Many benefits in the PPP++ model for transportation infrastructure investment by Deo Ca Group.

On March 1st, in Ho Chi Minh City, Deo Ca Group organized a conference titled "Potential and Opportunities for Investment in Transportation Infrastructure under the PPP++ Model" to identify and discuss the potential and opportunities for transportation investors through this model.

Mr. Ho Minh Hoang - Chairman of the Board of Directors of HHV, shared this at the investor networking event.

Mr. Ho Minh Hoang - Chairman of the Board of Directors of Deo Ca Group, at the conference "Potential and Opportunities for Investment in Transportation Infrastructure under the PPP++ Model".

According to the road network plan for the period 2021-2030, the Government has set a target of having 5,000 km of expressways. This is a key task, with the decisive involvement of the entire political system, and many specific mechanisms have been issued to create the most favorable conditions for project implementation.

Potential for investment in transportation infrastructure.

A representative from Deo Ca Group stated that, to encourage private sector participation, state budget funds support PPP projects as seed capital, prioritizing investment and exploitation of services related to the projects, and providing long-term credit with preferential interest rates. Additionally, public investment projects may be granted concessions for exploitation, and localities should research and implement mechanisms to collect revenue from land exploitation in the project areas to ensure efficient investment and increase the value of the projects.

Besides road transport, the development of railways is also a priority for the Government. Decision 1769/QD-TTg sets a target of investing in 9 railway lines with a total length of 2,362 km by 2030. Land allocated for railways is being appropriately planned for urban development and functional zones (TOD model) to generate investment resources. The socialization of railway business and transport services is being promoted to attract various economic sectors to participate in investment.

The government's determination to complete 5,000km of expressways by 2030 and the progress in implementing high-speed rail create huge job opportunities for businesses developing transportation infrastructure.

Commenting on the government's approach to realizing its transportation infrastructure development goals, Mr. Ho Nghia Dung, former Minister of Transport, stated that investing in transportation infrastructure requires enormous capital, and even the most powerful state cannot handle it all through public investment. Therefore, the government has called on the private sector to participate in investment through the PPP (Public-Private Partnership) method to develop public infrastructure and services for the people.

“However, no matter how strong the private sector is, it cannot ‘go it alone’ cooperating with the state to build a project. Instead, it will play the role of a ‘leader’ to gather and attract other investors to participate. The PPP++ model is an innovation of Deo Ca to create a sufficiently strong resource base to jointly carry out public services. The ‘leader’ unit must have sufficient financial capacity, human resources, a strong brand, and especially management capabilities to attract other investors. Deo Ca is a unit that possesses all the elements to gather and lead other investors to successfully implement projects,” said Mr. Ho Nghia Dung.

Comparing the traditional PPP model and the PPP++ model of Deo Ca Group.

What opportunities are there for investors?

In 2024, Deo Ca Group plans to invest in and construct 300km of expressways and ring roads with a total investment of over 82,000 billion VND from key projects such as the Huu Nghi - Chi Lang expressway, Tan Phu - Bao Loc expressway, Ho Chi Minh City - Chon Thanh expressway, Ring Road 4, Ho Chi Minh City - Trung Luong - My Thuan (phase 2)...

The PPP++ model is the solution proposed by Deo Ca to raise capital for the project by diversifying funding sources to increase fundraising efficiency and minimize risks throughout the project implementation process.

The capital structure of projects implemented under the PPP++ model is more diversified compared to the basic PPP model. In addition to state budget funds, equity capital, and credit capital, the capital structure under the PPP++ model includes profits from construction work, bonds, stocks, BCC contracts, etc.

Competent and experienced contractors participate simultaneously as secondary investors, jointly implementing the project under the design-build (EC) or design-supply-build (EPC) general contractor model. This method will contribute to optimizing investment efficiency because the profits from the construction contractor are reinvested back into the project's capital. The interests and responsibilities of the contractor are linked to the interests and responsibilities of the investor, and are directly related to the project's implementation and operation efficiency.

As the leading investor, Deo Ca is responsible for organizing project preparation, bidding for project implementation, and managing the project in its role as the investor, working directly with state agencies (National Assembly, Government, ministries, etc.).

"We not only address immediate tasks to create products and generate real value for society, but we also participate in building institutional policies, fighting against shortcomings to improve them, and creating laws that benefit the whole society," affirmed Mr. Ho Minh Hoang, Chairman of the Board of Directors of Deo Ca Group.

To encourage other businesses to participate in the project, Deo Ca categorized investors according to their respective rights and obligations. Investors who "steadfastly" participated from the project's investment preparation stage were directly involved in the project and enjoyed the rights of investors as stipulated, were given priority in selecting the scope of construction, and registered the volume of construction work in accordance with their participation and capacity.

"Bridge-building" investors participate from the project bidding stage, contribute capital through the leading investor, are entrusted with investment through a BCC contract with Deo Ca Group, enjoy benefits as agreed, and receive a volume corresponding to their investment participation ratio in the project, but with limitations.

At the conference, Mr. Hoang Quang Trung, Chairman of the Board of Directors of Trung Thanh Investment and Construction Joint Stock Company, stated that Trung Thanh is currently one of the bridge-building investors for Deo Ca. Through their cooperation, the company has observed that Deo Ca is experiencing rapid, steady, and sustainable development, with distinctive strengths. To become a "steadfast," "bridge-building," or "potential" investor, investors like us must demonstrate our own capabilities.

“We believe that to become a committed investor in the PPP++ model, we must be steadfast in overcoming difficulties, risks, and challenges, while also demonstrating our financial capacity, management skills, human resources, and professionalism. Currently, we are a bridge investor and will continue to demonstrate our capabilities to become a committed investor in the future,” Mr. Trung shared.

Potential investors participate from the project implementation phase, contributing funds under the project management mechanism as contractors, are considered for participation in future projects, and are assigned construction volumes commensurate with their capacity, but with smaller investment limits than the "bridge" group of investors.

For partners, when collaborating with Deo Ca Group on PPP++ projects, investors and contractors are assigned responsibilities and benefits in both roles.

Source