M-RCBG Associate Working Paper No. 124
Public Sector Management of Revenue Risk in Public-Private Partnerships: Vietnam's North-South Expressway Project
Tran Ha Duong
For developing countries, infrastructure is often seen as one of the key factors contributing to a higher level of economic growth and a better quality of life. At the same time, the lack of investment in infrastructure can severely constrain their growth potential. Despite having the highest level infrastructure spending over Gross Domestic Product in Southeast Asia, Vietnam still trails behind other major developing economies in the region in terms of infrastructure quality. the country would likely need to significantly increase infrastructure investment in order to sustain its current economic growth. As public financing is limited, the private sector's participation in infrastructure investment through Public-Private Partnerships (PPPs) will be essential for Vietnam to meet its infrastructure needs.
Although Vietnam has attracted a considerable amount of private investment in infrastructure over the last 20 years, its PPP program remains a work in progress. For example, many investors are concerned about regulatory issues and the lack of risk-sharing by the government under the current legal framework. While the upcoming PPP Law could help improve the regulatory environment, capable foreign investors would likely demand concrete forms of government support for future PPP projects.