Citizens’ money better than ODA
By Anh Quan
|The problem of HCMC’s traffic jams relates to not only road building and vehicle restriction but also comprehensive solutions – PHOTO: THANH HOA|
Whereas the State budget is limited and BT (Build-Transfer) and BOT (Build-Operate-Transfer) contracts no longer appeal to investors, it is time to come up with new solutions to the mobilization of capital for traffic infrastructure construction. Such forms as contributing capital to investors to operate a project together or issuing construction bonds can be completely feasible and more stable than obtaining official development aid (ODA). These are among the measures suggested by participants in a round-table meeting on traffic in HCMC hosted by Kinh te Sai Gon, the Weekly’s sister publication.
Since many years ago, the HCMC authorities have pinpointed investment in traffic infrastructure as a forerunner of measures for handling traffic jams. However, traffic congestion in the city has not been tackled effectively while infrastructure investment only inched ahead. Although the road map has been identified, the speed of implementation has been way slow for decades. Why so?
Pham Chanh Truc, former deputy head of the Party’s Central Economic Committee, addressed this matter head-on. According to Mr. Truc, it is a lack of public transport system in the context of a booming population which results in a soaring number of motorbikes. Meanwhile, traffic infrastructure has failed to keep up with the population growth, he added.
From the planning point of view, Dr. Vo Kim Cuong, former Chief Architect of HCMC, pointed a finger to the fact that over the decades the municipal authorities have focused investment on small projects which addressed traffic congestions in a short term. Few big projects aimed to key routes have been carried out.
Explaining why traffic infrastructure has made little progress, Assoc. Prof. Nguyen Minh Hoa, said traffic works in HCMC were mostly in the form of BT and BOT. As soon as the BT contract faced difficulties because the land fund had been used up and the BOT form had to be renovated in line with Resolution 437 of the National Assembly, many projects under way had to be transformed into public investment ones. “Only when infrastructure projects are likely to generate profit, even hefty profit, will the private sector invest in them,” said Assoc. Prof. Hoa. “BT and BOT contracts losing their appeal will find it hard to attract private investors.”
Some experts at the round-table meeting argued that to solve the problem of traffic jams in HCMC, only road building and restriction of individual transport means are barely enough. It also requires comprehensive plans aiming at the entire region. Stop-gap measures employed to address problems on a case-by-case basis are unlikely to work in the long run, said these participants.
As per solutions, Pham Chanh Truc emphasized on the priority in which the labor pool for the entire southern region must be redistributed to reduce the number of workers flocking to HCMC. To do so, it is necessary to build the HCMC-Can Tho railway route. Along this route will be industrial parks capable of retaining local workers who will not have to relocate to HCMC or Binh Duong to seek jobs. Without the “exodus” of provincial job-seekers, HCMC will be spared from tremendous traffic pressures.
Mr. Truc also indicated the need to rearrange the city’s urban space. “A comprehensive planning was once in place in HCMC,” he said. “However, it has been ignored to allow too many high-rises in the inner city and, as a result, the number of residents and their vehicles has become unbearable to it. The former guideline was the city had multiple centers. Yet now it has only one. That’s why traffic jams are permanent.”
Citizens’ money instead of ODA
To mobilize enough capital to be used for new traffic infrastructure project, the HCMC government has recently enacted a project to effectively manage and employ land funds, particularly, the measure for taking back land along roads in the pipeline. The revoked land will be auctioned to acquire capital for constructing the very same road. However, experts at the meeting warned about the feasibility of this measure. Without careful scrutiny, it may face failure, they said.
According to Nguyen Minh Hoa, auctions of land funds along a new road for building it may not be effective in cases of heavily populated routes. It can be successful only with thinly populated areas where a road to be built remains desirable. HCMC once succeeded with Nguyen Huu Tho Street in District 7 because not many people were then living along both sides of the road. “There have been cases of success and failure in many countries,” said Mr. Hoa. “So, the HCMC government should undertake in-depth studies before implementation.”
Addressing the proposal of auctions of land funds, Pham Chanh Truc maintained that it is a complicated issue. If land is revoked for the sake of community benefit, residents may accept a lower price than the corresponding market price. However, land taken back to put up for tender to serve economic purposes is a different story, which must therefore conform to market prices. “In this case, market prices are ‘real prices,’ not virtual ones,” Mr. Truc emphasized.
Meanwhile, Vo Kim Cuong said in land revocation, the area for road building and that for auction must be compensated on the same price level to be fair to the people. It would be unfair to recompense land for roads at low prices while repaying land for auction at higher prices, Mr. Cuong said. “What to do next is to fulfill the tasks in a transparent way and ensure harmony between the interest of the people and the State. “Openness and transparency will prompt the people to take part in these project.”
Together with auctions for land funds along roads to be built, Mr. Hoa also suggested another measure which allows landowners with revoked land to contribute the compensated value to become shareholders of the road project involved. The contribution may last for 20-30 years and each year, those shareholders may receive dividends. “This option has been undertaken in several countries and proved to be very successful,” he said.
Another suggestion highly appreciated by Mr. Hoa is the State may issue construction bonds to mobilize capital from the people in lieu of ODA loans. The option of mobilizing capital from residents is deemed more stable and independent of foreign loans by Mr. Hoa. Furthermore, he added, ODA also means the home side would have to rely heavily on foreign specialists.
“The problem of HCMC’s traffic jams relates to not only road building and vehicle restriction but also comprehensive solutions,” said Mr. Hoa. “If this problem can be solved, the mobilization of capital may no longer a conundrum.”