North-south expressway out of reach for Vietnamese because of requirements

The requirements on financial capability and experience that contractors must have for the north-south expressway project are out of reach of domestic enterprises.

According to the Ministry of Transport (MOT), the project management unit has issued 120 dossiers to select investors for eight component projects, including 26 domestic and 14 foreign investors.

North-south expressway out of reach for Vietnamese because of requirements



In mid-July, MOT will finalize the list of investors registering to join the project and then begin selecting contractors in accordance with the criteria.

Vu Duc Nhan, deputy CEO of Phuong Thanh, which is managing the Phap Van – Cau Gie highway, said his company wants to attend the bid, but finds it difficult to compete with foreign investors.

In mid-July, MOT will finalize the list of investors registering to join the project and then begin selecting contractors in accordance with the criteria.

 

He said few Vietnamese investors can satisfy the requirements on capability and experience. Contractors, for example, have to have stockholder equity equal to 20 percent of the project’s capital. If noting that a component project is capitalized at VND5-10 trillion, the stockholder equity that an enterprise must have would be at least VND1 trillion.

Besides, enterprises must have experience in executing projects with similar scale. Vietnamese enterprises have executed only large-scale projects recently such as Ha Long – Van Don and Bac Giang – Lang Son, so they don’t have much experience.

Another big difficulty for Vietnamese contractors lies in the access to bank loans. Commercial banks now tend to tighten lending or lend at high interest rates to BOT projects.

Bank loans have an interest rate of over 11 percent on average. Meanwhile, some BOT projects have revenue lower than initially estimated.

Deputy chair of Deo Ca Group Tran Van The also said domestic investors want to contribute to the construction of the north-south expressway, but with the requirements set by MOT, the opportunities for domestic investors are not high.

The projects they executed in the past must be at least equal to 50 percent of the scale of the north-south expressway, or VND4-5 trillion.

“Very few enterprises had opportunities to join such large projects,” he said.

Asked why Vietnamese enterprises don’t think of joining other investors to satisfy the requirements, he said the cooperation will have enough capital but experience will still be a problem. Moreover, it is not easy to find partners.

Le Dang Doanh, a respected economist, said a policy on allowing domestic enterprises to implement the north-south expressway project should be developed. And criteria should be set that is favorable for domestic enterprises to join others to win the bids.

Xuan Thuy

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