Hanoi (VNA) – Domestic investors find it hard to carry out the North-South expressway project, and they are waiting for the Government and the State Bank of Vietnam to remove capital bottlenecks.

The expressway will be 654km in length and has total investment of 118.7 trillion VND (5.1 billion USD).

The expressway will run through 13 provinces and cities from the northern province of Nam Dịnh to the southern province of Vinh Long.

The expressway will be separated into 11 sub-projects, of which three are public ones, and eight are implemented in a public-private-partnership (PPP) model.

The transport ministry announced on September 23 they would cancel open international bidding for eight projects of the North-South expressway, in favour of homegrown investors.

The decision was made on the consensus reached after consulting relevant agencies, transport ministry said in an announcement sent to the media, adding that it would adjust pre-qualification bidding invitations to better suit open domestic bids for eight public-private-partnership (PPP) projects for the eastern section of the trans-Vietnam highway.

Experts said that the project’s success depends largely on local investors who have considerable experience and financial capacity.

Criteria for domestic investors

The transport ministry's project management boards had received 60 applications as of the end of July, two months after the international bidding invitation.

Four of the projects did not have investors that passed the prequalification requirements; two projects had only one; one project had two; and one project had three, according to the report made by the procuring entity and State agencies. 

“The number of investors passing this stage was not high, leading to a lack of competition,” the ministry said.

As a result, the projects for the eastern section of the North-South Expressway are being re-examined to take into account global and regional disputes and national security concerns, as well as the empowerment of domestic enterprises.

Domestic investors, according to the ministry, are fully capable of implementing construction sub-projects for the expressway project.

Domestic investors, according to the ministry, are fully capable of implementing construction sub-projects for the expressway project.

However, experts have pointed out that Vietnamese investors face major challenges because of financial limitations, which would require them to seek alliances (in the form of joint-ventures) to pass the prequalification stage.

Deputy Director of the ministry’s Transport’s Public-Private Partnership Department Nguyen Viet Huy said that the criteria for investors would remain unchanged and would be in line on the Law on Bidding.

Domestic investors have been asked to meet the minimum standards specified by the law and Government Decree No. 20, and to have equity capital that reaches 20 percent of the total costs. Or, the investor could have total capital that is equal to at least 50 percent of the total investment for the project under construction.

“Investors who satisfy all the requirements can attend the prequalification for the eastern section project for the North-South Expressway,” Huy said.

“The transport ministry is joining hands with the Ministry of Planning and Investment to consider criteria on experience capacity so as to facilitate conditions for domestic investors to engage in the project, helping increase competitive edge, transparency and efficiency of the project”, he added.

Regarding the criteria for having "at least 50 per cent of the total investment for a project under construction”, Huy said investors could form a joint-venture with another investor.

“The ministry will meet with related ministries and agencies soon to discuss the issue. The plan is to hold another prequalification in October and results are expected to be released by 2020,” he added.

Meanwhile, Deputy Minister of Transport Nguyen Ngoc Dong said that the ministry is asking competent ministries to consider and reduce criteria on experience.

Transport expert Nguyen Xuan Thuy said that domestic investors should be given priority for the key national projects like the North-South Expressway to ensure quality and reduce costs.

“Only a few international investors joined the bidding because they may have not met the criteria or they were concerned about issues related to procedures, capital, interest, and other matters. Also, the project might not be attractive enough for them,” said Thuy.  

Since domestic investors would likely face financial challenges, he recommended that they cooperate with others.

“Large Vietnamese corporations such as Vingroup, Sun Group and T&T can work with road construction companies to have sufficient financial resources and at the same time meet standards related to experience," Thuy said.

Loan bottlenecks

Cancelling international bidding for the North-South Expressway project will be an opportunity for local firms, according to Vice Chairman of Deo Ca Group Tran Van The.

He recommended the transport ministry to pay due attention to criteria on experience and financial capacity of the investors, as well as their project management capacity.

“If local firms set up joint ventures, they will be able to carry out the trans-Vietnam express way project with good quality and timely progress. The Government should outline drastic measures, asking commercial banks to engage in the project. In case of necessity, the Government should increase capital for the banks so that they will have sufficient capital for the expressway project”, The said.

Domestic investors face capital challenge for North-South expressway hinh anh 1Construction of the North-South Expressway will be completed by 2021 (Photo: VietnamPlus).

Chairman and CEO of Phuong Thanh Transport Construction and Investment Joint Stock Company Pham Van Khoi said his company is establishing a joint venture with an investor to join the project; however, credit is still a big challenge.

Admitting that the investors will find it difficult to ask for bank loans for the expressway, Dong said that the transport ministry has already reported the issue to the Government, hoping that rational measures will be penned to remove bottlenecks for the project.

“The credit amount depends on existing regulations, while the feasibility of the project needs to be studied carefully. In case there is no investor, the transport ministry will recommend the National Assembly’s Standing Committee to move to public investment”, Dong stressed./.