Summary of phd thesis public private partnershop investment in some public service sectors pratice in some countries in the world and lessons for vietnam

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY SUMMARY OF PHD THESIS PUBLIC PRIVATE PARTNERSHIP (PUBLIC-PRIVATE PARTNERSHIP - PPP) INVESTMENT IN SOME PUBLIC SERVICE SECTORS: THE WORLD PRACTICE IN SOME COUNTRIES IN AND LESSONS FOR VIETNAM Major: International Economics Code Number: 9310106 YEN SON TUNG Hanoi, 2023 The thesis is completed at: Foreign Trade University Supervisor: Assoc Dr Do Huong Lan Đ€VI€WET Ì: St rưn €VI€W€T 2: Q TQ Ñ€VI€W€T Ổ: TQ The thesis will be defended at university-level Thesis Evaluation Council at Foreign Trade University The thesis can be found at National Library and The Library of Foreign Trade University LIST OF PUBLICATIONS I Research on factors affecting private investment attraction under PPP method Economics and Focast Review, ISSN: 1859-4972 Issue 22 August 2022 (No 812) How Public-Private Cooperation can Begin in STI in Vietnam: A Case of Sematech Asia-Pacific Economic Review, ISSN: 0868-3808 No 603, December 2021 Investment in the form of public-private partnership - PPP for public services in Vietnam Vietnam Journal of Education, ISSN: 1859-3917 Special Number, October 2019 Applying manufacturing extension partnership (MEP) in science, technology and innovation (STI) institution in vietnam Proceedings of Conference for Advance and High quality Program’ student “Innovation for Sustainable development in Vietnam” Bach Khoa Publishing House, ISBN: 978-604-3 16-255-4 June 2021 Public-Private Partnership (PPP) in the field of science and technology services: some forms of activities in the world and lessons for Vietnam Proceedings of Student’ Scientific Research Conference November 2020 INTRODUCTION The rationale of the research topic Many researchers, managers, and policy makers admit that, at present, in the forms of cooperation between the public and private sectors, the form of public-private partnership (Public - Private - Partnership - PPP) is considered to be effective, attracting private capital to participate in public projects of the State, thereby helping to reduce pressure on the budget Compared to the world, PPP in Vietnam has just appeared and been focused in the past three decades PPP investment in Vietnam is still focusing mainly on a few areas such as transportation, energy, the number of projects or investment capital for other types of projects such as services not much work Although the State's policy is to encourage PPP, the intention to participate in PPP investment of the private sector will determine the quantity and quality of PPP investment projects, leading to the need to study attractive factors private sector PPP investment Besides, in order to expand the implementation of PPP projects into public services, Vietnam needs to refer to the lessons of previous countries Countries that have experienced PPP investment in the world such as Germany and China are very interested in public services, especially in practical areas for residents! lives such as electricity or water supply clean water and many PPP projects on clean water supply and electricity supply have been implemented and succeeded in these countries This is the reason why the thesis selects public services and gives typical cases of the two fields of water supply and electricity supply to focus on studying international experiences, thereby drawing lessons for Vietnam Research objective and research tasks Research objective: propose solutions to increase attraction of private investment in the form of PPP in a number of public service sectors from lessons learned from countries Research tasks: investment practices in the form of PPP in some Firstly, an overview of the research situation, thereby proposing factors affecting the attraction of private sector PPP investment in public services Second, analyze the basis for discussion and draw out factors affecting the attraction of private investment in public services in the form of PPP Third, research international experience and draw lessons for Vietnam Fourth, research the current situation of attracting the private sector to invest in PPP in the public service sector in Vietnam Fifth, research development orientations and propose solutions to increase the attraction of private investment in the field of public services in general and clean water supply services and electricity supply services in particular in the form of PPP in Viet Nam Research questions First, what factors affect the attraction of private sector PPP investment in public services? Second, what is the current status of PPP investment in the world? Are there any regions and countries with developed PPP markets that can be learned from? What is the current status of PPP investment in those regions and countries? Third, what are the lessons learned for Vietnam when studying the current status of PPP investment in the above regions and countries? Fourth, from the lessons learned, combined with the Party and State's orientations, what solutions can be proposed to increase the attraction of private PPP investment in the public service sector? New contribution of thesis - Regarding theory, public services, systematized synthesized related