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Delayed payments leave workers in lurch

Update: September, 16/2013 - 08:10
Thanh Tri Bridge in Ha Noi was opened in 2007 but the balance sheet has not been settlled. Slowness in capital disbursement and settling balance sheets for infrastructure development projects is leading to rising public debts. — VNA/VNS Photo Anh Ton

HA NOI (VNS)— Localities and State agencies are struggling to seek funding for basic infrastructure development projects, according to a new report.

In some cases, work has been completed but payment is still due, causing major difficulties for constructors and their employees.

The report by the State Audit reveals that localities nationwide owe debts of around VND91 trillion (US$4.31 billion) from infrastructure spending up to the end of 2011.

Out of 63 provinces and cities surveyed, 15 have infrastructure development debts that are 2-3 times higher than initially planned.

For example: in central Ha Tinh Province, the public infrastructure development debt is nearly VND9.7 trillion ($460 million) or 2.93 times higher than planned, central Nghe An province VND6.3 trillion ($299 million) or 2.09 times higher, southern Dong Thap province VND3.3 trillion ($156.5 million) or 2.54 times higher and coastal Quang Ninh Province VND3 trillion ($142 million) or 1.16 times higher.

Tuoi Tre (Youth) newspaper reported that until June, nearly 3,200 employees in 98 companies under the Transport Ministry suffered a shortage of work. As a result, the companies did not pay out salaries worth a total of over VND160 billion ($7.59 million) and social/health insurance debt of VND255 billion ($10.67 million), according to the ministry's Trade Union.

Delayed payment was a feature of over 200 transport projects, with hold-ups and postponements of projects blamed for the shortage of work and overdue wages.

Pham Dinh Hanh, director of Hoa Hiep Ltd Company in central Vinh City said his company finished and handed over a State project roughly one year ago, but did not receive enough investment.

"We had to borrow from banks to have enough capital to develop constructions. When the State delayed paying us, we could not return the bank loan, so we faced many difficulties," he said.

In Ha Noi alone, major projects including Thanh Tri Bridge, Vinh Tuy Bridge and the city's Ring Road Number 3 have been in use for years but the projects' balance sheets have still not been settled.

Moreover, up to last June, total infrastructure development debt in 11 districts and towns was VND722.7 billion ($34.2 million), spanning across 1,100 projects.

Hoang Van Hung, an official at Ha Noi's Ba Vi District Finance Department, said the district's budget lacked funding for infrastructure development as it collected about VND70 billion but spent about VND1.3 trillion in an average year.

At commune level, funding for public works mostly came from auctioning land use rights, he said, noting that it was increasingly difficult to mobilise capital this way due to the ailing real estate market.

Vice chairman of Ha Noi Municipal People's Committee Nguyen Huy Tuong said that in the context of limited resources but a huge need to develop infrastructure, many State agencies still invested inefficiently, contributing to the public debts.

Vice head of the Central Institute for Economic Management Vo Tri Thanh, as quoted in Kinh te & Do thi (Economy and Urban Area) newspaper, said that addressing infrastructure development debts was very difficult because most were incurred a long time ago and in complicated fashion.

On one side, investors – usually State agencies – did not have enough money to pour into projects which had been approved but suffered from slow disbursement.

On the other side, many constructors offered the lowest project cost possible to win the contract and agreed to allow late payments, Thanh said, adding that when their business suffered losses, they found it even harder to manage their debts.

Deputy Minister of Finance Pham Sy Danh said the ministry had asked localities to not develop new projects unless they could arrange money to pay outstanding infrastructure development debts.

In addition, localities were told to avoid spending more than the approved capital on any projects and to ensure that constructors did not need to spend any money in advance. — VNS


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