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HCM City pushed to pay back loans

Update: September, 12/2015 - 08:45
A view of the Thu Thiem New Urban Area. The HCM City will face pressure next year paying its debt and interest on a loan borrowed to develop the area. — Photo
HCM CITY (VNS)— HCM City will face pressure next year paying its debt and interest on a loan borrowed to develop the Thu Thiem New Urban Area, according to the city government.

In a document sent to the Prime Minister, the city government said VND29 trillion (US$1.33 billion) had been invested in the Thu Thiem area.

The funds have been used for land clearance, resettlement, and social and technical infrastructure development.

Of the amount, the city used VND12 trillion ($545 million) from the State budget, and VND4 trillion ($181 million) collected from exploiting land and resettlement programmes for investment.

For the remaining VND13 trillion ($590 million), the city had to borrow from commercial banks. With the debt, the city has to pay VND2.9 billion in interest per day.

In 2015 the city must pay VND903 billion in interest. Next year, the city has to pay VND5.24 trillion and an additional VND829 billion in interest.

The city is also responsible for paying unsettled land clearance cases, infrastructure development in the peninsula, and building 12,500 apartments for resettlement. The payments are estimated to be VND5 trillion in 2015 and over VND8 trillion in 2016.

The land clearance compensation tasks have mostly been completed. Payments have been made for 14,346 out of 14,350 cases, with total disbursed money of VND17,288 billion.

Facing high financial pressure, the HCM City government is seeking approval from the Prime Minister to appoint investors for some projects, instead of going through a bidding process.

If approved, this would help to quickly raise money to pay for debt, interest and other purposes, the city said. The city wants to appoint a local investor to develop VND7-trillion Song Viet Complex in Thu Thiem New Urban Area's functional zone No. 1.

The Song Viet Complex and international standard trade center area will be invested in by Quoc Loc Phat Joint Stock Company. It is expected that the project will break ground next year.

Joint ventures

Previously, the city asked the government to allow joint ventures of seven South Korean and Japanese companies investing in Thu Thiem Eco Smart City (total investment of US$2.2 billion).

The project comprises trade centers, hotels, serviced apartments, office buildings and apartment buildings. The city government has also called for investment in Thu Thiem.

However, the results have not met expectations as infrastructure has not been developed well on the peninsula where the new urban area is to be located.

Currently, only the Thu Thiem Tunnel, Thu Thiem 1 Bridge, and Mai Chi Tho Road are the roads linking the peninsula with the city centre.

Plans for developing the 930ha Thu Thiem New Urban Area were approved by the central government in 1994.

HCM City has spent the last 10 years relocating 15,000 households from the area in District 2 to make way for the mega project. — VNS

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