Mobilizing investment capital for the development of road infrastructure in nghe an province

Specifically, for Nghe An Province, there has not yet been any study on the policies of the Provincial People's Committee regarding the mobilization of investment capital for the develop

ACADEMY OF FINANCE

DOAN THI NGOC HAN

MOBILIZING INVESTMENT CAPITAL FOR

THE DEVELOPMENT OF ROAD INFRASTRUCTURE

at the Academy of Finance

2 Dr Nguyễn Như Quỳnh

Reviewer 1:

Reviewer 2:

Reviewer 3:

This thesis is presented at the thesis Coucil

at academy level, held at the Academy of Finance

At, 2024

The thesis may be searched in National Library

and Library of Academy of Finance

PROLOGUE

1 The urgency of the thesis topic

Road infrastructure plays a crucial role in the socio-economic development and national defense of a country and its localities, especially in the context of strong industrialization, modernization, and international integration However, after nearly

40 years of reform, Vietnam still lacks a synchronized transportation infrastructure system Infrastructure development projects have not achieved their goals, particularly the North-South expressway, which remains incomplete, and many localities still do not meet development requirements This leads to low transportation capacity and high transportation costs, affecting the competitiveness of the economy If this situation persists, Vietnam will face significant challenges in making breakthroughs and achieving development Although the state budget allocates an average of about 9% - 10% of GDP for infrastructure investment annually, balancing funds for the development of infrastructure, especially road transport, remains a major challenge and does not adequately meet development needs According to the World Bank, Vietnam needs to increase infrastructure investment to about 11% - 12% of GDP to maintain its current growth rate

Nghe An, located in the center of the North Central region, has a strategic position on the north - south connection and the east-west economic corridor With its rich and diverse natural conditions and comprehensive potential for developing various economic sectors, Nghe An has the capacity to become a strong province According

to the 2023 report, Nghe An's economic growth rate ranks 26th nationwide and 3rd in the North Central region, with an economic scale ranked 10th among 63 provinces and cities in the country However, to fully leverage its potential and advantages, Nghe An needs a synchronized and modern transportation infrastructure system

The transportation infrastructure development plan for Nghe An, has been approved, aiming for a synchronized transportation system that connects both domestically and internationally However, to implement this plan, a significant amount of capital is needed, estimated at approximately 44,690.98 billion VND for the period 2031 - 2035 It is essential to mobilize investment funds from the state budget, public - private partnerships, and the community to alleviate the budgetary burden and ensure project progress

The current situation shows that from 2019 to 2023, investment in road infrastructure in Nghe An primarily came from the state budget (81.53%), official

development assistance (1.94%), and the local community (16.53%) Investment funding heavily relies on the state budget, while mobilizing capital from other sources, such as domestic and foreign enterprises, remains limited To achieve sustainable development, Nghe An needs to diversify its funding sources, especially from private partners, to alleviate pressure on the state budget and facilitate investment attraction

Given the importance of road infrastructure for the socio-economic development of the locality, along with development orientations and the current state

of investment mobilization, the research on “Mobilizing investment for the

development of road infrastructure in Nghe An province” is extremely urgent This

study aims to propose scientific and practical solutions to enhance investment capital and promote the development of road infrastructure in Nghe An in the near future

2 Literature Review

2.1 Domestic research related to the thesis topic

The topic of developing road infrastructure has been addressed by many domestic studies These research works are conducted by various authors, with diverse subjects, research data, and methodologies

The spatial scope of domestic studies includes provinces, economic regions within the country, and Vietnam as a whole The content scope of the thesis approaches a comprehensive analysis, including: (1) Theoretical foundations of road infrastructure and investment capital for road infrastructure; (2) Factors affecting investment mobilization for the development of road infrastructure; (3) Solutions for enhancing capital mobilization that provinces, economic regions, and Vietnam utilize

to develop road infrastructure The research results from these studies are not uniform

2.2 International research related to the thesis topic

International researches have also been conducted to provide a comprehensive analysis from three perspectives, similar to domestic studies However, the spatial scope of the research encompasses various countries Some foreign studies have results that are consistent with domestic research The content scope of the thesis for comprehensive analysis is also similar to that of domestic studies

