While infrastructure provides necessary public services and is vital for the socio-economic development of a nation, public funds alone cannot finance all infrastructure needs in society, especially after the COVID-19 pandemic, where many countries are facing budget deficits. Although private financing schemes, such as public-private partnerships (PPPs) and land value capture, have been considered intensively, they have yet to produce adequate private capital flows to infrastructure projects due to a lack of incentives for private investors. Against the background, this paper proposes a new financing mechanism in which governments might divert some of the increased tax revenue from the spillover effects of newly constructed infrastructures to fund the private sector through grants or subsidies. The empirical work in Vietnam shows a significant increase in tax revenues after completing two expressways, supporting our idea about spillover effects, which includes small- and medium-sized enterprise (SME) development. This study’s results suggest that spillover effects can bring new opportunities for governments and multilateral development banks (MDBs) to implement infrastructure projects with greater private sector involvement in the region. It also proposes some financial schemes, such as land capture and financing for business startups, including SMEs, to enhance the spillover effects of infrastructure.

Abe, M., Michael Troilo, J. S., Juneja, Narain, S. (2012). Policy Guidebook for SME Development in Asia and the Pacific. Bangkok: United Nations.

Abe, M., Troilo, M., & Batsaikhan, O. (2015). Financing small and medium enterprises in Asia and the Pacific. Journal of Entrepreneurship and Public Policy, 4(1), 2–32. https://doi.org/10.1108/jepp-07-2012-0036

Akintoye, A., Kumaraswamy, M. (2016). Public Private Partnerships: Research Roadmap – Report for Consultation. CIB Publication 406 Edition 1. CIB General Secretariat.

Asian Development Bank (ADB) (2014). Proposed Loans for Additional Financing Socialist Republic of Viet Nam: Greater Mekong Subregion Kunming–Hai Phong Transport Corridor—Noi Bai–Lao Cai Highway Project.

Cantos, P., Gumbau-Albert, M., & Maudos, J. (2005). Transport infrastructures, spillover effects and regional growth: evidence of the Spanish case. Transport Reviews, 25(1), 25–50. https://doi.org/10.1080/014416410001676852

Cao, C., Zhao, Z. J. (2011). Funding China’s Urban Infrastructure: Revenues Structure and Financing Approaches. Research Report CYS 11-10. Centre for Transportations Studies, University of Minnesota.

Chapman, J. I. (2016). Value Capture Taxation as an Infrastructure Funding Technique. Public Works Management & Policy, 22(1), 31–37. https://doi.org/10.1177/1087724x16670395

Dahlman, C. J. (1979). The Problem of Externality. The Journal of Law and Economics, 22(1), 141–162. https://doi.org/10.1086/466936

ESCAP. (2018). Tax Policy for Sustainable Development in Asia and the Pacific. Bangkok: United Nations Economic and Social Commission for Asia and the Pacific.

ESCAP. (2019). Infrastructure financing for sustainable development in Asia and the Pacific. Bangkok: United Nations Economic and Social Commission for Asia and the Pacific.

Giang, D. T. H., & Pheng, L. S. (2015). Critical Factors Affecting the Efficient Use of Public Investments in Infrastructure in Vietnam. Journal of Infrastructure Systems, 21(3). https://doi.org/10.1061/(asce)is.1943-555x.0000243

Grimsey, D., & Lewis, M. K. (2002). Evaluating the risks of public private partnerships for infrastructure projects. International Journal of Project Management, 20(2), 107–118. https://doi.org/10.1016/s0263-7863(00)00040-5

Gupta, A. S. (2007). Determinants of Tax Revenue Efforts in Developing Countries. IMF Working Papers, 07(184), 1. https://doi.org/10.5089/9781451867480.001

Guthrie, G. (2005). Regulating Infrastructure: The Impact on Risk and Investment. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.757014

Hodge, G., & Greve, C. (2017). Contemporary public–private partnership: Towards a global research agenda. Financial Accountability & Management, 34(1), 3–16. https://doi.org/10.1111/faam.12132

Hulten, C. R., Bennathan, E., & Srinivasan, S. (2006). Infrastructure, Externalities, and Economic Development: A Study of the Indian Manufacturing Industry. The World Bank Economic Review, 20(2), 291–308. https://doi.org/10.1093/wber/lhj007

Hurlin, C. (2006). Network Effects of The Productivity Of Infrastructure In Developing Countries. In Policy Research Working Papers. The World Bank. https://doi.org/10.1596/1813-9450-3808

Indah, V. F., Rusli, B., Myrna, R., & Nawawi, Z. (2023). How are companies involved in the construction of the trans Sumatra toll road, in Indonesia? Role analysis and development policy. Journal of Infrastructure, Policy and Development, 7(3). https://doi.org/10.24294/jipd.v7i3.2588

Inderst, G., & Della Croce, R. (2013). Pension Fund Investment in Infrastructure: A Comparison between Australia and Canada. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3001103

Inderst, G., Croce R. D. (2013). Pension Fund Investment in Infrastructure: A Comparison Between Australia and Canada. OECD Working Papers on Finance, Insurance and Private Pensions, No. 32, OECD Publishing.

Japan International Cooperation Agency (JICA) and Vietnam Ministry of Transport. (2010). The comprehensive study on the sustainable development of transport system in Vietnam (VITRANSS 2): North-South Expressway Master Plan Final Report. Available online: https://openjicareport.jica.go.jp/pdf/12000030_01.pdf (accessed on 3 April 2020).

