HCM City (VNA) - With public funding only able to meet a fifth ofthe 1.8 quadrillion VND (80 billion USD) required for development works in HCMCity’s in 2016 – 20, municipal authorities are striving to involve the privatesector.

According to Su Ngoc Anh, Director of the city Department of Planning andInvestment, many new measures and policies have been put in place to mobiliseprivate resources, but challenges remain.

He explained that investors must bring in 15-20 percent of the funding requiredfor a project, with loans from banks and other credit organisations making upthe rest.

Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam, HCM Citybranch, said bank funding for socio-economic projects, especially ininfrastructure, is linked to their effectiveness.

Therefore, investors and relevant authorities must ensure the effectiveness ofprojects when they are completed, he said.

Pham Manh Thang, Deputy Director General of Vietcombank, said the bank hasprovided loans of over 100 trillion VND for 61 projects, including 23 in theeducation sector, 16 for transport infrastructure (roads, bridges), nine forurban development, and seven for hospitals.

In the context of inadequate public funding, making use ofpublic-private-partnerships (PPP) is vital, he said, but admitted the PPP formfaces legal hurdles.

Thang said another problem is that most local banks are small, with most oftheir deposits being short-term, limiting their capacity to provide medium- andlong-term loans.

The central bank is amending regulations through a road map, limiting the rateof short-term deposits that can be used to provide long-term loans, and this isexpected to act as a hurdle to lending for infrastructure works.

Some major PPP projects in energy and transportation undertaken with foreigninvestment have shown that overseas creditors demand specific guaranteesrelated to revenue and foreign exchange risks.

Thang said relevant agencies should create regulations for public disseminationof information about PPP projects.-VNA