2.3 Overview results of the studies and research gaps

2.3.1 Overview results of research related to the thesis topic

Through the systematization of studies both domestically and internationally on investment in the development of transport infrastructure, as well as mobilizing investment for this purpose, the author finds that the research is very diverse Each

study addresses a specific issue regarding investment in the development of transport infrastructure at different scopes and with different research objectives, but they share some common points as follows:

From the theoretical perspective of mobilizing investment for the development

of transport infrastructure: concepts, characteristics, classifications, roles, and some factors affecting the mobilization of investment for the development of transport infrastructure at the local, regional, and national levels

In terms of practical experience, most studies present both successful experiences and limitations of certain localities in mobilizing investment for transport infrastructure development to draw their own lessons and provide suggestions for formulating mechanisms, policies, and solutions to mobilize investment in this area

From a practical perspective, based on theoretical foundations, the studies analyze and assess the current situation of mobilizing investment for the development

of transport infrastructure at the local and regional levels This includes outlining the policies and documents issued and applied by local authorities, the results achieved, and the limitations encountered in the process of mobilizing investment for transport infrastructure development, as well as identifying the causes of these limitations After analyzing the current situation, the studies provide the context, viewpoints, and solutions to enhance investment mobilization for the development of transport infrastructure

Regarding research methods, most studies primarily use traditional qualitative analysis and evaluation methods, while some employ quantitative methods using primary or secondary data for analysis

Specifically, for Nghe An Province, there has not yet been any study on the policies of the Provincial People's Committee regarding the mobilization of investment capital for the development of road transport infrastructure

2.3.2 Research Gaps

From the overview of studies both domestically and internationally, it can be seen that the issue of mobilizing investment capital for the development of road transport infrastructure at the local level is not new and has been explored by many

researchers from various perspectives However, there are still gaps in the research:

Research content: Although there have been some studies on mobilizing

investment capital for the development of road transport infrastructure at the local level, including the establishment of key policies and documents from the Provincial People's Committee aimed at attracting and enhancing investment capital for road transport infrastructure, there has yet to be a study that focuses on exploring and analyzing the measures and methods used by local authorities to mobilize capital through policy mechanisms for funding sources such as state budgets, ODA, public-private partnerships, and community involvement Particularly for Nghe An Province, based on the actual capital mobilization situation from 2019 to 2023, this thesis will focus on policy mechanisms aimed at attracting the two funding sources that currently account for a low investment share: public-private partnerships and community involvement

Scope of research: Each locality and each period will have specific

characteristics regarding the mobilization of investment capital for the development of road transport infrastructure, and the factors influencing this mobilization will vary Currently, there is no doctoral thesis research on mobilizing investment capital for the development of road transport infrastructure in Nghe An Province

3 Research objectives

Based on the theoretical and practical research, the study proposes solutions to enhance the mobilization of investment capital for the development of road transport infrastructure in Nghe An Province in the upcoming period

Research questions:

1 What is the theoretical basis for the measures and methods of mobilizing four sources of investment capital for the development of road transport infrastructure by local authorities?

2 What factors influence the measures and methods of mobilizing investment capital for the development of road transport infrastructure by local authorities?

3 What is the current status of the measures and methods that the Provincial People's Committee of Nghe An has implemented to mobilize investment from the four sources for road transport infrastructure development?

4 How effective have the measures taken by the Provincial People's Committee

of Nghe An been in attracting investment capital for the development of road transport infrastructure?

5 What actions should the Provincial People's Committee of Nghe An take to enhance the mobilization of investment capital for the development of road transport infrastructure?

4 Subject and scope of research

4.1 Research subjects

The research subject of the thesis encompasses both theoretical and practical issues related to mobilizing investment capital for the development of road transport infrastructure The approach of the thesis concerning the mobilizing entities, types of roads, and specific contents of mobilizing investment capital for the development of road transport infrastructure is presented in the scope of the research content of the thesis

4.2 Research scope

- Scope of content: The thesis examines the theoretical basis and the current

status of mobilizing investment capital for the development of road transport infrastructure at the local level from four sources: state budget, official development assistance, public-private partnerships, and community funding The entities responsible for this capital mobilization are the provincial local authorities, specifically the Provincial People's Committee of Nghe An, which undertakes investment mobilization through measures and methods, including issuing policy documents to attract and enhance funding from the aforementioned sources for the development of road transport infrastructure, particularly provincial, district, and commune roads in Nghe An Province

