Dong Stable as Vietnam Proposes PPP Amendments

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Mar. 11 – The Vietnamese Dong will likely remain stable this year thanks to Vietnam’s ample foreign currency reserves and the country’s trade surpluses. Nguyen Van Binh, the chief of the State Bank of Vietnam, has said that Vietnam’s reserves rose by US$18 billion in 2012.

In unofficial markets last Wednesday, the Dong traded at 21,100 to the dollar after falling to 21,140 during the prior weekend. During that time banks had buying and selling rates of 20,860 and 20,930, compared to 20,900 and 21,036 on February 21.

The government hopes to accelerate economic growth to 5.5 percent this year while keeping inflation at 6.0-6.5 percent. The central bank kept its exchange rate virtually unchanged last year at VND20,820 to the dollar, while the Dong gained 1.06 percent to VND20,815 from VND21,035 per dollar during the year.

In other news, the Vietnamese government proposed amendments to its public private partnership (PPP) laws in order to encourage greater international investment in the country. Under the current rules, PPP projects must fall into one of seven categories in order to qualify for such funding.

The proposed amendments will expand the PPP projects list to cover projects ranging from agriculture, offices and culture to the construction of markets. The changes will also result in additional incentives for investors as the state will cover more of the costs related to project preparation and management.

In addition, the proposed amendments will give Vietnam’s Prime Minister the discretion to decide how large a stake the state takes in particular projects. Currently, state participation in PPP projects is limited to a maximum of 30 percent.

The PPP arrangement also allows public services or private business ventures to be funded and operated through a partnership between the public sector and one or more private sector companies. Under the PPP arrangement, a state-owned enterprise is able to contract out its design, building and operations to a private sector company for a term of 25-30 years.

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