theories, private sector investment in partnerships the thesis has reviewed research on PPP in the theoretical basis for PPP in public services, and identified factors impact on attracting public services in the form of public-private - In practice, the thesis analyzes the current status of PPP investment in a number of countries around the world, analyzing some typical cases of electric charging services and clean water supply services in China and Germany, analyzing the current situation of attracting PPP investment by the private sector in Vietnam, thereby drawing lessons and recommending solutions to improve the attraction of PPP investment by the private sector in the service sector public service in Vietnam Research objects and scope Research object: (1) factors affecting the attraction of PPP investment by the private sector in public services in Vietnam, (2) research on the current status of investment in the form of PPP in the field of public services in some regions and countries (presenting a typical case of providing electric charging stations and providing clean water) Research scope: - Research scope in terms of space: (1) in Vietnam and (2) the world including Europe, Asia, specific analysis in Germany and China which are developed PPP markets at mid-range, higher than Vietnam - and with similarities in economic, political and social context (Give typical cases of electric charging stations in China and clean water supply in Germany) Scope of the study in terms of time: The topic researches secondary documents on PPP in general and PPP in the public service sector in the period from 2010 to 2023 Although PPP has been mentioned in the Documents from 1997 in Decree 77-CP of the Government promulgating investment regulations in the form of build-operatetransfer contracts applied to domestic investment, but only after 2010 , along with the issuance of Decree No 108/2009/ND-CP dated November 27, 2009 of the Government on investment in the form of BOT Contracts, BTO Contracts, and a number of PPP projects that have been implemented, The PPP form in Vietnam has recently received attention Primary data is collected through a business survey in 2022 - Scope of research on content: When researching international experience, the thesis analyzes the general context of PPP investment, political and focuses environment on legal, factors, institutional, finance in Europe economic and Asia, and in Germany and China, specifically in two countries: Germany and China, the thesis presents two service areas of public electric charging (in China) and water supply (in China) in Germany) for analysis For Vietnam, the thesis analyzes the general context and analyzes survey results based on factors according to the research model Methodology To accomplish the research objectives, the thesis uses a combined qualitative and quantitative approach: The qualitative method is implemented through desk research methods, collecting, synthesizing and analyzing data secondary data from reliable, academic sources Case study method, presenting a case study of PPP in the supply of electric charging booths in China and water supply in Germany Quantitative method is carried out through surveying enterprises to get primary data and testing the reliability of Cronbach's Alpha scale Structure - Chapter 1: Overview of research on investment in the form of public- private partnerships in some public service fields - Chapter 2: Theoretical basis for investment in the form of publicprivate partnerships in some public service fields and proposed research model - Chapter 3: Investment practices in the form of public-private partnerships in some countries around the world - Chapter 4: Investment in the form of PPP in some public service sectors in Vietnam and research results on factors affecting the attraction of private investment in the public service sector in the form of PPP - Chapter 5: Development orientation and recommended solutions to increase attraction of private investment in the public service sector in the form of PPP in Vietnam CHAPTER LITERATURE REVIEW OF PUBLIC-PRIVATE PARTNERSHIP INVESTMENT IN SOME PUBLIC SERVICES 1.1 Literature review on factors affecting investment in public services 1.1.1 Group of factors related to the State sector The review is based on the studies of Weiling Jiang et al (2019), Jeff Youssef and Rayan Nahas (2017), Marian Moszoro et al (2015), Maria Basilio (2020) 1.1.2 Group of factors related to the private sector The review is based on the studies of Gil and Beckman (2009), Torrance (2009), Zhang (2018), McKinsey (2016), Hambros (1999), Walker (1995) 1.1.3 Group of factors related to the project The overview thesis is based on the research of Chege L (2003), Than Thanh Son (2014), Reinhardt (2011), Walker (2010), Panayotou (1998) 1.2 Literature review on factors affecting investment in public services in the form of PPP to attract private The overview thesis is based on the research of Haavelmo (1960), 1.2.1 Group of factors related to the State Greene and Villanueva (1991), Elena Vasilyeva (2018), Muzenda (2009), Mona Hammami and add events (2006), Panayiotou (2013), Bogado (2015), Basilio (2011), Sharma (2012), Huynh Thi Thuy Giang (2012), Phan Thi Bich Nguyet (2013), Zhang (2018) and Pham Diem Hang ( 2018), Tran