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The Hanoitimes - Southeast Asian governments invest more as a share of total government expenditures than member countries of the OECD. Much of that spending goes for infrastructure. The delivery of services – such as clean water, reliable public transport, schools and hospitals – through economic and social infrastructure is among the most important functions of government. Resources must be well spent to ensure quality. People everywhere want good infrastructure, such as smooth and safe roads and timely and reliable trains that move passengers and freight across a wide range of destinations. They want clean water, reliable sanitation, easy-access broadband internet connectivity and electricity available 24/7. Well-managed and functional airports and seaports enable connection with the rest of the world, while schools and hospitals ensure well-being, including a healthy and well-equipped workforce. The delivery of services through economic and social infrastructure is among the most important functions of government and key to how citizens perceive the role and effectiveness of government. Illustrative photo. Source: www.macquarie.com Southeast Asian governments invest more as a share of total government expenditures (16.7%) than member countries of the Organization for Economic Co-operation and Development (OECD) (7.6%). Much of that spending goes for infrastructure, according to the ADB/OECD report Government at a Glance Southeast Asia 2019 . These infrastructure assets are largely provided by governments, including through state-owned enterprises and public private partnerships (PPPs). Southeast Asian countries increased spending on infrastructure by 1.5% between 2008-2016, reflecting in part governments’ ambitions to maintain growth and improve access. This compares to an investment decline of 1.8% in OECD countries over the same period. Yet, increasing infrastructure finance may not be enough. Resources must be well spent …

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The Hanoitimes - So far, solar power in Vietnam accounts for 44% of total solar capacity in Southeast Asia. Environmentalists hope that success in developing solar power will persuade the government of Vietnam to scale back its ambitions for coal-fired plants, according to The Economist. By the end of 2019, the country counted with 5.5 gigawatts (GW) – more than Australia, with an economy almost six times the size – just two years after the government paid suppliers a generous US$0.09 per kWh produced by big solar farms. Photo: EVN Meanwhile, the Vietnamese economy has been growing by 5-7% a year for the past two decades. The government has plans to double power generation by 2030, but estimates that supply may run short as soon as next year. As a result, it needs to find new sources of power as soon as possible. Coal is the cornerstone of Vietnam’s energy supply. Under current plans, the fleet of coal-fired power plants will soon triple. But construction has been dogged by regulatory delays, local opposition and flagging investor interest. Building a new plant takes the better part of a decade. Solar farms, in contrast, incite far less opposition and take about two years to build. To encourage the development of solar power projects, the government has begun improving the grid and it decreed in November 2019 that in future it would not offer a feed-in tariff, but instead auction the right to sell solar power to the grid, with the winner being the firm that offers to do so at the lowest price. Later this year it is due to release new targets for generation capacity in 2030. Wind and solar have almost already met their current goal of providing 10% of power, ten years ahead of schedule. In another move, prices are likely to continue to move in renewables’ favor. Wood Mackenzie, a consultancy, thinks power from large solar farms in Southeast Asia will be at least as cheap as that from almost all coal plants within five years. …

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The Hanoitimes - Taking into account the size of the Vietnamese economy, a large proportion of the state budget allocated for infrastructure development would affect the balance of payment and the economy. Vietnam is currently struggling to mobilize funds for infrastructure development, evidenced by the country’s state budget allocation of 5.7% of the GDP for such projects, the highest ratio in Southeast Asia, according to Lynn Tho, representative of Ernst & Young. Overview of the conference. Source: VGP. As funding from state budget remains limited, mobilizing private funds for infrastructure projects is a viable option for Vietnam, said Tho at a conference discussing the public-private partnership (PPP) mechanism in Vietnam’s context on January 15, the governmental portal reported. According to the Global Competitiveness Report 2017 – 2018 of the World Economic Forum, Vietnam ranked 79 th out of 137 countries and territories in terms of quality of the infrastructure system. Additionally, only 20% of Vietnam’s roads are asphalted, significantly lower than other countries such as Malaysia, India and Indonesia. The Asian Development Bank (ADB) estimated Vietnam would need around US$480 billion for infrastructure development in the 2017 – 2030 period. However, given the fact that Vietnam's modest economic size is restricting capital accumulation capacity, a large proportion of state budget allocated for infrastructure development would affect the balance of payments and cause public debt to swell. Addressing the conference, Country Director of the World Bank in Vietnam Ousmane Dione said the PPP mechanism would bring benefits for Vietnam, but fiscal risk remains the most challenging issue. Dione said some think the PPP investment is a way to have free infrastructure, or a solution to overcome financial difficulties. Moreover, most PPP projects in Vietnam are direct contracting, posing potential risks of losses to the state …

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