Several Vietnamese ministries are debating whether to accept China’s offer to loan $304.6 million for an expressway project to be developed in the northern province of Quang Ninh
, which borders Guangxi of the neighboring nation, local media reported.
The Chinese government, through state-owned Export-Import Bank of China, has offered to lend Vietnam nearly 80% of the total investment of a project to build a 96-kilometer expressway linking Mong Cai town with Van Don island district.
The Vietnamese Ministry of Transport backs taking the loan from China, arguing that it is an urgent and important project. This ministry also wants to be given the authority to override Quang Ninh's provincial government and approve the expressway project.
Meanwhile, the Ministry of Finance cautioned that Chinese concessional loans often come with conditions requiring the borrower to use their contractors, technology and machinery.
The Ministry of Finance proposed considering other options that have either lower costs or better technologies to reduce risks during the implementation of the project.
Similarly, the Ministry of Planning and Investment suggested further negotiations with the Chinese side to clarify the conditions of the loan and bargain for better terms.
The loan should not include conditions that involve hiring engineering, procurement or construction contractors from China, the ministry stressed.
The ministries’ reluctance is comprehensible as Vietnam has experienced “bitter spills to swallow” provided by Chinese contractors in Chinese-funded projects.
The most notorious example is the 13.5-kilometer Cat Linh-Ha Dong elevated urban railway in Hanoi
, with China Railway 6th Bureau Group being the main contractor. The project has missed the 2015 deadline and overrun its initial budget.
Commenting with BizLIVE, economist Le Dang Doanh said that with the loan offer, China wants to boost connection between Van Don port with its territory, thus facilitating that country’s export.
If taking the loan, Vietnam may have to use Chinese-made materials such as steel and cement which are oversupplied in that country like other projects. The project may encounter delays and overruns like the railway project in Hanoi.
The loan should be thoroughly considered given the strategic location of Van Don district, Doanh added.