Le, P. T., Chileshe, N., Kirytopoulos, K., & Rameezdeen, R. (2020). Investigating the significance of risks in BOT transportation projects in Vietnam. Engineering, Construction and Architectural Management, 27(6), 1401–1425. https://doi.org/10.1108/ecam-08-2019-0439

Lechner, M., Rodriguez-Planas, N., & Fernández Kranz, D. (2015). Difference-in-difference estimation by FE and OLS when there is panel non-response. Journal of Applied Statistics, 43(11), 2044–2052. https://doi.org/10.1080/02664763.2015.1126240

Leigland, J. (2018). Public-Private Partnerships in Developing Countries: The Emerging Evidence-based Critique. The World Bank Research Observer, 33(1), 103–134. https://doi.org/10.1093/wbro/lkx008

Maruichi, D., & Abe, M. (2019). Corruption and the business environment in Vietnam: Implications from an empirical study. Asia & the Pacific Policy Studies, 6(2), 222–245. https://doi.org/10.1002/app5.275

McIntosh, J., Newman, P., Trubka, R., Kenworthy, J. (2017). Framework for land value capture from investments in transit in car-dependent cities. The Journal of Transport and Land Use, 10(1), 155–185.

Méon, P. G., Weill, L. (2010). Is Corruption an Efficient Grease? World Development, 38(3), 244–259. https://doi.org/10.1016/j.worlddev.2009.06.004

Nakahigashi, M., Yoshino, N. (2016). Changes in Economic Effect of Infrastructure and Method. Public Policy Review, 12(1), 47–68.

Nguyen-Hoang, P., & Schroeder, L. (2010). An Analysis of Quasi-Decentralized Budgeting in Vietnam. International Journal of Public Administration, 33(12–13), 698–709. https://doi.org/10.1080/01900692.2010.514449

OECD. (2015). Economic Outlook for Southeast Asia, China and India 2015. In: Economic Outlook for Southeast Asia, China and India. OECD Development Centre. https://doi.org/10.1787/saeo-2015-en

OECD. (2017). Background Brief: Inclusive Framework on BEPS. Paris: Organisation for Economic Co-operation and Development.

Pereira, A. M., Pereira, R. M., & Rodrigues, P. G. (2021). Infrastructure investment and employment: Evidence for Portugal. Journal of Infrastructure, Policy and Development, 5(2), 1377. https://doi.org/10.24294/jipd.v5i2.1377

Peterson, G. E. (2008). Unlocking Land Values to Finance Urban Infrastructure. The World Bank. https://doi.org/10.1596/978-0-8213-7709-3

Phalatse, S. (2022). The role of private finance in infrastructure development in South Africa—A critical assessment. Journal of Infrastructure, Policy and Development, 6(1), 1391. https://doi.org/10.24294/jipd.v6i1.1391

PwC. (2018). Vietnam Pocket Tax Book 2018. Hanoi: PricewaterhouseCoopers.

Quiggin, J., & Wang, J. (2019). Unscrambling the toll road egg. Economic Analysis and Policy, 61, 29–38. https://doi.org/10.1016/j.eap.2018.07.002

Regan, M. (2017). Capital Markets, Infrastructure Investment and Growth in the Asia Pacific Region. International Journal of Financial Studies, 5(1), 5. https://doi.org/10.3390/ijfs5010005

Slemrod, J., & Yitzhaki, S. (2000). Tax Avoidance, Evasion, and Administration. National Bureau of Economic Research. https://doi.org/10.3386/w7473

Sundaram, J. K., Chowdhury, A. (2019a). World Bank Financialization Strategy Serves Big Finance. Opinion, 9 April. Kuala Lumpur and Sydney: Inter Press Service News Agency.

Sundaram, J. K., Chowdhury, A. (2019b). Coping With World Bank-Led Financialization. Opinion, 30 April. Kuala Lumpur and Sydney: Inter Press Service News Agency.

Swank, D. (2016). The new political economy of taxation in the developing world. Review of International Political Economy, 23(2), 185–207. https://doi.org/10.1080/09692290.2016.1155472

te Velde, D. W., Warner, M. (2007). The use of subsidies by Development Finance Institutions in the infrastructure sector. Overseas Development Institute Working Paper 283. London.

United Nations. (2022). Global Impact of War in Ukraine: Energy Crisis, Brief No. 3, August. New York: UN Global Crisis Response Group on Food, Energy and Finance.

Yoshino, N., & Abidhadjaev, U. (2017). Impact of infrastructure on tax revenue: Case study of high-speed train in Japan. Journal of Infrastructure, Policy and Development, 1(2), 129. https://doi.org/10.24294/jipd.v1i2.69

Yoshino, N., & Kaji, S. (2013). Hometown Investment Trust Funds. Springer Japan. https://doi.org/10.1007/978-4-431-54309-1

Yoshino, N., Azhgaliyeva, D., & Mishra, R. (2021). Financing infrastructure using floating-interest-rate infrastructure bond. Journal of Infrastructure, Policy and Development, 4(2), 306. https://doi.org/10.24294/jipd.v4i2.1236

Yoshino, N., Lakhia, S., Yap, J. (2021). Financing Sustainable Infrastructure Investment in ASEAN+3. In: Guinigundo, D., Kawai, M., Park, C. Y., Rajan, R. S. (editors). Redefining Strategic Routes to Financial Resilience in ASEAN+3. Manila: Asian Development Bank.

Yoshino, N., Masaki, N. (2004). The Role of Infrastructure in Economic Development. ICFAI Journal of Managerial Economics, 2, 7–24.

Yoshino, N., Taghizadeh–Hesary, F., & Nakahigashi, M. (2019). Modelling the social funding and spill-over tax for addressing the green energy financing gap. Economic Modelling, 77, 34–41. https://doi.org/10.1016/j.econmod.2018.11.018