Vietnam needs US$500 billion for its infrastructure development in the next 10 years, a senior official at the Ministry of Planning and Investment has said.
La Van Tang, director of the ministry’s Bidding Management Department, released the figure at a seminar on initiatives for higher efficiency in bidding, jointly held in Hanoi by the ministry and the U.S. Trade and Development Agency on Tuesday.
The amount is needed for investing in various infrastructure projects including those for building, upgrading or repairing seaports, airports, and electricity and water supply systems, Tang elaborated.
Meanwhile, the state budget, official development assistance (ODA) funds, and other public financial sources can provide only over VND200 billion ($9.4 million) for these projects, which means a shortage of nearly VND300 billion ($14 million).
Therefore, it is essential to raise funding from private investors, both local and international, to make up for the discrepancy, Tang said.
According to a World Bank (WB) report, Vietnam lacks financial mechanisms to mobilize capitals for its great demand for infrastructure development, VnExpress newswire reported.
With a target of $300 billion in GDP value by 2020, the Southeast Asian country needs about VND30 billion ($1.4 million) per year for infrastructure development in various fields, including traffic, electricity, irrigation, education and heathcare, WB experts said.
Meanwhile, the state budget, ODA, government bonds and other sources can cover merely 50-60 percent of the demand, they pointed out.
A sustainable capital supply for infrastructure development in Vietnam cannot exclusively rely on the state budget and ODA but it requires wider contributions from the local capital market as well as private investors, said Jennifer Sara, sector manager of the Sustainable Development Department of the WB.
The WB also proposed establishing the Municipal Development Fund (MDF) for tier-2 cities to spearhead local infrastructure development.
The MDF will act as a subprime lender and help improve capital mobilization through urban bonds, the WB said.