Vietnam - Domestic contractors moaning because they cannot collect debts

VietNamNet Bridge – A lot of contractors complain that they cannot get payment from project investors, though the construction was completed several years ago. However, they have to “sit down under an abuse” because they want to be free from hardship.

Struggling to collect debts

Nguyen Quoc Hiep, Chair and General Director of the GP Invest, said that his corporation was assigned to work as the contractor of the Buon Kuop hydropower plant in Dak Lak province. Only after four years after the construction was completed, did GP Invest get the payment from the investor.

“We had to use the money borrowed from banks to implement our works, and we had to pay interests for the loans during the four years. However, no one compensated for the money we had to pay,” Hiep complained.

“Under the current payment mechanism, if investors delay payment, they do not bear any punishment, but if contractors owe money to some, they will be fined immediately,” he continued.

Mai Dinh Hanh from the Vietnam Electrotechnical Industry Association (Velina), also said that electricity projects’ investors have still owed tens of billions of dong to the association’s member companies. “Economic contracts always stipulate that if investors make payments late, they will have to pay interests as well to contractors. However, you should be satisfied if you can get payment, while you should not dream of getting interests as well,” Hanh said.

Deputy Secretary General of the Construction Contractors’ Association, Duong Van Can, noted that under the current laws, contractors are not well protected. He said that in many cases, contractors cannot get payment, though the works were completed many years ago.

Phan Vu Anh from Vinaconex, the contractor of the Thang Long Boulevard, related that in order to fulfill the project on the occasion of the 1000th anniversary of Thang Long-Hanoi establishment in October 2010, his corporation accepted to execute the project even when prices had not been fixed. As a result, the corporation still had not got payment for the project so far.

Taking legal proceedings against investors – why not?

According to Lawyer Tran Huu Huynh from the Vietnam Arbitration Center, in such cases, contractors can sue project investors in court or bring the cases to the arbitration center. 

“Why don’t you follow legal proceedings and still keep relying on state management agencies’ decisions?” Huynh questioned.

Answering the question, Phan Vu Anh admitted that in principle, involved parties can bring the cases to the international arbitrary center or to the court. However, in fact, no one wants to do that, because it will take time and money, while enterprises do not want to spend time on following legal proceedings.

In some cases, the contractors tried to take legal proceedings against the investors. Meanwhile, state management agencies then intervened in the cases, instructing the court to return verdicts as they want.

Therefore, in most of cases, contractors would rather keep quiet and urge contractors to pay debts, than making the cases public or threatening to sue the investors.

Some contractors have admitted they dare not “raise a dust” when they ask investors to pay debts, because they need to keep good relations with the investors, who may give them the opportunities to implement the next projects.

However, Hiep said some contractors have sworn that they will not work with the investors of the state budget funded projects, because the investors of the projects are always late in making payment. 

The representative from the Vietnam Bidders’ Association has proposed to build the contract law which can correct the inequality of the relation between investors and contractors.

“The current laws stipulate many provisions, but they do not comprise the provisions on imposing punishment on violators. As a result, the laws have just existed on paper, while they have not been valid in the reality,” said Can.

Khanh Ngan


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