1. 1 Phạm Văn Đồng Bsc of Civil Engineering 2006(CTU) Msc of CME 2009 (TUDelft) Working at DoT 2009-now Breaking the Iceberg of Public- Private Partnership in Vietnam

2. 2 A story: lack of funding for infrastructure projects of a city in Vietnam

3. 3 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

4. 4 Research questions and Goal Research questions: What is PPP in Vietnam? Is there a framework to assess the success/failure of PPP? What are the problems with Vietnamese PPP? Goal: Clarify the problems with current BOT projects in Vietnam, find out what actors and factors (the iceberg) hinder the good PPP practices in Vietnam and come up with definite solutions

5. 5 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

6. 6 PPP concept: Definition What is Public-Private Partnership? Is it so simple? I don’t have money to realize the projects, can you come in? No, it is much more complex (Koppenjan 2005): Long-term contractual agreement between Public-Private party; Planning, construction, and/or exploitation and “co-financing”; Sharing or reallocating : risks, costs, benefits, resources & responsibilities. How about: Design-Construction (Maintenance) contract?

7. 7 PPP concept: forms of PPP Forms of private sector participation Source: Koppenjan (Adapted from Bennet et al., 2000) Public-Private Partnership (PPP): 1.Service contracts 2.DBFM(O) and BOT 3.Joint ventures

8. 8 PPP concept: motives Public partyPrivate party EfficiencyNew markets Inclusion private skills and knowledge Reduction of long term uncertainties Creation of added values and innovative solutions Public contributions to unprofitable project parts * Added value - Efficiency (cheaper,faster, better) - Enrichment and synergy Motives Source: Koppenjan

9. 9 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

10. 10 PPP in Vietnam: legislation Current key legislation: Decree No. 78/2007/CP enacted on the 11th of May 2007 Generic law Build-Operate-Transfer (BOT), Build-Transfer- Operate (BTO) or Build-Transfer (BT) contracts for all infrastructure services Decree No. 108/2009/CP enacted on the 27th of November 2009: BT focus

11. 11 PPP in Vietnam: expectations Filling in financial gaps Preventing the involvement of State-Own Enterprises (SOEs) with ineffectiveness, corruptions Stimulating private sector participation

12. 12 PPP in Vietnam: State of the Art Overall context of PPP in Vietnam: Projects: 17 vs. 83 Philippines, 80 Indonesia and 672 China Amount: US$ 4 billion vs. US$ 38 billion Philippines, US$ 37 billion Indonesia, and US$ 90 billion China Private Participation by sector (World Bank 2008)

13. 13 PPP in Vietnam: Hindering Factors Unfavorable investment environment: Weak financial market Weak PPP frame law Leading to high financial risks political risks

14. 14 PPP in Vietnam : sectors’ investigation Similarities: SOEs have kept dominant powers across sectors The competitive bidding is lacking across sectors Sector performance: Energy sector: most PPP projects (10 /17) Telecom: only BT contract (restrictions) Transportation: poor performance sector Water sector: tariff and affordability (turning into Design-Build-Lease)

15. 15 PPP in Vietnam: Solutions Macro improvements: Improve financial market and PPP policy Sectors’ strategy Energy sector: redefine master plans Telecom: true joint ventures, private ownership, management control right, and equity contribution Transport sector: determine the boundary of SOEs and private investors Water sector: income measures, differentiation of tariff and differentiated management

16. 16 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

17. 17 Fishbone Framework for CSFs of PPP projects

18. 18 Fishbone: success of feasibility phase

19. 19 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

20. 20 Case Studied: BOT Phu My 2 Phase 2 Energy Project (PM2.2)

21. 21 PM2.2 : Contractual arrangement (World Bank 2003)

22. 22 PM2.2: Financial arrangement

23. 23 PM2.2 : Successful factors (fishbone verification) Exploration phase: The intensive interests and strong commitments of government Feasibility study phase Planned Government guarantees (GG) Contract phase “Coguarantee”: GG and IDA PRG of World Bank Construction phase Trade-off Operation en maintenance phase Empowerment

24. 24 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

25. 25 Lessons learned from PM2.2 Update fishbone framework: 4 new factors Facilitating PPP in Vietnam Short term: PRG of World Bank or ADB Long term: release this layer of cost

26. 26 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

27. 27 Conclusions & Future Research Conclusions: It is difficult for PPP investments in Vietnam due to weak financial market, weak PPP policy; But, PPP can be lived up by good arrangements at operational level; Side effect: it is costlier to invest PPP projects in Vietnam by Government guarantees & risk premiums.

28. 28 Conclusion & Future Research Future Research: PPP in Vietnam: Transplant good PPP laws in other countries How to optimize the GG and establish the “Guarantee Fund” PPP in general: Valuate the effectiveness of risk transfer process How public reacts with PPP scheme as introduced

29. 29 Outline 1.Research questions and goal 2.Public-Private Partnership (PPP) concept 3.PPP in Vietnam 4.Fishbone Framework for Critical Success Factors (CSFs) of PPP projects 5.Case Studied: BOT Phu My 2 Phase 2 Energy Project 6.Lessons learned 7.Conclusion & Future Research 8.The process of theory application

30. 30 The process of theory application 3 BT projects in Cantho city with the amount of approximately 1600billion VND Provincial road 918: 675billion VND Provincial road 923: 549billion VND Political school: 377billion VND Progress: in detailed design – Cost estimate phase

31. 31 Questions and discussion