Vietnam's economists raise concerns about China's dominance in development projects

By Manh Quan, Thanh Nien News

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Vietnamese economists expressed concerns about the country's heavy economic dependence on China and alleged that certain groups and individuals have unduly benefited from Chinese-invested projects during a workshop held Thursday in Hanoi.
He did not elaborate on who those groups or individuals were, but described their influence as "obvious."
The workshop held by the Vietnam Chamber of Commerce and Industry (VCCI) took place in the context of rising tensions caused by China's illegal deployment of a mobile oil rig in Vietnamese waters in early May.
Dr. Le Dang Doanh, former head of the Central Institute for Economic Management, told the conference that Vietnam has handed too much engineering, procurement and construction (EPC) work to Chinese contractors.
The projects they're involved in include cement plants, coal-fired power plants, transportation projects, bauxite mining projects and forest land leases along the border.
Undue influence over the selection of Chinese contractors can be clearly seen, he said, as Chinese investors are “masters of bribery.” 
“[Bribery] led to loopholes and eventually to Vietnam's economic dependence on China,” Doanh said. 
He called on the government to make the bidding process more transparent and investigate individuals who have awarded too many important projects to Chinese contractors--particularly energy projects.

A thermal power project being built by a Chinese contractor in Hai Phong City has lagged behind schedule for three years. Photo: Ha Nguyen.
He also called for revisions to Vietnam's procurement process and its Bidding Law.
Nguyen Van Thu, chairman of the Vietnam Association of Mechanical Industry (VAMI), confirmed that Chinese contractors have come to dominate Vietnamese industry, adding that most industrial projects in which investors are authorized to assign or choose contractors who offer the cheapest prices have been awarded to Chinese contractors.
“Between 2003 and 2011, Chinese contractors have been assigned to deliver EPC for five out of the country's six chemical projects, both of its mineral processing projects, 49 of its 62 cement projects, and 16 of its 27 thermal power projects.
“But most of the projects lagged behind schedule, some were finished 2-3 years behind schedule, and the quality of materials and equipment provided for the projects proved so poor they usually had to be replaced.”
He said Chinese contractors repeatedly pledged to use high-quality materials or equipment, but instead employed cheap substitutes to cut costs.
He said one of the contributing factors for the situation is that Vietnam’s bidding law places too much emphasis on  contractors who offer cheap prices rather than the quality of the contractors.
Thu said VAMI asked the government to investigate all industrial projects currently being implemented by Chinese contractors.
Representatives from the Vietnam National Textile and Garment Group (Vinatex) told the workshop that the industry is also highly dependent on China; 46 percent of its imported materials come from China.
Certain groups and individuals have controlled Chinese-invested projects and Chinese investors are masters of bribery. [Bribery] led to loopholes and eventually to Vietnam’s economic dependence on China” -- Le Dang Doanh, former head of the Central Institute for Economic Management
As the Vietnam-China economic relations continue to sour, Vietnamese textile and garment companies are seeking new partners to provide materials for production, said Dang Phuong Dung, secretary-general of Vinatex.
Dr. Vo Tri Thanh, vice director of the Central Institute for Economic Management, said Vietnam should speed up negotiations on its free trade agreement (FTA) with Europe and its Trans-Pacific Partnership (TPP) agreement to expand the options available to Vietnamese exporters.
Nguyen Hong Hai, secretary-general of Vietnam Association of Financial Investors, said Vietnam should take more drastic measures to prevent smuggling and tax fraud as a huge number of goods continue to be smuggled into Vietnam from China, contributing to a yawning trade gap.
“Vietnam is good at producing rice, coffee and rubber, so as a vendor of these products, we can freely choose our trading partners and markets,” he said.

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