- Scope of space and time:

In Nghe An Province, the current status of the policy documents issued by the Provincial People's Committee to attract four sources of funding—state budget, official development assistance, public-private partnerships, and community involvement—for investment in provincial, district, and commune roads during the period from 2019 to 2023 The thesis will also address the objectives, viewpoints, orientations, and proposed solutions to enhance the mobilization of investment capital for the development of road transport infrastructure, applicable until 2035

5 Research methods and data

The thesis has utilized data collection methods (surveying through questionnaires and interviews) and data processing methods (synthesis, analysis, statistics, and comparison)

6 New contributions of the thesis

The thesis has achieved results and certain contributions in terms of science and practice, including:

In science term:

The thesis clarifies the theoretical issues regarding mobilizing investment capital for the development of road transport infrastructure (provincial, district, and commune roads) by provincial local authorities, focusing on the methods of mobilizing investment capital from four funding sources: state budget, official development assistance, public-private partnerships, and community funding

In practical term:

The thesis has studied the experiences of mobilizing investment capital for the development of road transport infrastructure in several localities both domestically and internationally From this, it draws lessons that can be referenced and applied to Nghe

An province It summarizes, analyzes, and evaluates the current status of mobilizing investment capital for the development of road transport infrastructure in Nghe An: the measures and methods the Provincial People's Committee has implemented in mobilizing investment capital, as well as the results of investment capital mobilizing for the development of road transport infrastructure from 2019 to 2023, highlighted the achieved outcomes, limitations, and causes of these limitations Based on these, the thesis proposes recommendations to enhance investment capital mobilization for road transport infrastructure in Nghe An province by 2035

The research results of the thesis will provide valuable information for formulating and implementing policies to enhance the investment capital mobilization for the development of road transport infrastructure in Nghe An province in particular and nationwide in general

Chapter 2 The situation of mobilizing investment capital for the development

of road transport infrastructure in Nghe An province

Chapter 3 Enhancing the investment capital mobilization for the development

of road transport infrastructure in Nghe An province

Chapter 1 THEORY AND EXPERIENCE IN MOBILIZING INVESTMENT CAPITAL FOR THE DEVELOPMENT OF ROAD

TRANSPORT INFRASTRUCTURE 1.1 Road transport infrastructure and investment capital for the development of road transport infrastructure

1.1.1 Road transport infrastructure

1.1.1.1 Definition of road transport infrastructure

Infrastructure is understood as the totality of physical and technical conditions, operational mechanisms, and social institutions equipped with material and environmental factors that serve human production and life activities Infrastructure includes both tangible and intangible elements and is a product of investment processes that provide the foundation for the comprehensive development of society

1.1.1.2 Characteristics of road transport infrastructure

First, the systemic nature impacts social production activities on a national scale

or across large territories

Second, the synchrony indicates that the components of the road transport infrastructure system must be interconnected and balanced within a coherent framework

Third, the pioneering and forward-looking nature means that to develop production and social activities, the infrastructure system must be ahead, meaning it must be fully constructed and completed before production and social activities can take place

Fourth, the regional nature indicates that the development of road transport infrastructure must take into account and heavily depend on natural conditions

Fifth, the nature of public goods is not purely public; in addition to state budget funding, it also attracts private sector participation in investment construction and collects usage fees to recover investment capital

Sixth, road transport infrastructure is a type of fixed asset that is stable in nature and subject to strong environmental influences

1.1.1.3 Classification of road transport infrastructure

Based on manifestation forms: Road transport infrastructure includes both physical and intangible forms

Based on management levels: Road transport infrastructure is managed by both central and local authorities

Based on usage characteristics: This includes roadworks, bus stations, parking lots, rest stops, and other auxiliary structures along the road that serve transportation and road safety corridors

1.1.2 Investment capital for the development of road transport infrastructure

1.1.2.1 Definition of investment capital for the development of road transport infrastructure

Investment capital for the development of road transport infrastructure is the financial resources mobilized by entities from various sources to improve, expand, or construct new road transport infrastructure

