parts
* Added value
- Efficiency (cheaper,faster, better)
- Enrichment and synergy
Source: Koppenjan
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Outline
1.
2.
3.
4.
5.
6.
7.
8.
Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success Factors
(CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy Project
Lessons learned
Conclusion & Future Research
The process of theory application
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PPP in Vietnam:
legislation
• Current key legislation:
• Decree No. 78/2007/CP enacted on the 11th of
May 2007
• Generic law
• Build-Operate-Transfer (BOT), Build-TransferOperate (BTO) or Build-Transfer (BT) contracts for
all infrastructure services
• Decree No. 108/2009/CP enacted on the 27th
of November 2009: BT focus
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PPP in Vietnam:
expectations
• Filling in financial gaps
• Preventing the involvement of State-Own Enterprises (SOEs)
with ineffectiveness, corruptions
• Stimulating private sector participation
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PPP in Vietnam: State of the Art
• Overall context of PPP in
Vietnam:
• Projects: 17 vs. 83
Philippines, 80
Indonesia and 672
China
• Amount: US$ 4 billion
vs. US$ 38 billion
Philippines, US$ 37
billion Indonesia, and
US$ 90 billion China
Private Participation by sector (World Bank 2008)
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PPP in Vietnam: Hindering Factors
• Unfavorable investment
environment:
• Weak financial market
• Weak PPP frame law
• Leading to high financial risks
political risks
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PPP in Vietnam : sectors’ investigation
• Similarities:
• SOEs have kept dominant powers across sectors
• The competitive bidding is lacking across sectors
• Sector performance:
• Energy sector: most PPP projects (10 /17)
• Telecom: only BT contract (restrictions)
• Transportation: poor performance sector
• Water sector: tariff and affordability (turning into
Design-Build-Lease)
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PPP in Vietnam: Solutions
• Macro improvements:
• Improve financial market and PPP policy
• Sectors’ strategy
• Energy sector: redefine master plans
• Telecom: true joint ventures, private ownership,
management control right, and equity contribution
• Transport sector: determine the boundary of SOEs
and private investors
• Water sector: income measures, differentiation of
tariff and differentiated management
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Outline
1.
2.
3.
4.
5.
6.
7.
8.
Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success
Factors (CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy Project
Lessons learned
Conclusion & Future Research
The process of theory application
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Fishbone Framework for CSFs of PPP
projects
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Fishbone: success of feasibility phase
Favorable investment
environment
Stable political system
Predictable exchange risk
Precise law frame
Stable macro-economic
situation
Consistent with
public interest
Available financial market
Favorable legislation
& regulations
Uncorrupted government
Feasibility
study
Successful
Community support
Political support
Project scope adaptation
Innovative idea
Financial trade-off
Being PPP character
Parties’ good will
for collaboration
Viable
project
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Outline
1.
2.
3.
4.
5.
6.
7.
8.
Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success Factors
(CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy
Project
Lessons learned
Conclusion & Future Research
The process of theory application
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Case Studied: BOT Phu My 2 Phase 2
Energy Project (PM2.2)
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PM2.2: Contractual arrangement (World Bank 2003)
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PM2.2: Financial arrangement
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PM2.2: Successful factors (fishbone verification)
• Exploration phase:
• The intensive interests and strong commitments of
government
• Feasibility study phase
• Planned Government guarantees (GG)
• Contract phase
• “Coguarantee”: GG and IDA PRG of World Bank
• Construction phase
• Trade-off
• Operation en maintenance phase
• Empowerment
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Outline
1.
2.
3.
4.
5.
6.
7.
8.
Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success Factors
(CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy Project
Lessons learned
Conclusion & Future Research
The process of theory application
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Lessons learned from PM2.2
• Update fishbone framework: 4 new
factors
• Facilitating PPP in Vietnam
• Short term: PRG of World Bank or
ADB
• Long term: release this layer of cost
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Outline
1.
2.
3.
4.
5.
6.
7.
8.
Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success Factors
(CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy Project
Lessons learned
Conclusion & Future Research
The process of theory application
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Conclusions & Future Research
• Conclusions:
• It is difficult for PPP investments in Vietnam
due to weak financial market, weak PPP policy;
• But, PPP can be lived up by good arrangements
at operational level;
• Side effect: it is costlier to invest PPP projects
in Vietnam by Government guarantees & risk
premiums.
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Conclusion & Future Research
• Future Research:
• PPP in Vietnam:
• Transplant good PPP laws in other countries
• How to optimize the GG and establish the
“Guarantee Fund”
• PPP in general:
• Valuate the effectiveness of risk transfer process
• How public reacts with PPP scheme as introduced
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Outline
1.
2.
3.
4.
5.
6.
7.
8.
Research questions and goal
Public-Private Partnership (PPP) concept
PPP in Vietnam
Fishbone Framework for Critical Success Factors
(CSFs) of PPP projects
Case Studied: BOT Phu My 2 Phase 2 Energy Project
Lessons learned
Conclusion & Future Research
The process of theory application
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The process of theory application
• 3 BT projects in Cantho city with the amount of
approximately 1600billion VND
• Provincial road 918: 675billion VND
• Provincial road 923: 549billion VND
• Political school: 377billion VND
• Progress: in detailed design – Cost estimate
phase
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Questions and discussion
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