Ministries disagree on Chinese-funded highway project
VietNamNet Bride - The Ministry of Transport (MOT) believes Vietnam should borrow $300 million from China if it chooses Chinese contractors for the highway project, while the ministries of Planning & Investment (MPI) and Finance (MOF) say Vietnam needs to be more cautious about the project.

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The Van Don-Mong Cai Highway, with the total length of 96 kilometers, is planned to be built with investment capital of $382 million in the first phase, which includes $304.6 million from the China Import/Export Bank. Meanwhile, Vietnamese reciprocal capital is $77.33 million.

The Van Don-Mong Cai highway is a component project of the Ha Long-Van Don-Mong Cai project. A BOT project has been approved for the Ha Long-Van Don section, while another project will be designed for the remaining section of road.

To date, relevant ministries still have no consensus on implementing the project.

MOT has proposed to apply the mechanism under which all foreign loans will be allocated to the project, i.e. Vietnam will borrow capital and appoint Chinese contractors. 

MOT has proposed to apply the mechanism under which all foreign loans will be allocated to the project, i.e. Vietnam will borrow capital and appoint Chinese contractors. 

The Ministry of Foreign Affairs (MOFA) agreed to develop the project with loans from China, but disagreed with MOT’s view on the capital allocation. It pointed out that this is a project with investment capital recovery capability, and MOT is not subject to relending, if referring to the Public Debt Management Law.

Meanwhile, MOF emphasized that the loan is conditional, i.e. Vietnam will have to use contractors, technology, machines and equipment from China. 

It believes that it is necessary to consider other sources for capital at lower costs and apply better technologies to avoid risks during project execution.

According to MOT, to date, China is the only investor showing interest in the project.

As for MPI, it believes that project development is a necessity, while the estimated cost of over $382 million is ‘reasonable’ considering the capital mobilization capability and transport demand.

However, it has proposed to p negotiate with China on more preferential conditions for the loan.

Meanwhile, economists have called on government agencies to be cautious with projects to be implemented with Chinese capital.

Nguyen Quang Toan from the Hanoi Transport University commented that it would be better to reconsider the plan MOT intends with the Van Don-Mong Cai highway.

“We need to be cautious when considering the project. I think we will take risks if following the plan,” he said.

He went on to say that MOF has every reason to worry about the requirements on using Chinese technologies and equipment. 

Many projects funded by China and implemented by Chinese contractors have been found ‘problematic’ and Vietnam needs to learn lessons from that.


Kim Chi

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