Construction enterprises need Government support

VietNamNet Bridge – Nguyen Quoc Hiep, Chairman of the Viet Nam Construction Tenders speaks to the Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper on challenges facing construction enterprises.

Many have complained that property prices in Viet Nam are too high compared to income. What do you think?

Though legal documents relating to real estate development in our country have achieved notable progress, there is still room for improvement – particularly in land prices.

According to our law, power over land price is held by local provincial governments to make decisions based on land prices set by the provincial government.

Land prices in a real estate project are often very high, accounting for about 20-25 per cent of a house/apartment – excluding the cost of land clearance which is a key factor making the price of real estate rocket. In addition, the new owner of the house or a flat has to pay land use tax.

All in all, the buyers have to bear all costs incurred by their homes.

Is debt in infrastructure construction the biggest concern for any builder?

Debt in infrastructure construction is not easy to count. According to the Ministry of Planning and Investment, in 2014, infrastructure construction debt was about VND21 trillion ($924 million). However, the figure has dropped, but it still remains a serious problem for constructors.

How can we solve this problem?

There are various reasons leading to the outstanding debt problem. In my opinion, the leading cause is the wide spread of public investment. It has crossed the benchmark of the State budget. To solve this problem, there are several measures that can be applied.

First, we should look at each case carefully and come up with options to solve the problem.

Second, we should revise the Law on Construction and the Law on Tendering and other related legal documents. I strongly recommend that the law should state clearly that the project owner must pay the tenders at least 60-70 per cent of the construction cost while the remaining sum must be deposited in banks as a guarantee.

When the tenders have accomplished all commitments as written in the contracts, the project owners have to pay the contractors the remaining 30-40 per cent deposit money.

Last but not least, we want the Law on Tendering and related legal documents to be completed and made public soon.

How does the quality of State construction enterprises compare with private ones?

In the past, State construction enterprises played a dominant role in construction. But in the last decade, joint stock companies like CoteCcons, Delta, Hoa Binh, CoFico and others have become emerging construction companies for their high quality performance. This is food for thought for the State or joint stock companies to consider how to improve their performance so that they remain a strong force in the construction market.

Recently, the Government has been determined in equitising many State-owned construction companies. But the process has not been up to expectation. My colleagues and I would like to request the Government to review the equitising process. If the Government sees an enterprise’s roles as unimportant, they should be privatised.

Source: VNS