Deputy Prime Minister Hoang Trung Hai has provided assurances that Vietnam will not suffer any dire consequences as a result of China’s recent suspension of bidding on projects in the Southeast Asian nation.

Deputy PM Hoang Trung Hai

In an exclusive interview provided to a Radio Voice of Vietnam (VOV) reporter on the sidelines of the NA Q&A session regarding the state of economic affairs with China, Deputy PM Hai quelled concerns that the Chinese move will negatively impact the nation’s economy.

Reporter: Chinese newspapers have recently reported that the Chinese Government has directed its state businesses to refrain from submitting bids on any new projects in Vietnam. Is this move troublesome?

Deputy PM: If Chinese contractors choose not to bid on projects, the consequences to Vietnam will be inconsequential, as bids from other foreign contractors will remain unaffected.  The decision really has no effect on Vietnam’s economy.

Reporter: Many people suspect many Chinese investors may disregard the ban on bidding because of the adverse financial consequences they may incur as a result.  What do you think about that?

Deputy PM: Factually, once a contractor’s bid has been accepted and the contract awarded, the contractor must comply with the provisions of the agreement to avoid substantial penalties resulting from noncompliance.

A number of Engineering, Procurement and Construction (EPC) projects funded by the World Bank (WB) and the Asian Development Bank (ADB) involve Chinese investors.  According to regulations, these international organizations have legal obligations to continue their investments and rights to submit bids on new projects in Vietnam. Therefore, these investments will remain unaffected by the suspension of bidding.

However, regarding EPC contracts under which businesses access credit loans from China; these enterprises should obey lending conditions of the Chinese government and live up to the ban. However, Vietnam should choose not to implement China’s EPC projects and award the projects to other interested foreign investors.

Reporter: Coming on the heels of recent tensions in the East Sea, many people are concerned about the progress of ongoing projects, implemented by Chinese contractors. What do you think?

Deputy PM: As a matter of principle, we can find substitute contractors and alternative credit sources if China says that it does not want to continue with existing contracts.   

However, Chinese contractors should fulfill their commitments for ongoing projects with Vietnam to avoid violations punishable by international commercial terms (INCOTERM). To date, there are no signs that Chinese contractors are not fully performing on these contracts.

For a handful of projects, Chinese labourers quit their job and returned home, we have dealt with the issue in the interests of both parties. As both nations are WTO members, we can simply follow the rules and laws of the WTO.

Reporter: As the main benefactor of these investments, will not Vietnam be damaged if they are suspended?

Deputy PM: For “win-win” contracts, both sides have equal rights. If they do not carry out the contracts, which will result in significant penalties, not the least of which is the negative effect it will have on their prestige.

Moreover, if Chinese contractors violate contracts, they will suffer risks of loss of capital resources they have lent Vietnam. Rights belong to both sides and are fair under the laws.

Reporter: However, some people are still concerned about some projects China is implementing. What measures has the Government taken deal with these projects?

Deputy PM: Both Government and businesses have their own plans. Any business activity has its risks and in principle, businesses should have solutions to cope with these risks.

If the Chinese interfere with the performance of the ongoing projects they are implementing, violations will be dealt with appropriately under the rules of contract law.

Regarding the supply of electricity, Vietnams has standby procedures in the event there should be any interruption in electrical supply. Vietnam has always had contingency plans for power outages, whatever the cause.

Reporter: Recently, there have been troubles for China-made transformers of Hiep Hoa 500KV transformer station. How do you plan to deal with the issue?

Deputy PM: The Hiep Hoa transformer station is a contract between the Electricity of Vietnam and a Chinese contractor. This is one of the ADB funded projects. At this time, it is not clear what the cause of the incident was. Until the facts are clear, we cannot say anything.

This is not the first time such a situation has arisen. Other manufacturers also encountered the similar incident. If mistakes belong to manufacturers, they will have to make compensation.