BOT no longer favored investment mode

But it is no longer easy to mobilize capital for BOT (build, operation, transfer) projects.

In the first quarter of the year, the ministry could only raise VND3.35 trillion in funds for the BOT project on upgrading Highway No 60, which connects Rach Mieu and Co Chien Bridges and the BOO (build, own, operate) project on non-stop fee collection on Highway No 1A and Ho Chi Minh Road. 

The figure was just 9% of the total capital raised in the first quarter of the year.

MOT’s H1 report did not mention the non-state budget capital mobilized for implementing projects. In the first half of the last year, VND27 trillion was mobilized for 11 BOT road projects.

The declared total capital to be disbursed for transport projects in 2016 is VND67.294 trillion, which is VND20 trillion lower than that in 2015 (VND89.907 trillion). 

In the first half of 2016, MOT only disbursed VND27.883 trillion, or 41.7% of the yearly plan.

Analysts commented that while in 2012-2013, investors had to queue up to apply for investments in the BOT projects on expanding Highway 1A and Ho Chi Minh Road, they are now hesitant about BOT projects

An investor implementing a BOT project in Ho Chi Minh City, who asked to be anonymous, said that MOT could easily mobilize hundreds of trillions of dong for BOT projects, because  Highway 1A is considered a ‘delicious piece of cake’. 

Since this is a north-south highway with high traffic, investors are sure they can take back the investment capital from collecting tolls. 

Investors have lined up to register and some investors have even accepted to spend their money to implement projects first and then apply for licenses later.

However, investors have shrunk back recently because there is no more ‘delicious piece of cake’. 

People and businesses all have complained that the fee is unaffordable, pointing out that it is unreasonable to ask them to pay both the BOT fee and road maintenance fee. 

Meanwhile, commercial banks have tightened lending to fund BOT projects.

Minister of MOT Truong Quang Nghia said at a conference in July that the investment under BOT mode will only be applied to new routes and people can choose which way to go – old roads with no fees or new ones with BOT fees.