Want to be in the loop?
subscribe to
our notification
Business News
BANKS SKEPTICAL OF BOT TRANSPORT PROJECT RELIEF
Despite the Ministry of Transport’s proposal to increase the debt repayment period and cut lending rates for build-operate-transfer transport project operators, lenders remain concerned.
On May 8, the ministry (MoT) sent Document No.4416/BGTVT-DTCT to the prime minister seeking for financial supporting policies for build-operate-transfer (BOT) transport projects, including restructuring the debt repayment period, cutting lending rate by 2-3 per cent, and stopping banks from changing them into bad debts. The proposal, however, may be a tough task because banks have remained silent on the matter.
“It is difficult to restructure the debt repayment period as banks are not ready and are concerned about risks. BOT transport is not a priority for them,” Le Duc Khanh, director of the market strategy department at PetroVietnam Securities, told VIR. “However, powerful state-run banks would have to follow a government order.”
Phan Dung Khanh, investment advisory director for Maybank Kim Eng Securities, said that along with transport, businesses in other sectors also have difficult access to bank loans. “Banks are in a dilemma. Vietnam’s bad debts are forecast to increase in the coming time and so banks are tightening control,” Khanh noted.
The MoT, which is managing 61 BOT projects, also proposed reducing tax and allocating VND5.08 trillion ($220.87 million) to support BOT projects that are suffering partly because they have not received permission to increase tolls. The ministry even proposed to buy related projects with funding from the 2021-2025 public investment pot.
The proposal comes as BOT operators are facing huge losses due to a fall in traffic during COVID-19. At the end of 2019, 45 BOT projects reported lower revenues than forecast in their contract signed with the state, with Thai Nguyen-Bac Kan and Thai Ha Bridge reaching only 13-15 per cent of initial plan.
While the Ministry of Finance’s Circular No.159/2013/TT-BTC dated November 15, 2013 on adjusting road toll by roadmap stipulates BOT transport operators can increase tolls every three years at the rate of 12-18 per cent, the government’s Resolution No.35/NQ-CP released in 2016 on supporting enterprises until 2020 stopped them from executing this right. Pham Quang Dung, chairman of Tasco JSC, already constructing many BOT projects nationwide, said, “If we get permission to increase tolls now, BOT developers would not need to restructure bank debts. Companies cannot wait until 2022 for permission.”
Nguyen Tuan Huynh, general director of Cienco 4, the investor of the Thai Nguyen-Cho Moi BOT project, said that many ventures will go bankrupt by the 2022 deadline, and banks will see more bad debts.
Shrinking revenue at BOT projects has been a hot issue for years because of the high initial construction costs, long duration of recovery (20-30 years), and a lack of a risk-share mechanism, which makes it difficult for the transport sector to attract international ventures despite strong interest. Recently, the eight public-private partnership sections of the eastern cluster of the North-South Expressway had to cancel international bidding partly because of these reasons.
Thus far, any BOT transport schemes are bogged down in difficulties, with many halting construction for years even, due to difficult loan access.
Source: VIR
Related News
VIETNAM’S GDP TO GROW 5.5% THIS YEAR – WB
This forecast is based on the assumption of a moderate recovery in manufacturing exports in 2024, fueled by rebound growth of 8.5% year-on-year in the fourth quarter of 2023 and 17.2% year-on-year in the first quarter of 2024, reflecting strengthening global demand, said Dorsati Madani, senior country economist at the WB in Vietnam.
FARE REFUND FOR VISA REJECTION
Cathay Pacific will offer full refunds for cases of visa rejection to provide you with the confidence to explore the world with ease. If you are planning to fly to a destination that requires an entry visa, you can now book with greater peace of mind.
FOUR COMMODITIES POST Q1 EXPORT VALUE OF OVER 5 BILLION USD
The total export turnover of agricultural, forestry, and fisheries products in the first three months of 2024 is estimated to reach 13.53 billion USD, an increase of 21.8% compared to the same period of 2023.
MOIT PROPOSES SCHEME TO BOOST RENEWABLE ENERGY PROCUREMENT
The proposed Direct Power Purchase Agreement (DDPA) mechanism, outlined in the draft decree, targets organisations and individuals consuming electricity from the 22kV power grid or higher, with a monthly consumption averaging 500,000kWh. However, residential households are excluded from direct procurement.
REAL ESTATE BONDS PLACE PRESSURE ON ISSUING FIRMS
The ministry’s recent report underscores concerns within Vietnam’s corporate bond market for 2023 and 2024. It emphasizes the critical need to address hindrances to the real estate sector in line with the objectives provided in Government Resolution No. 33/NQ-CP, which aims to stabilize the industry.
DA NANG CUSTOMS FOCUSES ON DEVELOPING CUSTOMS-BUSINESS PARTNERSHIPS
Da Nang Customs Department issued an action plan for developing customs-business partnership in 2024. One of the new events this year is the workshop on “Settlement reports for enterprises engaged in outsourcing, export production and export processing” held in Da Nang Customs Department on April 16, 2024.