1.1.2.2 Characteristics of investment capital for the development of road transport infrastructure

✓ Investment capital for the development of road transport infrastructure is large, with long investment periods and extended capital recovery times

✓ The depreciation of investment capital for each road transport infrastructure project varies

✓ Due to the requirement for synchronization within the road transport infrastructure system, the allocation of development investment must ensure coherence

✓ The effectiveness of investment capital for developing road transport infrastructure projects is often assessed in terms of economic and social benefits

✓ The structure of investment capital for a road transport project is very complex

✓ There is a significant risk of loss and waste of investment capital in development projects

1.1.2.3 Classification of investment capital for the development of road transport infrastructure

Classification of Investment Capital for Road Transport Development is

typically based on the following criteria:

According to the content of investment in the development of road transport infrastructure, there are two types of capital:

Investment Capital for New Road Transport Infrastructure: This refers to funds

invested in completely new road projects that have never existed before, resulting in significant changes and expanding the road transport network New projects are typically large-scale, requiring high and long-term investment

Investment capital for upgrading and improving road transport infrastructure:

This involves funding for projects aimed at enhancing the quality and efficiency of existing road infrastructure through renovation, expansion, or modernization Upgrade

projects are usually smaller in scale compared to new projects, but can also be quite large depending on the extent of the upgrades

According to the sources of investment capital, there are four types of funding:

✓ Investment capital for road transport infrastructure from the State Budget

✓ Investment capital for road transport infrastructure from Official Development Assistance (ODA)

✓ Investment capital for road transport infrastructure from Public-Private Partnerships (PPP)

✓ Investment capital for road transport infrastructure from Community Contributions

1.1.2.4 The Role of investment capital in the development of road transport infrastructure

✓ Investment capital involving the State Budget plays a crucial role in ensuring financial support for the development of road transport

✓ Investment capital from the State Budget acts as "seed capital" to attract external funding sources for road transport development

✓ Provides an additional channel for mobilizing investment capital from enterprises

✓ It also helps reduce pressure on the State Budget for road construction investments

✓ Capital raised from the community contributes to enhancing the quality and efficiency of rural transport infrastructure investment

✓ Capital from the community fosters greater proactivity and engagement among rural residents

1.2 Mobilizing investment capital for the development of road transport infrastructure

1.2.1 Concept of mobilizing investment capital for the development of road transport infrastructure

Mobilizing investment capital for the development of road transport infrastructure is a set of measures and methods implemented by local authorities to attract funding from various entities for the construction, expansion, upgrading, renovation, and improvement of the road transport infrastructure system

1.2.2 Content of mobilizing investment capital for the development of road transport infrastructure

1.2.2.1 Mobilizing investment capital for the development of road transport infrastructure from the state budget

- The provincial local government will directly allocate State Budget funds for road transport projects For this funding, the locality must develop approved investment programs and projects at all levels of government The local government prioritizes the allocation of State Budget funds for transportation projects according to the planned schedule

- The allocation of financial resources from the State Budget for road transport development is also based on the division of expenditure responsibilities among different budget levels

- Allocation of state budget capital for investment in road transport infrastructure construction is based on balancing needs and capabilities to prioritize a list of projects allocated investment capital for the planned year

- The allocation of state budget capital for the development of road transport infrastructure should avoid spreading thinly and focus on the list of transport projects approved annually by the competent authorities, ensuring sufficient resources are arranged for projects before proceeding with allocation to ensure the efficient use of capital

- Ensure the timely and strict allocation and disbursement of capital, avoiding any loopholes that could cause waste, embezzlement, or loss of state budget capital

1.2.2.2 Mobilize investment capital for the development of road transport infrastructure from official development assistance

✓ Develop clear and detailed local plans and long-term strategies for road transport

✓ Effectively implement pilot projects

✓ Develop a plan to repay loans and interest on time for ODA re-lending projects

✓ Create an investment environment that facilitates ODA investment

1.2.2.3 Mobilize investment capital for the development of road transport infrastructure through public-private partnerships

- Financial support from local governments: initial capital investment, based subsidies, operating cost support, land use fee exemptions, tax incentives, and appropriate tax incentives

output Nonoutput financial support from local governments such as publicizing the list of investment projects, establishing a complete, clear, and transparent legal framework