VietNamNet Bridge - Vietnam understands the potential risks behind Chinese ODA (official development assistance) and Chinese technologies, but it still needs Chinese capital.

 

 

Some analysts have made sarcastic remarks that Vietnam has fallen into the Chinese trap receiving ODA from the country. A series of accidents occurred during the implementation of the Cat Linh – Ha Dong railway project, causing serious damage. Meanwhile, the bauxite project in the Central Highlands is facing losses.

Dr. Nguyen Van Nam, a well-known expert, and former head of the Trade Research Institute, noted that no one is unaware of Chinese technologies and Chinese machines’ low quality. However, China has money to lend, which Vietnam is short of.

In fact, the capital can come not only from China, but also from Japan, ADB (Asian Development Bank) and France. However, it is China which wins the majority of bids.

Chinese contractors have big advantages: they can offer low bids and they have good financial capability to implement projects immediately with their advance money. 

“It (China) is a deep one,” an economist, who asked to be anonymous, said.  “Chinese contractors usually bid lower prices to win the bids, but they only do the easiest components of the projects, and then transfer the projects to others for money.”

The economist went on to say that China gets benefits in every way when providing ODA to Vietnam. It can make profits from the project transfer and it can sell materials to Vietnam, from steel to machines, and odds and ends.

In many cases, Chinese contractors deliberately prolong project implementation, blaming  that slow site clearance and other factors, and then ask to increase the projects’ estimates.

As such, though Chinese contractors initially offer low prices, they still can get well paid. The total investment capital for the Cat Linh-Ha Dong railway project, for example, has increased by 60 percent compared with the initial estimates.

Nam noted that in case the ODA providers are developed countries, the risks would be lower because the countries demand high transparency. 

Meanwhile, China is more “practical” and “cunning”, and therefore, it can pocket bigger money.

What can China bring to Vietnam? The answer is “backward technology, environmental damage and unreasonably expensive projects”. And what will this lead to? The answer is “polluted environment, economic stagnation and increasingly high debts”.

Dr. Pham Sy Liem, former deputy minister of construction, now chair of the Vietnam Construction Federation, noted that while other countries are vigilant about ODA-sourced capital, Vietnam still tries to attract ODA despite its bad management skills.

However, Liem noted that some Vietnamese agencies and businesses are aware of the heavy price they have to pay for ODA. 

“ODA capital seems to be cheap, but it is really expensive,” he said.

Dat Viet