Thanh Phuong (2022) Robert and add the (2017), Hyun and add the (2018), Hammami and add the (2006), Kawamura (2020), Yang and add events (2020), Nguyen Thi Ngoc Huyen (2013), Nguyen Thi Hong Minh (2016), Ye and the add the (2018) 1.2.2 Group of factors related to the private sector The overview thesis is based on the research of Azjen (1991), Cheng (2016), Tang (2016), Zhang (2018), Yang and add ( 2020 ), Ramli (2021) Robert and Chan (2017), Ye and the add (2018 ) Jing Du and add the (2018) 1.2.3 Group of factors related to the project The overview thesis is based on the research of Koppenjan and Enserink (2009), Dada and Oladokun (2011), Fleta- Asin (2021), Waziri and Isa (2017 ), Schaufelberger & Wipadapisut (2003), Xueqing Zhang (2005), Robert and Chan (2017); Qiao and add the (2001); Hardcastle and add (2006), Hyun and Tian ( 2018 ), Liu and Wang (2019), Xu (2014), Almarri and Abuhijleh (2017), Huynh Thi Thuy Giang (2012), Tran Thanh Phuong (2021) 1.3 General assessment and research gaps From the review of the research overview above, it can be affirmed that so far there are very few studies that combine analysis of the current situation of attracting investment in PPP in public services in Vietnam and analysis of PPP investment in public services in Vietnam Analyze the international context to draw lessons and recommend solutions for Vietnam Therefore, this approach is a new direction for the author to conduct in-depth research to come up with solutions to enhance the attraction of the private sector to invest in the form of PPP to promote the development of services public service in Vietnam CHAPTER THEORETICAL BASIC OF PUBLIC-PRIVATE PARTNERSHIP INVESTMENT IN SOME PUBLIC SERVICES AND PROPOSE RESEARCH MODEL 2.1 General overview of investment in the form of public-private partnership in public services 2.1.1 The concept 2.1.1.1 The concept of PPP investment Investment in the form of a public-private partnership (Public Private Partnership - hereinafter referred to as investment in the form of PPP) is an investment method made on the basis of a limited-term cooperation between the State and private investors approved the signing and implementation of PPP project contracts in order to attract private investors to participate in PPP projects (Law on Investment in the form of public-private partnership No 64/2020/QH14) Investment fields in the form of PPP include: (1) Transport; (2) Power grids, power plants; (3) Irrigation; provide clean water; drainage and wastewater treatment; waste treatment; Education - training; (6) Information technology 35/2021/ND-CP dated March 29, 2021) (4) Medical; (5) infrastructure (Decree 2.1.1.2 The concept of PPP investment in public services From the above concepts, PPP investment in public services can be understood simply as investment activities in the fields of public services through the form of PPP projects 2.1.1.3 The concept of attracting PPP investment in public services within the scope of the thesis In the content of the thesis, the author proposes the concept of attracting private investment in the form of PPP in the field of public services as follows: attracting private investment in the form of PPP in public services is an activity that attracts pull and encourage private investors to invest in PPP projects in the public service sector thanks to the attractiveness of these projects, thereby making the private sector form investment intentions private From there, the study of attracting private investment in PPP projects in public services can be determined by studying the intention of private sector investment in PPP projects in public services 2.1.2 Features of PPP investment in public services In addition to the characteristics of investment in general, PPP investment has specific characteristics of PPP form, the first is long-term cooperation, taking advantage of advantages, resources (capital, expertise, experience, etc.) ) of the public and private sectors; The second feature is the sharing of benefits and risks among parties in the process of implementing PPP projects Besides, PPP investment in public services also carries the characteristics of public services, that is, (1) products and services essential to the socio-economic life of the country, community population or ensuring national defense and security and (2) Including public nonbusiness services and public products and services 2.1.3 Objectives of PPP investment in public services The objective of PPP investment in public services is similar to that of PPP investment According to World Bank (2017), the objectives can be 12 CHAPTER PRACTICE OF PUBLIC-PRIVATE PARTNERSHIP INVESTMENT IN SOME COUNTRIES IN THE WORLD 3.1 PPP investment context in the world Based on the theory of PPP market development by Alexiou (2017) and UNECE (2022), countries tend to go through three different stages in the process of high-level PPP projects coming into operation best Most countries are in the early stages, where the development of actual projects is still weak It is only in the third stage, where there are relatively few countries currently, that the PPP becomes the most complete At this stage, countries will develop the necessary legislation and institutions Alexiou, N (2017) and UNECE (2022) suggest that the group of PPP qualified