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Vietnam Infrastructure Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7519 Description The energy and utilities sector saw a surge in new projects this past quarter, with at least two largeprojects breaking ground, including the 4.4GW Long Phu power complex in Soc Trang province and the750MW Nhon Trach Power Plant No2 in Dong Nai Province. Meanwhile, financing arrangements werecompleted for the Van Chan hydroelectric power project in Yen Bai and the Huoi Quang hydropowerplant. In addition, JAKS Resources singed a memorandum of understanding (MoU) for the first everpublic-private partnership (PPP) in Vietnam's power generation sector for the Hai Duong thermal powerstation.In BMI’s Q409 Vietnam Infrastructure Report we have kept our forecasts steady for this quarter. Newpreliminary estimates from the national statistics agency indicate that construction industry value realgrowth for 2008 was a mere 0.4%. Given that the macroeconomic outlook is bleaker for 2009, we haverevised our real growth forecasts for 2009 to near zero percent, at 0.06%. Fixed capital formation isforecast to decline from 23% in 2007 to an estimated 16% in 2008 and 2% in 2009. This is the key factorthat weighs down our forecasts for 2008 and 2009. Our medium-term view of strong growth remains unchanged. Not only did new projects break ground inearly summer, but the county has significant projects in the pipeline for building and upgradinginfrastructure that should sustain the industry. We believe that growth will pick up in 2010 andsignificantly accelerate in 2011 onwards. Our optimism for the country is tamed by the weak regulatory environment governing long-term privatesector participation in the sector. Though bits of legislation exist, there is no clear-cut set ofresponsibilities for ministries and authorities involved in infrastructure, making PPP ventures andprocedures more opaque than they need be. This is reflected in the weak score and regional standing thecountry receives in BMI’s Asia Pacific Infrastructure Project Finance and Business Environment Ratings. In an announcement contradicting earlier claims, Electricity of Vietnam said that it will implement amulti-billion-dollar capital expenditure programme in 2009, despite having given up projects earlier citingfinancing concerns. The first quarter of 2009 saw greater penetration of the private sector in the utilitiesmarket with new multi-billion-dollar independent power projects (IPP) announced by US-based AES andMalaysia’s Janakuasa. BMI has maintained that private sector participation is pivotal for addressingVietnam’s long-term power generation shortfall. Table of Contents
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