Research into the role of the private sector in rural transport

This study assesses the capacity and constraints to private sector participation in rural transport infrastructure, consulting and services in Vietnam. The findings will offer advice for the third rural transport project (RT3), and Ministry of Transport’s (MoT) future policy direction.

The study concludes that private enterprises are ready, and the legal environment adequate, to see an increased role for the private sector in rural transport, despite some problems with legal compliance. These are nevertheless partly due to the local cartel arrangements (“managed markets”), and the ambiguity between state management and commercial roles.

Recommendations for the government of Vietnam include:

• reserve work for non–SOEs in all donor programs
• enforcing compliance and transparency are the most effective ways to enable PS participation and development
• restrict provinces in contracting unfunded projects and in the proportion of shopping and limited bidding contracts.

Recommendations for provinces include:

• favour commune-based service operators
• improve participation and liaison with general business associations
• delete capital requirements of bidders
• strengthen the role of consultants and community supervisors.

Implications for RT3 include:

• require community representatives to
  • approve work plans
  • participate in bid evaluations; and
  • conduct and assist consultants in supervision
• general demand for bigger packages, higher design standards, more sealing and concreting of village roads
• provide a special fund for site/spot improvements for local teams