countries in the development group now includes the UK, Australia and Ireland The second group of developed countries can include countries such as Canada, the United States (in the Americas), Spain, Germany, the Netherlands, (in Europe), New Zealand (in Australia), Japan, Korea, Hong Kong (in Asia) Countries in the developing or emerging group make up the majority and most of them are in South America, Asia, Africa and only a few in Europe Many countries can be listed in this group such as Belgium, (Europe), Mexico, Brazil, Argentina, (Africa), China, India, Thailand, Czech (in South America), South Africa,, and even Vietnam (Asia) 3.2 Some typical PPP development areas suitable for research 3.2.1 PPP investment in Asia 3.2.1.1 Overview of PPP investment in Asia Over the last three decades, Asia has been the world's most vibrant developing region, with sustained economic growth driving poverty reduction in the region's two largest economies, China and India, as well as in most high- and middle-income Asian countries Although PPP investment activities in Asia in most countries in Asia are only assessed as average, but not outside of the general economic development momentum, investment also has a very high growth rate high in recent years PPP 13 3.2.1.2 Legal and institutional In 2019, World Bank held a survey of 19 countries on PPP environment in 2019, countries with PPP legal environment were assessed as being in the development group, the transparency of contracts in these countries was also assessed attention has improved in recent years The issue of PPP institutions of countries in Asia has been upgraded International experience has shown that countries with specialized PPP agencies/units will better support PPP investment activities than countries with no or no independent units 3.2.1.3 About the economic, political and financial environment Maturity of PPP in Asia: the majority of countries in Asia have a PPP development level that is still in the nascent stage, assessed through the factors of experience in contract implementation, management experience risks and handling contract termination Most countries have political support for the PPP, but some multi-party countries lack unified support, or face opposition in parliament or society In terms of finance, most countries in Asia have relatively limited capital markets for PPP activities Some countries are assessed to have a financial market for PPP at a developed level in Asia India, Philippines, China, Thailand are still at average level compared to the world 3.2.2 PPP investment in Europe 3.2.2.1 Overview of PPP investment in Europe The European Union (EU) consists of 28 member economies, is one of the largest trading partners in the world, with a market size of 18 trillion USD (accounting for 22% of total global GDP), a population in 500 million people, the total annual trade turnover is approximately trillion USD, providing nearly 40% of the world's outward investment capital 3.2.2.2 Legal and institutional Existing EU legislation and practice not govern matters relating to PPP projects, so the general rules and principles relating to free business and 14 service provision are applied by the EU used in this field About the institution The institutions of PPP activities in Europe are spread out and depend heavily on the characteristics of each country, on the time of PPP market formation, on the specifics of the Government's management mechanism, policies, culture and many other factors other factors, so finding a common institution is not available organizations and The European PPP management and support institutions are as follows: EPEC, EIB, JASPERS, JESSICA, Project Bonds, LGTT, The Marguerite Fund 3.2.2.3 About the economic, political and financial environment In 2021, the total value of PPP transactions in the European market totals€ 8.0 billion, down 13% compared to 2020 (€ 9.2 billion) The number of PPP transactions is 40, down from 2020 In terms of EU financing for PPPs, European funds are an important source of financing in the financing of many infrastructure projects in the European Member States 3.3 Practice of PPP investment in public services in some typical countries 3.3.1 PPP investment practice in China 3.3.1.1 Overview of PPP investment in China According to data from the World Bank, from 2014 to now, China has significantly increased the number of PPP projects, and the legal framework has also been focused on improving much more than before The institution has also been tested and refined 3.3.1.2 Legal and institutional According to a report by the World Bank (2019), China does not have a specific law on PPP and has few procedures for the bidding process and contractor selection criteria The project selection procedures provided by the PPP Center and the assessment practices are governed by two sets of guidelines published by the NDRC and the MoF 15 3.3.1.3 About the economic, political and financial environment PPP projects in China are implemented in many fields, however, like other countries with developed PPP market in the early stages, China is focusing on investment planning for the road system Like many emerging economies in Asia, the Government does not have enough budget for this investment The shortfall of 150 billion USD (1998-2020) is