A project study submitted in partial fulfillment of the requirement for the degree of Master of Business Administration, School of Management

Project (M.B.A.) - Asian Institute of Technology, 2014

Government procurement is made up of the largest part of public spending beside state salaries and social benefits. The government procurement in Vietnam is witnessed to vary from 18 to 24 percent of Vietnamese GDP annually. The corruption in public procurement is a challenge for not only the government of Vietnam but also many nations in the world. The World Bank estimates that corruption can add 20 percent or more to the cost of public procurement. As a member of reputable international trade organizations such as WTO, APEC, ASEAN, Vietnamese government strives to improve its poor rankings on the world corruption indices. Since 2005, a set of laws and regulations on public procurement was passed and adopted in Vietnam with the aim of securing the transparency, efficiency, and integrity of government procurement. However, the purposes of the laws in Vietnamese government expenditures are extremely hard to achieve since there are still many interventions of mankind in all steps of public procurement. Since 2009, thanks to support of KOICA, Vietnamese government brought in a pilot of e-Government Procurement system which is a combination of information and communication technologies in public procurement. The online bidding system will make public procurement more accessible, transparent and competitive to suppliers. Furthermore, it can decrease administrative burdens, reduce costs for both government and businesses, and keep public expenditures more auditable. Over the years of introducing into the e-GP pilot system with the participants of three state organizations, Vietnamese Government decided to implement a complete e-GP system under a 10 year BOT contract in nationwide. The financing structure of project will be contributed by Vietnamese government, private sector and bank loans. The BOT contract could help Vietnamese government take advantages of management skills, technological competencies of private sector. The project financing valuation plays a key role in the success of the project because of the lack of demand robustness in e-GP market. This research study is going through the current practices of Vietnamese public procurement, and applying Discounted Cash Flow analysis technique to evaluate the risk and viability of project. The solutions to deal with three scenarios of high, medium and low market demand are also put forward based on the DCF model