Strengthening management over BOT transport projects   The Ministry of Transport plans to invest in 50 large transport projects with an investment of roughly US$7.36 billion Management over transport projects under the build-operate-transfer (BOT) model must be tightened amid the public concern over a series of issues including investment procedures, the selection of investors, quality of construction work, the installation of toll stations, and investment efficiency, among others. In recent years, the transport sector has mobilised over VND100 trillion (US$4.6 billion) from non-state sources to invest in BOT transport projects, contributing to reducing the burden on the state budget and facilitating the development of infrastructure and the economy. The mobilisation of huge investments from non-state sources into transport infrastructure is necessary for Vietnam due to the tight state budget. In addition, the Ministry of Transport has planned to invest in 50 large transport projects in the future which require an investment of roughly VND160 trillion (US$7.36 billion). The State Bank of Vietnam has recently asked commercial banks to take measures to control risks in granting credit to BOT and build-transfer (BT) transport projects. This move is not to prevent credit granted to such projects, but to warn commercial banks to be more cautious about credit granting. BOT projects funded by non-state sources do not have to obey regulations on public finance and are eligible for banking loans with preferential interest rates guaranteed by the State. If BOT projects with loans guaranteed by the State bring in benefits, investors will enjoy those benefits; in case of losses, the State will incur the loss. The process of lending to transport projects has also revealed shortcomings and potential risks. Many investors have shown poor financial capability and lack of equity capital to participate in projects as committed. Many projects have been delayed, particularly land clearance projects, creating higher interest expenses and reducing the effectiveness of projects and the ability to repay loans. In addition, many projects currently underway require an increase in investment capital, affecting the ability to mobilise capital. BOT and BT transport projects often require large investments and a long recovery period (around 20 years), while banking credit is mostly short-term loans, thus the investment capital increase will create negative impacts on liquidity. The excessive concentration on the transport sector may restrict the banking credit in other production and business sectors. To effectively manage BOT transport projects, the transport sector and localities must carry out projects within their capacity and obey the regulations on investment in the form of public-private partnerships (PPP). Authorised state agencies must proactively review all ongoing and future BOT projects and complete the master plan on toll stations on national highways in a bid to strengthen management over such projects. In the meantime, credit institutions should carry out thorough assessments of the financial capacity of investors and execute co-financing to share risks, in addition to exercising close supervision over the lending process. XICH TUNG, Nhandanoline