Value Capturing: A Realistic Funding Source for Urban Transportation in Ho Chi Minh City?

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This paper examines how the concept of value capture has been applied in some developed and developing countries to collect considerable funds for urban development and urban transportation.

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Author: Nguyen Thien Phu

Motor vehicles are an important source of urban air pollution. Making financing sources available for reducing transportation impact, notably reducing dependence on private transportation and enhancing public transportation should not therefore be separable from any urban air management plan. Like other developing cities in South-East Asia, Ho Chi Minh city is lacking stable and important funding for urban transportation projects, especially public transportation projects. At present, the public transportation system in the city, though considerably improved, just satisfies only 6-7 percent of the urban travel needs and the majority of city-dwellers rely on private transportation for their travel, especially motorized two-wheelers. Many factors have long been identified for the weaknesses of the city’s urban transportation system but it seems that the vital issue which is funding sources for the transportation system hasn’t received much attention from the authorities who just depend on an annually fixed meager budget for maintenance, operation of and investment in the system.

The paper’s purpose is to examine how the concept “value capturing” has been applied in some developed and developing countries to collect considerable funds for urban development and urban transportation. A literature review of the subject matter is conducted, then various aspects of its applicability in the context of Vietnam will be discussed. Because Ho Chi Minh City needs to find new means to finance transportation capital investment, particularly public transit, value capture offers a good opportunity to achieve these goals.