Mobilizing finance for infrastructure development 10 years looking back 1

For an economy to develop sustainably, building transportation infrastructure needs to become a crucial content. However, developing transport infrastructure requires a long-term strategy with a large enough financial resource. Mobilizing finance from many sources is an effective method for this problem. Let's look back at the financial mobilization strategy for transport infrastructure development in the period 2011 - 2021

1.What are financial resources?

Financial resources for socio-economic development can be understood as monetary resources or assets that can be converted into money in the economy. Socio-economic development in general and transportation infrastructure in particular are both longer projects, requiring a large financial resource. Mobilizing financial resources can come from many different sources and different mobilization channels.

Financial resources are extremely important in transport infrastructure development

Financial resources can be mobilized within the country, from the state or domestic private enterprises. In addition, you can mobilize capital from other countries through ODA, foreign direct investment (FDI), and capital from non-governmental organizations (NGOs).

2.Current status of transport infrastructure development in Vietnam

By the end of March 2018, data showed that investment resources from society and transport infrastructure projects had achieved many positive results. A series of large-scale projects were invested, upgraded and put into operation. For example, the project to expand National Highway 1 from Thanh Hoa to Can Tho, Ho Chi Minh Road through the Central Highlands, Complete and put into operation 1050 km of highway, etc.

Ho Chi Minh Road - Central Highlands

However, to achieve the goal of industrialization and modernization, transportation infrastructure in Vietnam has not been highly appreciated. According to the World Economic Forum, Vietnam ranks 79/137 countries in terms of overall infrastructure quality with 20% of roads being paved. One of the main reasons is that the process of calling for investment capital faces many difficulties.

3.Calling for capital to develop transport infrastructure over the past 10 years

3.1 Financial resources mobilized from abroad
The average ODA capital in recent years has increased impressively, and Vietnam has also received strong support from international donors. We spend about 60% - 70% of this capital to develop infrastructure in the transportation, energy and industry sectors. Some outstanding projects using ODA capital are: Nhat Tan bridge, Passenger Terminal T2 - Noi Bai International Airport, Noi Bai Lao Cai Expressway..

FDI capital remains stable

3.2 Financial resources from the state budget
Up to now, Vietnam still relies mainly on the state budget to develop transportation infrastructure. Private investment in infrastructure is very low at less than 1%.

According to World Bank statistics, investment in infrastructure in recent years is nearly 10 times higher than in the 1990s.

3.3 Financial resources mobilized from the private sector
Decree No. 15/2015/ND-CP affirms the encouragement of investment participation from the private sector. Since then, the limit of 30% of Government support capital for a PPP project has been removed. Thanks to that, mobilizing capital from the private sector has achieved certain effectiveness.

Tratigroup is proud to be in the top 6 leading asphalt manufacturers and suppliers in Vietnam, a belief in sustainable construction projects over the years.