ISSUES OF PPP INFRASTRUCTURE PROJECTS IN VIETNAM – THE TRANSACTION COSTS PERSPECTIVE

Actually, the Public Private Partnerships’ advantages are always highlighted, whereas the transaction costs embedded in these governance structures seem to be understated or ignored. They are classified in two types: explicit and implicit costs. The construction project’s features and the incomplete contract are the main causes of the explicit transaction costs. Moreover, the principal-principal and hold-up problems are aware of the implicit transaction costs’ origins. This paper’s objective is to study when, and what kind of infrastructure project Vietnamese government had better to apply the PPPs to. The four chosen typical BOT projects as case studies are the Phu My Bridge, the Rach Mieu Bridge, the Binh Trieu 2 Bridge and approached roads, and the Yen Lenh Bridge. The fulfilled analyses indicate that in a socialist economy as Vietnam, the soft budget constraints and the participation of the SOEs are the most popular underlying reasons of the implicit transaction costs embedded in PPP contracts. They also point out that in developing countries; the magnitude of an infrastructure project itself causes the hold-up problems. It contributes to undermine the advantages of, and is the seeds of exorbitant transaction costs in PPP projects in Vietnam in particular