A digging robot used to construct Bến Thành Market Station. Metro Line 1 in HCM City as part of one of the biggest ODA projects that JICA has implemented in Việt Nam. — VNA/VNS Photo Trần Xuân Tình

HÀ NỘI — Delays to disbursement of official development assistance (ODA) for HCM City’s Metro Line 1 project pose a danger of setting a bad precedent and negatively affecting the implementation of other Japanese-funded projects in Việt Nam.

Speaking at an annual press conference held by the Japan International Cooperation Agency (JICA) Việt Nam Office on Thursday, Senior Representative Takahashi Junko said if the project total investment could not be adjusted from VNĐ17 trillion (US$731 million) to VNĐ47 billion ($2 billion) by November 2019, the situation would be worsened.

 “Because Metro Line 1 is a very significant project that has attracted a lot of attention even from Japan, its implementation will affect the mindset of the Japanese government, especially at the moment, when Việt Nam is preparing for the next medium-term investment plan from 2021 to 2025” said Takahashi.

The project was first approved in 2007 with an initial budget of VNĐ17 trillion. However, in 2011, the city asked the Government to increase the budget to a massive VNĐ47 trillion.  

According to the Ministry of Transport, planning for the project started in 2006. At that time, Việt Nam had not embarked a project of this kind, hence the estimate being well below the actual cost.

In July, HCM City People’s Committee also asked the Ministry of Planning and Investment (MPI) to revise the cost of its first two metro lines. This adjustment has yet to be approved, so ODA disbursement has been delayed.

The first route connecting Bến Thành Market and Suối Tiên Water Park is more than 60 per cent complete.

Although Takahashi refused to reveal the amount of money withheld from contractors, including Japanese firms, the JICA representative said: “It's quite large”.

“I think this is the biggest project we have which has ever been delayed,” she added.

According to Takahashi, the problem was the central Government was being slow to issue instructions to HCM City, while the city authorities had raised the budget several times to support payment for the project.

“I hope that by November everything will be settled,” she said.  

 According to Konaka Tetsuo, JICA Việt Nam Office Chief Representative, the agency was working closely with Vietnamese partners to accelerate ODA projects in the country.

“The disbursement performance of 2018 was slow due to payment delays in ongoing projects, HCM City Metro Line 1 for example. This is not only a problem for JICA and the Japanese government; it's a problem for other international organisations and sponsors that are experiencing the same situation,” he said.

“Việt Nam’s economy has been growing and rapidly supported by the development of large-scale infrastructure projects which take a long time to finish, therefore if we are reluctant to push the implementation in the early stages, it will affect future economic growth. This is our biggest concern.”

However, Konaka appreciated government and agency efforts to address these problems. In June 2019, Deputy Prime Minister Phạm Bình Minh chaired a meeting of the ODA Steering Committee to identify challenges and come up with solutions for ODA projects. Moreover, the decline in Việt Nam’s public debt and the Government’s increased focus on improving the efficiency of public spending had highlighted the need to improve conditions for ODA project implementation  

“Việt Nam should be careful not to excessively carry out public debt control as it might restrain the economy’s growth and negatively impact development projects,” he said.

From April to September 2019, JICA’s total disbursement for ongoing projects in Việt Nam reached JPY8.8 billion ($80.87 million).

In the near future, the agency will also support Việt Nam’s long-term strategies and provide input for the Socio-Economic Development Strategy by 2030.

“Japanese ODA policy to Việt Nam has to be adjusted to catch up with changes in the global economy and political landscape as well as Việt Nam’s rapid growth. JICA has piloted several new assistance projects in terms of elderly care in co-operation with World Bank, public-private-partnerships in infrastructure development, e-government and cybersecurity,” he said. — VNS