Proposal to issue government bonds for transportation projects.

The bond funds were used to renovate National Highway 1A and projects on the Ho Chi Minh Highway section through the Central Highlands.

National Highway 14 is in serious disrepair. (Photo: TNO)

In response to comments from Deputy Prime Minister Vu Van Ninh on the sidelines of the National Assembly regarding economic solutions, including the possibility of additional support such as requesting the National Assembly to issue more bonds to invest in the expansion project of National Highway 1A, at the regular government press conference in May 2013, Minister and Head of the Government Office Vu Duc Dam stated that the National Highway 1A project has been included in a Resolution of the Central Committee, considering it one of the key infrastructure projects of the country.

The Ho Chi Minh Highway section passing through the Central Highlands plays a particularly important role, as the Central Highlands is a region with significant socio-economic, defense, and security development needs to be prioritized, thus infrastructure development must come first. Compared to other regions, the Central Highlands lacks a railway and only has a few small airports, so development requires focused investment in transportation. Therefore, the need for investment in these two projects is extremely urgent and is of great concern to the people nationwide.

However, in line with general policy, the proportion of investment in Vietnam's total budget revenue has gradually decreased. By 2013, as approved by the National Assembly, the total capital investment in basic construction within the total budget had fallen to less than 19% (compared to around 30-40% in previous years). Therefore, the government is intensifying its efforts to encourage socialized investment, but the socialization of road construction depends heavily on the overall level of economic development.

"Investing trillions of dong to build roads but mainly recovering the investment through tolls paid by road users, which are mostly in small change, is unacceptable. To recoup the investment, there needs to be a large volume of traffic, or if not, the toll per vehicle must be high. National Highway 1A is the backbone of the country, spanning nearly 2000 km, so not every section has enough traffic to convince investors to charge tolls," Minister Vu Duc Dam said.

National Highway 1A is overloaded with traffic.
(Photo: Dan Viet Newspaper)

Minister Vu Duc Dam explained that, with a direction appropriate to the level of economic development, we cannot raise traffic fees too high. Therefore, some sections of the route can attract investors, or be built using the BOT method or public-private partnership. However, on some sections with low traffic volume, we cannot attract investors, so we are forced to use the state budget.

Regarding budget utilization, Minister Vu Duc Dam said, “The National Assembly has also set a budget deficit target (not exceeding 4%). Since 2012, the Government has reported to the National Assembly, and the National Assembly has discussed and passed a Resolution allowing the issuance of corporate bonds guaranteed by the Government. Corporate bonds issued and guaranteed by the Government are essentially public debt, meaning that this amount has been approved in principle by the National Assembly to be included in the overall public debt.”

Minister Vu Duc Dam also stated that, over the past year, the Ministry of Transport, under the direction of the Government, has been preparing to issue government-guaranteed corporate bonds in accordance with the National Assembly's resolution. However, calculations show that at this time, it is very difficult for businesses, and when businesses issue bonds, coupled with existing bank interest rates, the final issuance costs, when added to the road construction costs, will be very high.

“The Government has been discussing this issue since the April session, and this morning, the Government listened to the Minister of Transport and other relevant Ministers' proposals and agreed on a plan to report and submit to the National Assembly for permission to issue government bonds instead of corporate bonds with government guarantees to finance the construction of National Highway 1A, projects on National Highway 1A, and projects on the Ho Chi Minh Highway section passing through the Central Highlands,” Minister Vu Duc Dam said.

According to (vov.vn) - LT