Vietnam Requires a Strong Initiative to Attract Private Investment in Transportation

Despite recent legal enhancements and substantial potential, the transformation of Vietnam into a prominent destination for transport investment may require some time.

Private investors have expressed satisfaction with the progress made on issues related to financial mechanisms for public-private partnership (PPP) projects. This follows the National Assembly’s issuance of a resolution in late 2023, which increased the state capital contribution to PPP projects in certain areas from 50% to 70%.

“The new legal improvements hold promising prospects for private investors to engage in transport infrastructure projects in the near future,” remarked Tran Chung, chairman of the Vietnam Association of Road System Investors (VARSI). “With the anticipated amendments to the Law on PPP Investment in 2024-2025 and the resolution of more legal barriers, numerous projects related to transport infrastructure development are expected to be implemented, addressing Vietnam’s significant investment needs amid state budget constraints.”

In the past year, the sector’s performance spotlighted the disbursement of public investment, exceeding 95% of the total. Approximately 475 km of expressways were inaugurated, contributing to a national total of nearly 1,900 km. However, Chung acknowledged that the private investment landscape in the sector remains challenging despite dedicated efforts to bring about improvements.

The 13th Party Congress set the ambitious goal for the country to have around 3,000 km of expressways by 2025 and about 5,000 km by 2030. The period from 2021 to 2025 has seen a threefold increase in resources directed towards transportation infrastructure development compared to the 2016-2020 period.

The Transport Development and Strategy Institute estimates that the country requires approximately $87.3 billion for transport infrastructure by 2030, excluding maintenance costs.

EuroCham Vietnam highlights challenges in the evolving PPP regime and the lack of government policy certainty and risk allocation, leading sponsors and investors to primarily focus on smaller-scale projects under the Law on Investment. This has constrained the capital investors are willing to deploy for infrastructure projects in Vietnam, making large-scale developments exceptionally rare for a country of Vietnam’s scale and growth potential, according to members.