partially covered by the state budget, the rest needs private support In terms of finance, the main sources of funding for PPP investments are the government, bank credit, bank wealth management funds and insurance companies 3.3.1.4 A case study on risk sharing of the Anging public charging infrastructure PPP project in Anging, China Since the 2010s, the Government has increased electric vehicles and reduced petrol and diesel vehicles as a countermeasure to the pollution problem, leading to the need to build public charging station infrastructure for electric vehicles By the end of 2016, China had nearly 150,000 public charging stations, making China a global leader in the development of charging infrastructure (Electric vehicle charging infrastructure promotion joint annual report, 2018) Although the electric charging infrastructure in China is large-scale, the quantity is much lower than the rate of electric vehicle development Since then, PPP projects to provide public charging booths have been carried out, in which, Anqing project deployed in An Khanh is one of the largest projects Project plan: built in 2016 is 1800 charging piles Construction layout: SPV is required to use charging equipment that complies with the general standard, AC charging standard, DC charging standard and other relevant standards charging service platform and In addition, the building of a smart connection with Anqing digital urban management platform, provincial and national management platform is also focused 16 Risk sharing: seven The main risks of the Anging project are divided into categories: design/build, operational, financial, revenue, legal, government conduct and others 3.3.1.5 General assessment and lessons learned Challenges in China mainly come from the operating mechanism of the State apparatus Disputes are also often handled without transparency or with independent arbitration Other challenges include: the use of PPPs by some local governments as “disguised fundraising channels”; provide guarantees of redemption value or return on investment to private partners and is contrary to the risk-sharing spirit of PPP; growing local debt; and lack of transparency, information, data and expertise, which threaten the cost- benefit advantage of PPP projects Some lessons learned from the study of PPP investment in public services in general and the charging station PPP project in China: (1) focus on building investment incentive mechanisms for private investors when participating in the form of PPP in the electricity industry; (2) apply competitive bidding to select private investors; (3) flexible but also very focused on planning overall and detailed plans, good coordination between public and private entities; (4) unify and standardize technical standards from the outset to avoid waste; (5) identify risks and have a reasonable risk- sharing mechanism; (6) building a Smart Service Platform to provide diversified Services; (7) supervision of PPP projects in the power sector is strictly implemented and managed at two levels; (8) diversify forms of implementation organization 3.3.2 Practice of PPP investment in Germany 3.3.2.1 Overview of PPP investment development process in Germany German PPP investment has undergone significant changes in recent years Although German construction and transport infrastructure PPP projects continue to dominate the market share, Germany is also planning to implement many PPP projects in other sectors According to Jan Bonhage 17 (2022), due to the Covid-19 pandemic, the number of new German PPP projects decreased but the project volume doubled, along with the volume of the PPP market in Europe 3.3.2.2 Legal and institutional The development and implementation of PPP projects in Germany is governed primarily by the Budget Law, in particular sections and 55 of the Federal Budget Code Institutionally, the creation of a specialized PPP unit is to fulfill the desire for an agency that can provide centralized consulting services with extensive experience in complex agreements to clients in public sector in all areas 3.3.2.3 About the economic, political and financial environment The German economy is one of the stable and developed, the German economy is the fifth largest in the world and the largest in Europe In 2021, Germany's GDP continues to grow at a rate of 2.9% Politically, compared to other EU countries, Germany shows a high and constant political support in this area In Germany, the main financial method is factoring, free of public recourse However, the financial method (Private Finance - PF) is widely used in large projects PPP projects using the PF method are often large projects because the expected returns of small projects are often not enough to cover the transaction costs 3.3.2.4 Case study on the political economy context of urban water supply in Berlin, Germany in the form of PPP Privatization of water supply deployment in Berlin began in 1994 with the commercialization of Berliner Wasserbetriebe (BWB) The Berlin Senate coalition between the Christian Democrats and the Social Democrats decided to convert the BWB into a public law firm; The reasons given are that this will allow the BWB to access the private funds needed for infrastructure works (Lanz and Eitner 2005), other reasons are financial