Vietnam Expressway Corporation transforms to welcome new opportunities

After the most difficult period, VEC will soon restructure according to the plan approved by competent authorities, moving towards building a professional, highly specialized organizational apparatus with new potential to welcome new opportunities.

Mr. Pham Hong Quang, Deputy Secretary of the Party Committee, General Director of Vietnam Expressway Corporation (VEC).

These days, Vietnam Expressway Corporation (VEC) is preparing to turn 20 years old. I cannot help but feel moved when looking back at the journey that VEC has gone through, full of hardships but also with very proud achievements.

Increased revenue, stable mining infrastructure

After two decades of establishment and operation, VEC has contributed to the goal of serving the national expressway network development strategy through investing in 5 expressway routes with a length of 540 km, with a total investment of about 108,865 billion VND mobilized from domestic and foreign capital sources.

With the role of managing, operating and exploiting the expressways assigned by the State, VEC has put into stable operation 490 km of 04/05 expressway projects (Cau Gie - Ninh Binh, Noi Bai - Lao Cai, Da Nang - Quang Ngai, Ho Chi Minh City - Long Thanh - Dau Giay), accounting for more than 27% of the total length of expressways in operation, serving over 400 million vehicles.

Total toll revenue (excluding VAT) reached more than VND 30,000 billion, ensuring payment of due debts according to the approved financial plan.

Expressways put into operation by VEC help save travel time, reduce traffic congestion and accidents, and contribute to the socio -economic development of localities along the route.

Throughout the process of formation and development of VEC, with the expectation of building the Corporation into a leading State-owned enterprise, leading in investment, development and exploitation of expressways in Vietnam, the Government has given maximum support to VEC with specific mechanisms and policies.

Resolving financial capacity difficulties of projects through restructuring investment capital for 05 expressway projects that VEC is managing is a typical example.

VEC General Director Pham Hong Quang inspected the progress of the Ben Luc - Long Thanh Expressway Project.

VEC General Director Pham Hong Quang inspects the progress of the Ben Luc - Long Thanh Expressway Project.

Looking forward to a solid foundation

In the period of 2021 - 2023, VEC's production and business results achieved over the years have met and exceeded the planned targets on profit, total revenue, and budget payment. Total revenue reached 20,500 billion VND; accumulated profit after tax reached more than 2,700 billion VND; State budget payment was more than 2,000 billion VND.

The business picture is on the rise, but few people know that behind those achievements, VEC once had a time when it was "lost" in the dark. Without the perseverance and efforts of all leaders, staff, and workers, today's business results would certainly not have been able to shine.

Previously, according to the Development Strategy, Production and Business Plan and 5-year Development Investment Plan for the period 2016 - 2020 approved by the Ministry of Transport, VEC continued to prepare for investment in the Hanoi - Lang Son expressway project (Chi Lang section to Huu Nghi border gate) and was approved by the Prime Minister for investment policy in March 2016.

In October 2017, the Ministry of Transport decided to switch the project to the PPP investment form and assign it to another unit to implement. The goal of completing and putting the project into operation by 2020 cannot be achieved.

During this period, VEC also proactively researched and proposed investment in the Cao Bo – Mai Son Expressway Project and the Project connecting the two expressways Ho Chi Minh City – Long Thanh – Dau Giay with Ben Luc – Long Thanh; Researched and participated in bidding to select investors under the PPP form for 3 expressway sections of the North – South expressway axis: Mai Son – National Highway 45; National Highway 45 – Nghi Son and Dau Giay – Phan Thiet.

To ensure resources for participating in projects, the Corporation actively coordinates with a number of domestic and foreign financial institutions to research and propose forms of capital mobilization.

However, difficulties in implementing Decision No. 2072/QD-TTg of the Prime Minister on restructuring investment capital for 5 expressway projects of VEC caused the process of adjusting and increasing charter capital of VEC to be delayed. The investment target for the new expressway project was once again unsuccessful.

Frankly speaking, although it was born as the first special model in investing in the construction of transport infrastructure (a state-owned enterprise that both invests, manages, exploits and collects tolls to recover capital), up to now, VEC still lacks a solid foundation to accelerate and effectively promote the flow of state budget capital as expected.

That is low charter capital compared to investment scale, not ensuring debt/equity ratio as prescribed by law.

Besides, the legal framework for investment, operation management, maintenance, exploitation, and capital recovery business of VEC is both lacking and unstable.

VEC has just applied a number of pilot mechanisms in the form of Decisions of the Prime Minister, governed by higher legal documents such as Laws, Decrees, Resolutions of the Politburo and the National Assembly, so a number of mechanisms are no longer effective, affecting production and business activities.

A section of Noi Bai - Lao Cai highway invested by VEC.

