Foreign contractors will face stricter scrutiny in the coming times as
authorities aim to limit delays in a range of projects.
Talking with VIR recently in
Hanoi in the seminar named 'Evaluation and range Vietnamese contractors'
ability," Vu Khoa, chairman of the Vietnam Construction Contractor
Association, said that while most foreign contractors won the right to
implement projects due to their "good track record" on the paper,
they have revealed their weaknesses when working in Vietnam.
"Many foreign contractors
have especially won biddings in Vietnam based on their brand names, but they
have not had many experiences when implementing biddings in Vietnam," Khoa
said.
The standstill of real estate and
infrastructure projects has occurred in major markets such as Hanoi, Ho Chi
Minh City, Danang, Haiphong and Ba Ria-Vung Tau.
Several famous foreign
contractors have halted work, including Korea's Keangnam, Posco, Doosan,
Hanshin, GS E&C, Sungjee,; China's Gauxing, China Road & Bridge
Corporation, China Guangdong Provincial Changda Highway Engineering Company,
Shandong Road and Bridge Group, and many others.
Pham Sy Liem, deputy chairman of
the Vietnam Construction Association, said that, despite the "track
record" of foreign companies, these contractors proved ineffective in
Vietnam.
The result was that while many
projects have broken ground years ago, there has often been very little
progress on the project site and no ones know when they could be finished.
Foreign investors have given
different reasons for the delay.
Khoa said that the lack of
financial resources was the first and the essential reason for the delay in all
projects.
"At present, many projects'
developer could not disburse capital investment to the contractors, therefore
contractors could not push the projects ahead," Khoa said.
Moreover, Khoa said bidders'
chosen activities were not transparent and effective.
In order to push the projects'
process ahead, Khoa said related laws on biddings must be strictly followed, to
clearly clarify the right of the developers, contractors and government as
well.
In June, Korea's Keangnam was
fined in two major northern highway projects after dropping behind the Ministry
of Transport deadlines.
Slow progress is seen at the
$1.25 billion Noi Bai-Lao Cai project and the $476 million Hanoi-Thai Nguyen
expressway.
Meanwhile, local contractors are
also falling in the same situation with foreignones because of a shortage of
capital investment.
With most infrastructure projects
using foreign capital sources implemented by foreign contractors, their
domestic counterparts have been sidelined.
According to figures from
Ministry of Construction, around 150 infrastructure projects are constructed in
Vietnam each year, and most of them are carried out by contractors from Japan,
South Korea and China.
Limited financial capacity,
outdated equipment and low labour productivity have forced local contractors to
cede ground.
Because local contractors do not
have enough capital to implement such projects, they have to depend on credit
sources from international organizations like the Asian Development Bank, World
Bank, or Japan Bank for International Cooperation.
These loans often come with
certain conditions that are hard to meet, so only foreign contractors are found
eligible to win international bids.
Only a few Vietnamese contractors
like Vinaconex, Song Da and Licogi have the capacity to compete with foreign
rivals for Engineering Procurement Construction contracts in the domestic
market.
Figures from Vietnam Federation
of Civil Engineering Association show 99 per cent of the thousands of construction
projects underway in Vietnam were behind schedule.
Chung Ngoc | vir.com.vn
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