BOT projects are initially designed, built and operated by private sector companies who raise a set amount of the required capital and are entitled to retain all revenues from the projects. After an agreed period of time elapses, the project is handed over for public administration and the responsibility of the private investor ends.

The deputy director of HCM City’s Department of Transport, Bui Xuan Cuong, said that there are currently 10 BOT transport projects being implemented in the city, while nine others are being discussed with potential investors. There have been recent complications over the return on the investment of private companies.

One major operation that is facing difficulties is the on-going Phu My Bridge project, which will connect HCM City’s Districts 2 and 7. Work has been stopped and responsibility passed back to the city after the investor, the Phu My Construction Investment Corporation (PMC), claimed that it would be unable to collect enough of its initial investment back in the agreed period before handing over responsibility to the State. Income from the bridge will be generated from tolls.

Cuong said that the municipal People’s Committee was considering the issue. "Phu My Bridge is not the first BOT project to die prematurely," he said, adding that currently BOT investors in the project have raised 10 to 15 per cent of total investment capital.

The State is yet to issue clear regulations about the capital assessment process, where investors prove they have the financial capability for the required investment. At the moment, this assessment is based on appraising financial returns recorded by investors over just a few years. After the contract has been negotiated and signed, the authorities only have a limited overview of investors’ business activities.

Senior figures have argued that the BOT mode is not proving successful for either the private or public sector.

Doctor Nguyen Xuan Thanh, director of the Fulbright economic teaching programme, said it was risky for investors to take up BOT contracts as the actual traffic flow through completed transport projects often did not generate enough revenue to meet the expectations of the investors.

Meanwhile, Cuong admitted that BOT contracts would continue to be a burden to Government finances, with the shortfall being left if investors abandon projects being covered by taxes. He said, "the investors should share the risks with the Government, but at the moment contracts are allowing them the right to evade responsibility."

Pham Sy Liem, vice president of the Viet Nam Federation of Civel Engineering Associations, said that the BOT mode should be replaced by PPP (Public – Private – Partnership), a system where investment and responsibility were shared between the State and investors, limiting the risks for both.

According to Cuong, PPP would be an improvement as, unlike BOT, it accurately appraises the total investment. The regulations in PPP contracts are also more attractive to partners.