Vietnam legislators want open bidding for build-transfer projects

The issue of BT projects came up in the National Assembly (NA) on Monday when members discussed implementation of the laws on land planning and administration since the Land Law came into effect in 2013.

A report to the house said 22 provinces and cities have adopted the BT model, and many more such projects are planned. Most BT projects in Vietnam involve private contractors taking on infrastructure construction projects in exchange for the rights to use one or multiple land plots as payment.

But there are issues such as inadequacies in determining how much land should be handed over to investors and their value, the report said.

Vu Hong Thanh, head of the NA’s Economic Committee, said: “Most BT projects have investors chosen by authorities. The payment made to them in the form of land without auctioning the land is not in line with the 2013 Land Law and is a loophole that could lead to losses for the state budget.”

Thach Phuoc Binh, a deputy from the southern province of Tra Vinh, said while the BT model, commonly known in Vietnam as ‘an exchange of land for infrastructure’, offers benefits such as quick development of economic, social and environmental infrastructure without relying on public funds, its drawbacks still outnumber benefits.

“Many projects fall behind schedule and see their costs balloon. There are projects in which companies take possession of lands and divide them into plots for sale and ignore the infrastructure they are supposed to build for the government. These issues arise from the fact the legal framework for BT projects is still inadequate.”

There are many regulations governing BT projects in several legal documents, but they overlap and contain loopholes, he said.

For instance, the 2013 Land Law only has regulations for the government transferring land management rights to investors for carrying out projects, but there are no regulations on how to transfer land or value it, Binh pointed out.

Another example highlighted by Binh was that while a BT contract is the basis for the government and investors to implement a BT project, there is still no specific regulation on this type of contract and how to supervise them.

He said the land transfer to investors should only be done after the infrastructure works are completed and independent audits are done. But a 2015 government decree allows transfers to be made while the work is ongoing.

“Regulations like that contain risks. Why don’t we auction lands and get money for infrastructure? That is a loophole the law and government decrees are creating.”

BT projects should only be awarded in poor localities that are unattractive to investors and others should fund infrastructure by auctioning land, he said.

Nguyen Hong Hai, director of Binh Thuan Province’s department of transport, agreed with Binh and called on the government to auction lands to raise funds for infrastructure, citing market prices are always higher than the value determined by local authorities.

Hoang Quang Ham, a standing member of the NA’s Finance and Budget Committee, said while considering the resource limitations it is necessary to finance projects via the BT model, there are no laws regulating investment in the form of public-private partnerships. The government has not issued a decree either on the use of public assets to pay BT investors.

“The lack of policies leads to difficulties in management and affects investment and so they need to be researched and completed immediately.”