A $1 million technical assistance (TA) grant from the Asian Development Bank (ADB) will help to increase efficiency in road transport administration and attract investment in Viet Nam’s rapidly expanding road transport network.
The grant, sourced from the Japan Fund for Poverty Reduction and funded by the Government of Japan, will provide the Ministry of Transport and its support agencies with guidelines to strengthen institutional and financial arrangements, operation and maintenance, and governance.
A plan for the long- and medium-term institutional enhancement for Viet Nam Expressway Management Administration will be developed, and real-time advisory support to Ministry of Transport officials will be provided.
Funding for road projects will be improved through the TA. An assessment will be made on how to fund the Viet Nam’s North-South Expressway Project, a massive road development project estimated to cost $17.9 billion and covering 1,811 kilometers of expressway stretching from Ha Noi to Can Tho on the eastern side of Viet Nam.
Possible funding options include public-private partnership (PPP), official development assistance, and government funding. PPP arrangements are more closely assessed in the most southern section of the project, My Thuan-Can Tho Expressway, which is included in ADB’s indicative assistance pipeline.
The TA will come up with guidelines to improve the cost effectiveness of road projects by reducing life-cycle costs and enhancing the sustainability of expressways, and national and local roads.
Guidelines will also be developed to strengthen governance of state-owned enterprises under the Ministry of Transport involved in ADB-financed projects.
“Viet Nam needs to attract more investments into the road transport subsector. Private sector participation, which is still developing, is crucial for bridging the huge financial gap between infrastructure demand and available budget,” said Masahiro Nishimura, Transport Specialist in ADB’s Southeast Asia Department.
The swift pace of economic growth in Viet Nam is estimated to require as much as $16 billion annually in new infrastructure investments from 2011 to 2020, or 20% of projected gross domestic product (GDP).
Investments in the transport and communications sector have been growing rapidly, accounting for 4.5% of GDP in 2009, more than double the level in 2004. The sector, however, needs to address inefficiencies if it is to meet infrastructure demand.
The government will contribute $150,000 equivalent toward the TA’s estimated total cost of $1.15 million. The Ministry of Transport is the executing agency for the TA, which is due for completion around August 2011.
