Boston, MA -- (ReleaseWire) -- 02/12/2014 -- Vietnam's construction sector is in an upward cyclical phase, as evidenced by a real growth rate of 5.3% y-o-y in the first nine months of 2013. We believe this could continue in 2014 and are maintaining our growth forecasts of 5.8% for 2014. Easy monetary conditions and greater investment interest from foreign sources in Vietnam's construction sector is likely to support growth for the year. Furthermore, the government continues its efforts to restructure state-owned enterprises and improve its business environment, both of which would level the playing field, free up public funds and improve profitability, and help to attract additional investment for infrastructure development over the coming years.
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The major developments in Vietnam's infrastructure sector are:
- In November 2013, the Vietnamese government approved an amendment in its Land Law (see 'Revised Land Law A Major Step In Tackling Corruption', December 9 2013). The revised legislation, which will come into effect on July 1 2014, is aimed at limiting land disputes by prohibiting the government from appropriating land for socio-economic development unless such projects have been approved by the prime minister and the Vietnamese parliament. We believe this revision is a major step in strengthening the regulatory framework and will increase transparency for projects that are implemented under the direction of the provincial government. It would also help reduce the risk of project delays which have been caused by long and costly disputes over compensation.
- In October 2013, the Railway Gazette reported that Line 5 of the Ho Chi Minh metro system will be financed by three international organisations instead of two as previously announced by state officials. The Asian Development Bank, the European Investment Bank and the Spanish government will provide US$500mn, EUR150mn (US$206mn) and EUR200mn (US$275mn) respectively, to construct in 2015 the first 8.9km of the line that is slated to run between Sai Gon Bridge and the Bay Hien Intersection. In October 2013, the Vietnamese government granted approval to Hanoi General Export-Import Joint Stock Company (Geleximco) to withdraw from the build-transfer model-based Hoa Lac-Hoa Binh expressway linking Hanoi with localities in the northwest. According to the transport ministry, the company invested US$17mn in the project, with US$2mn in the construction and US$12.4mn in land acquisition, over three years, but continues to face escalating investment costs which has made it difficult for the company to reach the project deadline. Instead, the government will now look to alter the project's investment model to public-private partnership to make it more feasible and obtain official development assistance to help finance it.
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