Vice chairman of Vietnam Contractors Association, Nguyen Quoc Hiep, gave an interview on improving the relationship between investors and contractors.
Vice chairman of Vietnam Contractors Association Nguyen Quoc Hiep
Investors normally are the ones who sue contractors for stagnant projects. According to Hiep, the case involving Japanese contractor Tokyu which demanded the Ministry of Transport to pay compensation for slow site clearance for the Nhat Tan Bridge project was the first of its kind in Vietnam. He said the contractor was right and the case would have a positive effect on the construction sector.
To be able to work, the contractors must employ workers and buy equipment. Some constructions require unique equipment and the contractors may face losses from buying expensive equipment that can only be used for a short time.
Hiep said the Nhat Tan Bridge case may level the playing field for investors and contractors and encourage contractors to ask for compensation from investors who did not follow their contractual obligations.
Are there any regulations that outline the punishments for contractors or investors if they let a project stagnate?
Contractors and investor are only bound by the terms in their contracts because we haven't issued any regulations on the matter. But in reality, the investors often have the upper hand because they hold the purse strings.
That's why most contractors don’t want to stir up problems to avoid trouble when making payments. Furthermore, suing is a strenuous and time consuming process.
Many domestic contractors either went bankrupt or were shouldered with huge losses last year because of slow disbursement. Could the contractors request compensation from investors in such cases?
It's a painful operation shutdown. There are contractors who had to wait for their payment for years after they completed construction. If the investors have problems or have their capital cut then the contractors will go bankrupt because they are unable to pay their bank debts.
However, most contractors choose to bite the bullet and make compromises with the investors. The investors aren’t afraid of any punishment, even if they owe money to the contractors.
With the case of Nhat Tan Bridge, do you have any solutions to protect the contractors?
The Vietnam Contractors Association proposed to amend the law on tendering. The State Treasury must ensure that the investors have sufficient funds to pay the contractors when they start on the construction.
In the meantime, we will rank the standards of contractors for investors. We hope that if those two conditions were filled, the domestic construction sector should improve.
