The original article by Ngoc Mai appeared in The Hanoi Times.
Vietnam to push for greater transparency in Chinese-funded projects
The Hanoitimes – For Chinese-funded projects with specific requirement of selecting Chinese contractors, there are concerns over project quality and implementation progress, particularly the engineering – procurement and construction (EPC) form of contracts. Vietnam’s Ministry of Transport (MoT) is expected to work with other government agencies during the process of negotiating financing agreement with international donors, including those from China, to ensure greater transparency, fairness and efficiency in selecting contractors.
The MoT made the statement in response to concern from National Assembly deputy regarding the bidding process for transportation projects, particularly with those involving Chinese contractors.
According to the MoT, international bidding shall be held to select tenderer only when it meets conditions stipulated in the Law on Bidding, including: the donor of bidding package requests for holding international bidding; Tender packages for procurement of goods where the goods are not yet able to be manufactured domestically or able to be manufactured but fail to meet technical, quality or price requirements; Bidding packages of providing advisory service, non-advisory service, construction and installation, mixture provision which domestic tenderers are not able to satisfy requirements of bidding package performance.
Infrastructure development projects using government funds, therefore, are not subject to international bidding, stated the MoT.
However, Chinese investors are allowed to take part in the bidding process for ODA-funded projects on the condition of meeting requirements of the financing agreements, as well as bidding instruction of the donors.
The MoT said with projects financed by JICA, EDCF, World Bank, ADB, among others, Chinese contractors have met requirements regarding process and construction quality. But for Chinese-funded projects with specific requirement of selecting Chinese contractors, there are concerns over project quality and implementation progress, particularly the engineering – procurement and construction (EPC) form of contracts.
The MoT attributes these issues to the lack of legal frameworks in managing and implementing turnkey contract.
This is particularly difficult for projects using new technologies, requiring thorough consideration and review before signing financing agreement, stated the MoT.
Previously, the Vietnam Institute for Economic and Policy Research (VEPR) and the US-based Center for International Private Enterprise (CIPE) jointly released a survey which revealed 19 out of 30 coal-fired power plant projects financed by Chinese capital in Vietnam under the form of EPC contract have experienced delay besides using outdated technologies which pose risks to the environment.
Minister of Planning and Investment Nguyen Chi Dung in a meeting on July 18 requested provinces to be more selective and refrain from issuing investment licenses for FDI projects that use outdated technologies, consume to much energy and pose risks of trade fraud.
Vietnam is scheduled to tighten its standards and technical specifications regarding products, environment, resources and cost efficiency during the process of reviewing FDI projects, Dung continued.
FDI commitments in the January – June period totaled US$18.47 billion, down 9.2% year-on-year, while disbursement of FDI projects totaled US$9.1 billion in the six-month period, representing an increase of nearly 8% year-on-year, a report of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment has shown.
The data shows that out of 95 countries and territories investing in Vietnam in the six-month period, Hong Kong (China) took the lead with US$5.3 billion, accounting for 28.7% of total investment, and China at the third place with US$2.29 billion, or 12.4% of the total.