Despite being operational for only around six months, the Hanoi Development Investment Fund (HADIF) has become an important capital mobilisation channel for infrastructure construction projects in the capital city.
Demands for loans, particularly mid- and long-term loans for socio-economic development programmes are huge. Hanoi’s state budget remains limited and cannot meet the demand. For instance, Hanoi needed around VND16,000 billion (US$1 billion) for infrastructure construction in the 2001-2005 period, but the city’s state budget could provide nearly VND11,000 billion (US$696.1 million), meaning that the city remains around VND5,000 billion (US$316.5 million) short.
Meanwhile, the capital city needs around VND122,000 billion (US$7.72 billion) for development investment and the city’s state budget can meet only around 22 per cent.
Currently, almost all mobilised funds are short-term ones which are not suitable to infrastructure projects. Therefore, the Hanoi Development Investment Fund has been set up by the municipal people’s committee with an aim of attracting more mid- and long-term funds for the development of the city.
With the birth of the fund, now there are two sources for financing infrastructure projects including the municipal state budget and the HADIF. This is an important progress that makes the management of development investments more effective and ensures trust for investors.
HADIF often co-operates with local commercial banks to lend to key infrastructure projects. In the coming time, the Hanoi Development Investment Fund will intensify borrowing from commercial banks in combination with its own capital for financing infrastructure projects. This form of co-operation will help the fund boost its capacity and reduce capital costs. It will be also more convenient for investors of infrastructure projects. Interest rates offered by the fund will be lower than rates offered by local commercial banks.
Besides, the HADIF has a fund worth around VND1,000 billion (US$63.3 million) (trusted from the state budget) for investing in apartment buildings for resettlement. This will help the city’s authorities better manage houses built for resettlement.
In 2005, the fund targeted to issue municipal construction bonds for investing in major infrastructure projects.
According to HADIF, the government should establish a common legal framework for development investment funds in localities nation-wide operating more effectively. The birth of such a common legal framework will create a new momentum for the development of the existing development investment funds nation-wide and the establishment of such kinds of the funds in other provinces and cities.
The government also allows establishment of association of the development investment funds in localities in order to help them co-ordinate with each other for supposing new policies for better operation.
Vietnamese
