Construction ministry to slash spending

The Ministry of Construction (MoC) plans to slash budgets for its State-invested projects and public spending under Government Resolution 11 aimed at curbing inflation. Deputy Minister of Construction Tran Van Son spoke to a Vietnam News Agency reporter about the spending reduction plan.

Under the Government’s instructions, all State budget and T- bond invested-projects managed by ministries and provinces will be overhauled in order to reduce public spending. Which of the MoC’s projects will be considered?

The MoC has issued an action plan to implement Government Resolution 11/NQ-CP on curbing inflation and stabilising the macro-economy.

All departments and enterprises under the MoC will be required to review their 2011 investment projects, including those funded by the State budget and those using bank loans, in order to limit spending.

The ministry was allocated VND981 billion (US$47.4 million) from the State to fund 19 projects in 2011. Of this amount, about VND810 billion was allocated to two major projects: the National Assembly House and the Ha Noi National University. The remainder would go renovating the ministry’s research facilities and development units.

Under the Government’s instruction, the MoC has asked several units to stop their construction projects, such as the New Materials Research Centre and the Multi-function Learning Building of the two-year College of Construction No 4.

The purpose, size, investment efficiency and rate of progress will be assessed for projects already underway. After reviews, the MoC will start cutting down, continuing with certain projects and stopping inefficient and non-urgent ones.

As for groups and State-owned corporations’ projects that are funded by loans or by their own capital, the MoC also requested that these enterprises review their own projects and the projects of their subsidiaries. Accordingly, inefficient projects, including investment projects abroad, will end soon.

Non-urgent projects will be halted. Only new projects that are deemed efficient will begin construction if the investors ensure that they have sufficient capital to carry them out.

Only investment projects focused on groups and corporations’ core business areas will be given the go-ahead.

This month, the MoC will set up several inspection teams to review all projects.

What difficulties might projects and construction sites face if they are stopped?

According to Civil Law and Government Decree 48/2010/ND-CP issued on May 7, 2010 on construction contracts, if projects are stopped or extended because of investors, the investors are then responsible for compensating the contractors and removing unused machinery, equipment and materials.

Extending projects could lead to a need to adjust contracts if more construction materials are required and labour costs rise. This in turn would affect investment expenditures, payments and balance sheets.

The Government has instructed that key projects and construction sites be given priority to receive capital in order to be completed in 2011. On what projects will the MoC focus its efforts?

The MoC has reviewed all projects funded by the State in order to transfer capital from inefficient projects and those with low disbursement to efficient projects facing a shortage of capital.

Regarding major projects assigned by the Government, such as the National Assembly House, the National History Museum and the Ha Noi National University, the MoC has asked those project management units to move faster in getting those projects implemented, giving them priority in capital allocation.

The MoC will also submit to the Government a list of projects invested by groups and corporations that need to be halted or extended based on inspection results. — VNS

Tags: Vietnam Construction, Vietnam construction sector