In recent years the government of Vietnam has increasingly been involving the private sector to help meet the country’s infrastructure needs in an effort to sustain its rapid growth that has already lifted millions of its people out of poverty. The road sector is no exception. The Vietnamese government is now embarking on an ambitious $30 billion highways program to be implemented over the next three to four decades. Several of the planned expressways in the program are expected to be implemented through public-private partnerships (PPPs). Furthermore, complementary initiatives to build the capacity within the Ministry of Transport (e.g., by setting up a PPP cell within the Ministry of Transport) and the overall enabling environment for PPPs (e.g., PPIAF supported activities on developing a PPP financing framework and a PPP unit within the Ministry of Planning and Investment) are being pursued to encourage private sector participation in the country’s infrastructure sectors. In light of these developments, the Ministry of Transport—with support from the World Bank and PPIAF—held a three-day workshop on PPPs in roads and highways from December 13–15, 2010 in Hanoi.
 

The workshop aimed to foster a better understanding of PPPs in the development of expressways and build the capacity of local road officials in implementing PPP arrangements. Around 30 people attended, mostly from the various departments within the Vietnamese Ministry of Transport. Vietnam’s Ministry of Planning and Investment, Ministry of Finance, and development partners such as the Australian Agency for International Development (AusAID) and Japan International Cooperation Agency (JICA) also participated.
 

The workshop’s introductory session proved to be helpful in explaining the current environment for PPPs in Vietnam, particularly in light of the recent passage of Decision 71/2010/QD-TTg that defines conditions, procedures, and principles to be applied to a number of infrastructure development and public services provision projects under the form of a PPP. Decision 71 covers pilot projects and programs and will most likely evolve as these pilots are implemented. Decision 71 took effect on January 15, 2011. During the workshop session, an introduction of the general PPP concept—its advantages, disadvantages, and when it is appropriate—were particularly helpful to many of the participants. One participant asked whether a publicly listed or partly privatized state-owned enterprise qualifies as an “investor” under existing laws; discussions around this enlivened the workshop’s first-day. This helped clarify the concept of PPPs and fundamentally led the discussions towards the essence of PPPs—risk allocation. PPPs are most successful when risks are allocated to the party best able to manage them. Risks transferred from one government entity to another simply keeps the risks within the government’s ambit and overlooks ways that such risks could be better managed by the private sector.
 

The last two days of the workshop were devoted to introducing essential principles on how to properly prepare PPPs. The sessions used the PPIAF-funded Toolkit for PPP Roads and Highways and other tools available for planners and policy makers. Concepts on PPP policy, planning, and development were introduced through various case studies and financial models that came with hypothetical spreadsheet templates to provide participants hands-on training on the basics of PPP project finance. This helped participants better understand the key parameters that affect the financial viability of a PPP highway project. Simulated negotiations—where each group had someone play the role of a consumer, the government, and the private sector—further demonstrated to participants the trade-offs between subsidies or government support, tariffs, and returns to investment in PPPs.
 

Overall, the participants found the workshop useful in their work. Ms. To Hang Anh, the Ministry of Transport’s Senior Expert of Department of Planning and Investment who is also a member of the Ministry of Transport’s PPP Unit, indicated that for her and many of her colleagues the workshop “helped us better understand the concept of PPPs as many of us are new to the concept.” She considered the workshop timely and relevant as the Ministry of Transport is preparing for highway projects with private sector participation. Of the workshop activities, participants found the financial modelling the most interesting, as the template spreadsheet was something they can quickly use in their work as they assess various highways projects. The Ministry of Transport is currently working with the World Bank on preparing the Dau Giay-Phan Thiet and portions of the Ninh Binh-Thanh Hao-Bai Vott expressways as potential PPP projects.
 

Castalia Strategic Advisers (lead consultant) facilitated most of the workshop with Hogan Lovells acting as a resource on PPP contracts. The Toolkit for PPP Roads and Highways is publicly available here.