Nowadays, more and more foreign investors are dragging out payments to Vietnamese contractors and sub-contractors as local companies lack information about their investors’ financial capabilities, which has caused big headaches to not only Light Industrial Construction Co (Descon) but also local contractors, said Nguyen Xuan Bang, general director of Descon.
The total figure of unrecoverable receivables from foreign investors has not been compiled, but it is clear that the sum has been increasing, experts have said. For instance, foreign investors owe 12 billion of the 15 billion dong receivable owed to Descon, said Bang.
According to Bang, legal matters in relation to equipment installation contracts are still undermining the advantages of Vietnamese contractors. “In many projects, consultants or contractors usually apply foreign-designed standards and foreign principles to the implementation of bid packages of these projects and also make use of the foreign Law on Contract Dispute to the projects. If any dispute occurs between local and international contractors, this dispute must be settled at arbitration courts in foreign countries. Therefore, once a disputes occurs, the winner of lawsuit concerning these disputes surely must be the foreign side,” said Bang.
Moreover, the financial conditions in tender contracts are usually related to the foreign-invested capital. At present, the money remained in conformity with the contract is sometimes occupied by foreign investor owners with a series of dissatisfied reasons, said Bang.
Bang as an example said the Nam Con Son Gas Project, which is Vietnam’s first huge gas project and also the biggest ever foreign investment project of the country. This project is run by PetroVietnam and its partners, including BP (UK), ONGC Videsh (India) and ConocoPhillips (US). The project is predicted to provide three billion gas cubic meters yearly, enough to produce 12 billion kWh of electricity, equivalent to 40% of Vietnam current electricity demand, after handing over the work to the investor—PetroVietnam, the project’s main contractor and material supplier—Macdow disappeared out of Vietnam and allegedly left behind an unpaid debt amounting to millions of US dollars.
While most of local contractors or businesses are working faithfully and respect commitments, there are still a few foreign investors and contractors take great advantages of the shortage in the legal basis of Vietnam and weak legal capacity of local contractors to earn profits, said Bang.
Bang has called for a suitable resolution to protect Vietnamese contractors from the risks caused by foreign investors.