Restructuring for the goal of "using infrastructure to create infrastructure"

In the period from 2021 to present, under the strong direction of the State Capital Management Committee at Enterprises, the Ministry of Transport, the support of the Ministry of Planning and Investment and relevant agencies, one of the most outstanding results in removing obstacles related to that mechanism is the completion of the report and the approval by the Politburo and the National Assembly of the content of transferring loan capital for re-lending to state budget allocation for 4 expressway projects of VEC.

Based on the opinion of the National Assembly Standing Committee, the Government leader assigned the Ministry of Finance to guide the implementation of increasing charter capital for VEC.

On February 9, 2024, the Government Office issued Document No. 488/VPCP-DMDN to the Ministries of Planning and Investment, Finance, Transport, and the State Capital Management Committee at Enterprises on the restructuring plan of VEC, maintaining the model of a state-owned enterprise in which the State holds 100% of the charter capital.

These are extremely favorable premises creating conditions for VEC to develop stably and sustainably.

Experience from some developed countries such as Japan and South Korea shows that implementing highway development projects through state-owned enterprises overcomes the limitations of traditional public investment models and investment in the form of public-private partnerships.

In order to promote the achievements in recent times, implement the Party and State's guidelines and policies on continuing to restructure, innovate and improve the efficiency of State-owned enterprises, a number of restructuring solutions have been quickly researched and proposed.

Firstly , fully and synchronously carry out the assigned tasks of restructuring investment capital for 5 projects invested by VEC, especially contents such as: completing procedures to approve restructuring investment capital for 5 projects, increasing charter capital...

Based on the approved restructuring plan, VEC will actively work with competent authorities and relevant ministries to carry out procedures and complete procedures to increase charter capital to VND 44,543 billion by 2026 based on direct investment capital in projects.

Second , overcome limitations and obstacles in policy mechanisms, including: State participation through investment capital structure in projects; Charter capital of enterprises; State guarantee to access preferential commercial loans; Determine the nature of assets (to be proactive in production, business, management, toll collection, operation, and exploitation of expressways).

In order to complete the goal of developing expressways in the Road Network Planning approved by the Government, VEC hopes to receive attention and facilitation from the Party and the State regarding the policy of assigning VEC to manage expressway infrastructure assets, calculate the State capital component in the enterprise and increase charter capital according to the roadmap based on the State capital invested in projects invested by VEC.

This mechanism, if implemented effectively, will help state capital to be effective in accordance with the policy of "using infrastructure to create infrastructure", without creating additional state budget expenditures and public debt.

Third , stabilize and restructure the organizational structure to ensure VEC's operations are streamlined and efficient, and demonstrate the leading and core role of state-owned enterprises in investing in the development of the national expressway system.

Restructuring the organizational structure, focusing on two main areas: construction investment and highway operation and management.

In the field of construction investment, VEC will fully delegate authority to the Project Management Boards. The Project Management Boards will be reorganized, with additional functions and tasks to act as representatives of the investor, directly performing the tasks and powers of the investor, participating in the implementation of project management consulting services, supervision consulting, etc. for expressway investment projects managed by other investors.

In operation and exploitation management, the goal is to complete the legal corridor to be proactive in the management, operation and exploitation of expressways by continuing to carry out necessary procedures for accounting, increasing charter capital and handing over expressway infrastructure assets to VEC for management.

Along with that, it is necessary to build an organizational structure and a re-exploitation operation model in a centralized and professional direction, with specific decentralization and streamlined focal points; gradually convert, restructure, and supplement functions and tasks for a number of affiliated units to suit the new operation and exploitation model; organize a management department and develop expressway service business.

The work of reviewing and recommending competent state agencies to amend and supplement the provisions of the Road Law, Land Law, Law on Management and Use of State Capital Invested in Production and Business at Enterprises, Bidding Law, etc. and other relevant legal documents will also be focused on. The goal is to overcome difficulties arising in restructuring enterprises, investment, management of state capital at enterprises, and the issue of capital allocation and asset allocation to state-owned enterprises.

Important milestones in the 20-year journey of establishment and development of VEC
– On September 1, 2004, the Prime Minister issued Document No. 1245/CP-DMDN agreeing to establish the Vietnam Expressway Development Investment Company (the predecessor of Vietnam Expressway Development Investment Corporation - VEC).
– On October 6, 2004, the Ministry of Transport issued Decision No. 3033/QD-BGTVT on the establishment of VEC, marking the birth of a type of expressway development investment through an enterprise in which the State holds 100% of the charter capital in Vietnam.
– On May 31, 2010, the Government Office issued Document No. 3626/VPCP-DMDN on converting Vietnam Expressway Development Investment Company into Vietnam Expressway Development Investment Corporation.
– Following that, the Ministry of Transport issued Decision No. 1666/QD-BGVT dated June 17, 2010 on the establishment of the parent company – Vietnam Expressway Corporation.
– On July 15, 2010, the Corporation officially launched operations under a new model.
– Currently, VEC is the only 100% state-owned enterprise operating in the field of investment, development, management, operation and toll collection for capital recovery of national expressways.