PPP models have been applied in many countries around the world and some infrastructure sectors are more conductive to PPP than others. In which, the power sector and transport sector have received most PPP model. There are ranges of reasons including better potential for cost recovery, higher political commitment due to the sector’s importance for country economic growth etc. Nevertheless, this does not mean that PPP in other sectors is without prospects. With appropriate modalities, support for capacity development, and political commitment to sector reform, PPP is feasible in others sectors as well.
Urban development plays important role in country development; the possible good of urbanization can solve many problems such as housing, environment, infrastructure systems etc. As infrastructure development project, a huge budget needed to urbanize. Mr. Nguyen Thanh Trong made case study to carry out the way to apply PPP model in urban development project, especially in Mekong delta in Vietnam base on real project which has been implemented in Soc Trang province in Vietnam.
The main objectives of his study were to: (1) study existing regulations and law affecting PPP project in Vietnam; (2) study theories and standard guideline and its applications of PPP in urban development projects; (3) analyze PPP Soc Trang province project in terms of structure, risk, law compliance and financing structure and compare to the theory and the standard guideline in order to find out the successful and problems in the project; and (4) propose recommendation for improvement
Conclusion
It is estimated that urban area of Vietnam account for 70% of economic growth and contain around 30% of the population, it is believed that urban development will occur quickly to meet the social demand. The private sector is encouraged to be more involved in urban development by providing resources. In order to have more private sector participation, government supports and clear understanding among the stakeholders, especially in term of risk perceptions, such as potential risks, possible sources of risks as well as risk management strategy are very important.
This project case study had analyzed the success of the project in terms of land acquisition and resettlement, approval from Government Agencies, participation of private sector and also social benefits.
Land acquisition: The success of land acquisition based on proposed compensation land price by the government is equal to actual market land price. In addition, the land owner will receive 10% residential land area in the resettlement sub-project in the line with total land area affected by project.
Approval from Government Agencies: It takes short time for getting approval from Government Agencies due to the procedures to carry out the project strictly with Law on housing and the necessary to implementation project.
Participant of private sector: The most successful of participation of private sector in this project are:
Government offices have a little knowledge about private –public partnership and recognize the important role of private sector in supporting economic growing of the province.
Private sector’s constant skepticism toward the government will be gradually reduced.
Social benefits: The project has maximized the land resource for economic development, changing the value of agriculture land with low productivity by residential land with high value.
Local government orient, regulate and control initiative to stabilize the real estate market in order to overcome the spontaneous development, not follow the urban master planning of the city.
On the other hand, this project case study has identified what kind of government problems including the sources of problem in order to help determine the most strategy solution base on Good Project Governance (GPG) concept and the guideline of WB.
The main problem related to government responsibility in this project is no contract between Public agency and private sector. Without contract, many problems can be encountered in this project, such as:
- The fairness was not achieved.
- Government supporting was not achieved.
- Clear mechanism was not achieved.
- Risks identification was not achieved.
The second problem in this project is no financial modeling, so all key drivers underpinning, and variables likely to impact upon the financial performance of project are not identified. There are no financial feasibility assessment models which can become valuable management tools in all anticipated operating circumstances.
Base on this case study, the lesson that can be drawn is that urban development projects which carried out through PPP approach will be successful when achieving two conditions:
- Urban master plan must be suitable with short term and long term purpose and satisfy with varying demands;
- Advisers must be hired in order to design adaptation mechanisms to new or unforeseen circumstance.
Recommendation for further research
Urban development project always has short term as well as long term purposes and its life cycle is very long, so during its life cycle there are many policies, decisions of local government will impact directly in the efficiency of the project.
For instance, in this project, the local government is implementing an investment concentrated administrative building project adjacent to this project, therefore, in the near future; the value of residential land in this project will be increased. So it is very necessary to research the impact of local government‘s policies on the efficiency of project in order to identify the way of sharing risks and benefits between public sector and private sector in PPP project.
His thesis abstract is copied and posted.
Abstract
For procuring public works projects, Public Private Partnership is a well established methodology in Vietnam for recent years, especially in infrastructure projects. Due to supplying the private sector’s expertise, efficiency, innovation, risk sharing, financing etc. into public project, the quality of public facilities and services can be uplifted.
Public Private Partnership models have been applied in many countries around the world and some infrastructure sectors are more conductive than others, especially it is hardly to find urban development project carried out base on Public Private Partnership approach.
In order to compare with other procurement method, it is important to understand the local situation by an analysis of the project conducted to date. Lessons learn can be applied to other projects or to derived in to legal framework. This project case study will carry out the way to apply Public Private Partnership model in urban development project.
The aim and objectives of this study were achieved via a understanding literature review, deep case study analysis in term of successful and problems encountered and recommendation for improvement.
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