May 27, 2018 04:31

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Investment in construction: Many obstacles leading to long outstanding debts

20:59 | 13/05/2018

VCN - According to experts, the field of capital construction is very broad and involves many ministries, sectors, and laws. As a result, ministries and sectors need to organize direct dialogues with those who are directly affected by laws on this field to comprehensively deal with the proposals, so that these agencies can explain, absorb, settle and add new mechanisms and policies to remove difficulties and problems, contributing to raising efficiency and preventing wastefulness in construction investment.

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investment in construction many obstacles leading to long outstanding debts
Direct dialogue with those who are directly affected by the laws on construction investment to solve problems. Photo: H.ANH.


Long settlement period

At present, construction investment is governed by 12 laws, many decrees and resolutions of the Government, the Prime Minister, circulars guiding ministries and sectors and more than 20,000 technical and economic standards from the stage of defining the investment policy, the need for investment capital, the investment preparation, the construction investment and the finalization of the construction investment to put the project into operation.

According to the Ministry of Construction, difficulties and problems related to institutions and legal regulations occur in three stages including the investment preparation, the project implementation and the finalization of project to put it into operation. Specifically, at the finalization of the project, there are still problems in the settlement period of project capital being longer than the regulatory period . Accordingly, in 2016, 12,255 projects violated the settlement period (accounting for over 14% of completed projects), of which more than 5,400 projects violated the settlement period over 2 years, up more than 1,100 projects ( 27%) compared to 2015. This was due to the fact that many projects lack legal basis and have poor quality records; investors, and project management boards lack experience and abilities; the settlement process of a construction project does not strictly abide by agreements in the contract and construction law. The verification and approval of completed projects is still slow.

Also the Ministry of Construction said that in 2016, about 9,700 completed projects have submitted their settlement reports but have not yet been approved due to insufficient project settlement documents, the agency in charge of verifying and approving the project was overloaded; capacity of organization and individuals in charge of verification of the project settlement fail to meet the requirements.

Regarding difficulties and obstacles in the settlement of projects, Vietnam Engineering Consultant Association also said that in terms of the settlement period, Decree 32/2015 / ND-CP on management of construction costs stipulates that project investors must prepare the settlement dossier to submit to the person in charge for approval at least 9 months for national important projects and group A projects, 6 months for group B projects. and 3 months for group C projects from the date the construction works are completed and put into operation. After 6 months from the date of issuance of the decision approving the settlement of investment capital of the completed project, the investor shall be responsible for paying the debt and closing the project account at the investment capital payment agency. However, it is a fact that no construction projects using state capital can meet the deadlines for project settlement mentioned above.

The Association emphasized that, "In fact, many projects, including national important projects and many Group A projects have to take many years to complete the approval since the acceptance of the handing over to put the projects into operation .. As a result, outstanding debts in capital construction are also prolonged. This situation is caused by two main reasons: The participants of the settlement have not really paid attention, or the regulations on the settlement period of projects in legal documents is not feasible. Specifically, the settlement period stipulated in Decree 32/2015 / ND-CP is impossible because many contents need to be checked, reviewed and considered carefully before submitting to the competent agencies for approval. In addition, submission period of the project settlement after handing over and putting the projects into operation for national important projects is no later than 9 month, while the verification and approval period under Circular 09 / 2016 of Ministry of Finance requires 7 months.

Needs direct dialogue to remove obstacles

According to the Vietnam Engineering Consultant Association, the settlement of construction investment projects plays a very important role, so it should be clarified in the Construction Law. Competent agencies should make real statistics, announce the period for settlement of construction investment projects (including period of submission and verification of approval), and assess the handling of outstanding debts of capital construction after completing the projects. Thereby, evaluating actual causes, study the development of mechanisms and policies on settlement period and methods to be close to the reality and meet the requirements of the assigned target.

Regarding the problem on the classification of funds, the Vietnam Chamber of Commerce and Industry (VCCI) also said that there are many problems arising from management of projects funded by different sources. Specifically, the Construction Law, the Law on Public Investment, the Law on Investment, the Law on Procurement, the Law on the Management of the Use of State Capital to invest in production and business at enterprises do not stipulate clearly and uniformly the scope and the content of the concept of "investment project", "state capital", "business investment", which makes it difficult for enterprises to apply the law, especially in the process of inspection and examination. The Construction Law and decrees and circulars have clauses that lead to the understanding that all sources are state budget funded. Therefore, a concept to distinguish between the state fund (state budget and non-state budget) and other funds should be required. At the same time, a specific regulation on type of project under public private partnership (PPP) form should be issued to create favorable conditions for investors and state management agencies.

Mentioning the content of the Constitution of 2013 in which the State recovers land used by organizations and individuals in the case of real necessity prescribed by law for purposes of national defense, security and socio-economic development for the national and public benefit, but Mr. Tran Ngoc Hung, President of Vietnam Construction Association said that the regulation of Land Law on this issue is very "open". Almost all projects are eligible as recovery land for the state management agencies to have the right to transfer the land and lease the land without auction, which leads to the asking and giving situation of projects built on golden land such as office land, factories and warehouses. Because investors get huge benefits due to differences of land fees (compensating at low price and selling at market prices including group benefits from these projects). "Therefore, it is proposed to amend all Article 62 of the Land Law toward that the state only recovers land in really necessary cases for the national and public interests. Land must be auctioned with all economic development projects not for the purposes of national defense and public security," Tran Ngoc Hung stressed.

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VCN- Being an important area in the economy, but in Vietnam, the construction sector has many overlapped ...

According to experts, the field of capital construction is very broad and involves many ministries, sectors, and laws. As a result, ministries and sectors need to organize direct dialogues with those who are directly affected by laws on this field to comprehensively deal with the proposals, so that these agencies can explain, absorb, settle and add new mechanisms and policies to remove difficulties and problems, contributing to raising efficiency and preventing wastefulness in construction investment.

Mr. Tran Ngoc Hung, President of Vietnam Construction Association:

Policies and mechanisms on capital construction have a decisive impact on fighting against wastefulness and raising investment efficiency, currently accounting for 30-35% of GDP of the economy. However, in general, the investment efficiency is still at a low level. It is reflected by the ICOR (Incremantal Capital - Output Ratio), which is still very high compared to other countries in the region and the world. The situation of wastefulness is very common and many policies are not appropriate and do not promote the strength of society and the market. Administrative procedures are cumbersome, which obstructs the production and business activities.

By Hoai Anh/ Huyen Trang