Vietnam struggles to deal with loss-making megaprojects
>> Ministry of Industry and Trade facing 12 loss-making projects
Ngo Tri Long, former head of the Institute for Market and Price Research under the Ministry of Finance blamed both Chinese contractors and Vietnamese investors for 12 failing major projects.
In an interview with the Phap Luat TP HCM Newspaper, Long said the consequences of those loss-making projects would be huge and badly affect lives. Vietnamese investors still lack experience in negotiating with Chinese contractors. More importantly, the terms of the technology and standards are so unclear that it led to many disputes that are hard to solve.
However, he agreed with the opinions that the Vietnamese investors must take the blame as they ignore the regulations and previous experience just to cut costs.
"They didn't even ask what are needed for the settlement procedures beforehand," Long said. "They didn't monitor the construction closely enough."
Long also thinks that the Vietnamese investors are weak in project planning, evaluating and monitoring. And their weak abilities lead to overshooting their budget. For example, the estimated investment for Thai Nguyen Iron and Steel Project was VND3.8trn (USD167m) but it was raised to nearly VND9trn.
Investors of bio-fuel projects haven't calculated input costs and the prices of the goods carefully enough. For example, cassava prices were only a few thousands of VND per kilo previously, but have gone up to tens of thousands of VND. Investment was poured into three plants while biofuel was still new and hasn't been sufficiently distributed nor promoted with consumers.
"The authorities have thought about restructuring, divestment, co-operating with foreign firms and bankruptcy. Some projects that are facing losses because of out-dated technology and high costs like Ninh Binh Nitrogenous Fertiliser Plant and Thai Nguyen Iron and Steel JSC will find it difficult to call for investment," Long said.
As state budget is limited, bankruptcy is a solution to deal with unsalvageable projects.
Deputy Prime Minister Vuong Dinh Hue also said of 12 projects, those that cannot be restructured will undergo divestment, auction or be forced into bankruptcy. The state budget will not be used to cover the losses of such projects.
In an interview with the Phap Luat TP HCM Newspaper, Long said the consequences of those loss-making projects would be huge and badly affect lives. Vietnamese investors still lack experience in negotiating with Chinese contractors. More importantly, the terms of the technology and standards are so unclear that it led to many disputes that are hard to solve.
Ngo Tri Long, former head of the Institute for Market and Price Research
However, he agreed with the opinions that the Vietnamese investors must take the blame as they ignore the regulations and previous experience just to cut costs.
"They didn't even ask what are needed for the settlement procedures beforehand," Long said. "They didn't monitor the construction closely enough."
Long also thinks that the Vietnamese investors are weak in project planning, evaluating and monitoring. And their weak abilities lead to overshooting their budget. For example, the estimated investment for Thai Nguyen Iron and Steel Project was VND3.8trn (USD167m) but it was raised to nearly VND9trn.
Investors of bio-fuel projects haven't calculated input costs and the prices of the goods carefully enough. For example, cassava prices were only a few thousands of VND per kilo previously, but have gone up to tens of thousands of VND. Investment was poured into three plants while biofuel was still new and hasn't been sufficiently distributed nor promoted with consumers.
"The authorities have thought about restructuring, divestment, co-operating with foreign firms and bankruptcy. Some projects that are facing losses because of out-dated technology and high costs like Ninh Binh Nitrogenous Fertiliser Plant and Thai Nguyen Iron and Steel JSC will find it difficult to call for investment," Long said.
As state budget is limited, bankruptcy is a solution to deal with unsalvageable projects.
Deputy Prime Minister Vuong Dinh Hue also said of 12 projects, those that cannot be restructured will undergo divestment, auction or be forced into bankruptcy. The state budget will not be used to cover the losses of such projects.
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