Ho Chi Minh City is the economic hub of Vietnam, thus, urban infrastructure development is essential to boost social and economic development. In the past years, most infrastructure projects in the city have been developed with State Budget capital or from loans. Ho Chi Minh City Infrastructure Investment Joint Stock Company (CII) was set up as a financial investment organization, operated in the form of a public company, to draw investment capital from various economic sectors for its projects. This contributes to the socialisation of infrastructure investment in the city. Vietnam Business Forum talked with Mr Le Vu Hoang, General Director of CII.
As known, CII was set up with the goal of mobilising idle public cash for infrastructure development investment. After five years of operation, what are the major achievements of CII?
To carry out the general policy of the city, CII has invested in several focal projects during its 5-year history. Specifically, CII took part in six big projects with combined investment capital of nearly VND8,000 billion (US$500 million); namely Phu My Bridge, Kinh Dong Water Plant, Tan Phu Trung Industrial Park, Hoa Phu Industrial Park, Thu Duc Water Plant, and Binh Trieu Bridge 2 in the second phase. To carry out these projects, CII and its partners set up joint stock companies, with CII being the founding shareholder. CII has contributed more than VND300 billion (US$18.72 million) to these projects.
Currently, the chartered capital of CII is VND500 billion (US$31.25 million) and this will be raised to VND1,000 billion by 2010. CII can mobilise capital for its plans with bank loans and bond issuance.
As of late 2006, the total investment capital of CII was over VND1,312 billion (US$82 million). The biggest success of CII has been the affirmation of its trademark as a leading financial investor in the field of infrastructure development. The success of CII can be seen in the following aspects. First, CII has become a multi-field infrastructure developer in road, bridge, water supply, industrial park and complex infrastructure construction. Second, more and more foreign investors are involved in the operations of CII. Foreign investors’ capital accounts for some 45 per cent of CII’s total investment. Third, CII has asserted its name in the field of traffic toll collection. Fourth, CII has extended its business to other provinces.
To increase the role of the company in infrastructure development activities, how will CII directed its development in the coming time?
To fulfil our mission as a financial investor in the field of infrastructure, our business development from now to 2015 highlights the following contents. In operation form, CII will head for the form of a holding-subsidiary company. First, we will continue traffic toll collection, which is the major business that CII has done in the past five years. Second, CII will invest in various infrastructure fields like building power plants, water supply plants, bridges, piers, waterways, parking areas, and waste treatment facilities. Third, CII will expand its financial investment in the stock market. In development size, we will raise our chartered capital to VND1,000 billion. Total asset value is expected to reach VND5,000 billion.
In investment form, we will increase our capital contribution proportion in our projects. By this form of investment, CII will make long-term investments in infrastructure. We will also enter joint ventures to set up joint stock companies for new infrastructure projects. CII also has plans to set up a subsidiary real estate trading company. The most important issue is how to mobilise capital effectively. Besides, CII will gradually approach international capital sources. We have recently had frequent talks with international financial organisations, and many showed strong interest in CII projects. This is a great chance for CII to access long-term loan sources with low interest rates, which are suitable for projects carried out by CII.
In your opinion, how should the Government introduce policies to attract enterprises to exploit the advantages of BOT projects?
The outstanding advantage of the BOT investment mode is that the State can mobilise social capital sources for infrastructure projects. This will lessen the burden of infrastructure system investment on the State Budget, and promote active and creative investment. However, to optimise this investment mode, we need to introduce improved policies related to financial investment and infrastructure construction investment. If the implementation of a BOT project goes slower than scheduled, recovery of investment capital will be affected. The largest difficulty in carrying out a BOT project is site clearance, and administrative procedures related to construction. Therefore, the State needs to continue consolidating its legal document system to facilitate investors doing business. Additionally, in negotiating BOT contracts, the State should pay attention to investor profitability.
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