Ministry admits to poor quality control over Chinese contractors
The Ministry of Planning and Investment has had to explain why Chinese firms continue to win tenders for major projects in Vietnam despite being tardy, unsafe, and of poor-quality.
The MPI admitted the fact that more Chinese firms have become contractors despite the slow pace of construction and quick deterioration of the projects after being put into operation.
According to the MPI, the main cause of this is Vietnam’s reliance on Chinese loans, so the country has to accept Chinese contractors as an article in the loan agreements.
Secondly, the budgets for Vietnamese projects are often low in value, so firms which offer advanced technologies fail due to being too expensive.
A lack of domestic ability to appraise bidding procedures also remains low, and there are not sufficient technical barriers to eliminate poor-quality bids.
Experts said that Vietnam needs to reduce its dependence on Chinese loans by attracting more private and foreign investment for its projects as well as raising the capacity to appraise and select contractors.
The MPI said that investors have to judge the quality of previous contract implementation when taking into account bids. For instance, contractors which have a history of failing to fulfill their contracts earlier will be rejected.
Vietnamese investors should be careful in negotiating contracts with Chinese firms have provided tardy, unsafe, and poor-quality work.
Chinese contractors are known for bidding low to win contracts, then asking for more, citing unexpected cost overruns. Many Chinese-contracted projects are likely to reach completion behind schedule, amassing further costs.
The Cat Linh-Ha Dong urban railway project in Hanoi with China Railway Sixth Group as the engineering, procurement and construction contractor is a typical example. The project cost has risen to USD868 million from an initial USD553 million.
Thai Nguyen Iron and Steel Plant - Phase 2 won by the China Metallurgical Group Corporation (MCC) was kicked off in 2007 with an estimated cost of VND3.8 trillion (USD170.4 million), this later increased to VND8 trillion (USD361.4 million).
The MPI admitted the fact that more Chinese firms have become contractors despite the slow pace of construction and quick deterioration of the projects after being put into operation.
According to the MPI, the main cause of this is Vietnam’s reliance on Chinese loans, so the country has to accept Chinese contractors as an article in the loan agreements.
Secondly, the budgets for Vietnamese projects are often low in value, so firms which offer advanced technologies fail due to being too expensive.
A lack of domestic ability to appraise bidding procedures also remains low, and there are not sufficient technical barriers to eliminate poor-quality bids.
Experts said that Vietnam needs to reduce its dependence on Chinese loans by attracting more private and foreign investment for its projects as well as raising the capacity to appraise and select contractors.
The MPI said that investors have to judge the quality of previous contract implementation when taking into account bids. For instance, contractors which have a history of failing to fulfill their contracts earlier will be rejected.
Vietnamese investors should be careful in negotiating contracts with Chinese firms have provided tardy, unsafe, and poor-quality work.
Chinese contractors are known for bidding low to win contracts, then asking for more, citing unexpected cost overruns. Many Chinese-contracted projects are likely to reach completion behind schedule, amassing further costs.
The Cat Linh-Ha Dong urban railway project in Hanoi with China Railway Sixth Group as the engineering, procurement and construction contractor is a typical example. The project cost has risen to USD868 million from an initial USD553 million.
Thai Nguyen Iron and Steel Plant - Phase 2 won by the China Metallurgical Group Corporation (MCC) was kicked off in 2007 with an estimated cost of VND3.8 trillion (USD170.4 million), this later increased to VND8 trillion (USD361.4 million).
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