July 29, 2011
1. On July 28, JICA co-sponsored a workshop with the United States Agency for International Development (USAID) on Vietnamese infrastructure development and financing mechanisms in Hanoi, Vietnam. Deputy Minister Dong of the Ministry of Planning and Investment (MPI) and others gave opening addresses to the approximately 80 participants.
2. In order to achieve sustainable growth and development in the future while maintaining competitiveness, Vietnam needs to further infrastructure development. The financing required for infrastructure development, however, is estimated at US$ 100 billion over 10 years and US$ 300 billion over 20 years, and because of the difficulties in the Government of Vietnam and ODA financing to adequately fund such amounts, private sector financing must be mobilized quickly. To mobilize private sector financing, the Government of Vietnam established a law for PPP pilot projects (Prime Minister Decision 71) in November 2010, and established a task force under the MPI to advance PPP pilot projects.
3. Given this background, JICA and USAID have held series of discussions on cooperation for providing assistance for infrastructure development with private sector financing mobilized (PPP infrastructure). In September 2010, JICA and USAID concluded a memorandum for cooperation for providing assistance with PPP infrastructure in Vietnam. This is the first cooperation between Japan and the United States on establishing an organization responsible for PPP infrastructure, institutional development, policy establishment, financing mechanisms and fund-building. In this process, JICA is leading the study of PPP infrastructure financing mechanisms, and USAID is taking the initiative on creating a system for PPP and making policy suggestions.
4. Between October 2010 and June 2011, JICA conducted a basic survey on PPP infrastructure, and the conclusion obtained was that in order to meet the demand for extensive PPP infrastructure financing, it is necessary to form an infrastructure finance facility (IFF) as a mechanism for fund raising required for infrastructure development. The results of the survey were shared with the concerned Vietnamese parties (such as government agencies, financing agencies and private companies) and with other donors and parties, and comments were received from those parties. To receive further cooperation in the formation of the IFF, JICA and USAID will carry out a more detailed study toward the establishment of an IFF in fiscal 2012 with reference to the feedback from the workshop.