The Vietnamese Ministry of Transport (MoT)’s decision in adjusting the procurement process for sub-component projects of the Eastern North-South expressway project from international to domestic biddings presents good opportunities for domestic enterprises.
Former Director of the Central Institute for Economic Management (CIEM) Le Dang Doanh expressed his support for the MoT’s decision, saying this project has significant meaning in national security.
“Letting foreign contractors take charge of the project would pose potential risks to the country’s security,” Doanh said.
Meanwhile, this would be an opportunity for domestic contractor to prove their capabilities. “Although the national expressway project is a national priority with very high standards, local companies are fully capable of executing the project,” Doanh added.
Doanh also noted the government must pay special attention to the process of construction supervision and contractor selection. “Recent complaints surrounding the low quality of certain highway built by Vietnamese contractors are warnings for the government.”
The issue was not about the capacity of enterprises, but the supervision work of the authorities. Most projects suffer degradation because of poor execution and low quality materials used by contractors, Doanh stressed.
Sharing Doanh’s view, Pham Xuan Mai, a former lecturer at Ho Chi Minh University of Technology, said local enterprises must grasp this opportunity for further development.
However, Mai said changing the procurement method was only the first step as the most important one would the selection process.
Mai suggested the MoT screen thoroughly financial capabilities, experience and responsibilities of contractors, as in some case the awarded contractor resold the project to another.
Mai also said the government should set up an independent appraisal committee for the selection process of contractors, instead of only the MoT being the evaluator.
Surprise but necessary move
On September 24, the MoT announced the cancellation of international bidding process for eight sub-component projects of the Eastern North-South expressway project under the public-private partnership (PPP) arrangement.
According to the MoT, as of the end of July, two months since the issuance of bidding documents, the MoT’s project management units had received 60 proposals.
The evaluation of these proposals showed no one was qualified for preliminary process in four sub-component projects; only one proposal in each of two projects; one project with over two proposals and one with over three proposals qualified for preliminary evaluation.
“As a result, the number of bidders qualifying for preliminary qualification is low, leading to low competitiveness of the tender,” said the MoT in a statement.
Under this circumstance, the MoT has decided to cancel the result of preliminary qualification process under the form of international bidding, and opts for opening new domestic bidding process for all eight sub-component projects.
This would help “ensure national security and enhance capacity of Vietnamese enterprises in fields of infrastructure development,” added the MoT.
MoT’s decision was a surprise to the public, as two months ago, project management units under the MoT informed among 60 proposals, Chinese contractors made up the majority with 30 (under the form of joint-venture or single entity) and submitted proposals in all eight sub-component projects, the other 15 proposals were from investors of South Korea, France and the Philippines, and the remaining 15 from Vietnamese enterprises.
Notably, one of these Chinese contractors was China Railway Sixth Group, which was the EPC (Engineering, Procurement and Construction) contractor for the Cat Linh – Ha Dong railway project in Hanoi, a notorious project that has several times missed the deadlines and suffered hefty cost overruns.
The high number of Chinese contractors would lower the chance for domestic companies to win the bids.
Many experts said under this circumstance, the only way for local contractors is to team up to compete with foreign contractors.
The Eastern North-South expressway project is of national priority for investment in the 2017 – 2020 period, which includes 11 sub-projects with total length of 654 kilometers running through 13 provinces and cities, of which three will be financed by state budget and eight under the public private partnership (PPP) and build-operate-transfer (BOT) arrangements.
The 11 projects are estimated to cost a total of VND118 trillion (US$5.04 billion), including VND55 trillion (US$2.35 billion) in state capital to be pumped into three public investment projects, and counterpart funds for the other eight projects.
The eight projects include sections from Cao Bo (Nam Dinh province) to Bai Vot (Ha Tinh province); Cam Lo (Quang Tri) to La Son (Hue); Nha Trang (Khanh Hoa) to Dau Giay (Dong Nai); My Thuan 2 bridge (Tien Giang and Vinh Long).
Three public investment projects are Cao Bo (Nam Dinh) – Mai Son (Ninh Binh), Cam Lo (Quang Tri) – La Son (Thua Thien - Hue), and My Thuan 2 bridge (Tien Giang – Vinh Long).
