Vietnam is expected to invest VND280 trillion (US$17.5 billion) into its fundamental transportation projects this year, or more than 20 per cent of the country’s GDP, the Dien Dan Doanh Nghiep newspaper said.
The Southeast Asian country will have to spend an additional VND140 trillion-VND200 trillion (US$8.75 billion-US$12.5 billion) to compensate prices fluctuations of construction materials, or up 1.5 folds-1.7 folds higher for the projects in the field, the newspaper noted.
“The added compensation sum exceeds the initial estimated figure of VND280 trillion and accounts over 20 per cent of the country’s GDP in the year, compared to 20 per cent of last year,” Pham Sy Liem, Deputy Chairman of the Vietnam Builders’ Association said
The Ministry of Construction is now seeking government’s approval for the adjustment of construction material prices; therefore, many contractors still suffer from great losses due to the price hikes of construction materials.
Dinh Xuan Tap, Director of Truong Giang Construction Joint Stock Company in northern Son La province said the company lost VND4 billion because of the price hikes between 2007 and the first quarter of this year. The loss is equivalent to 8 per cent of the company’s total revenues last year.
“Many contractors there are on the same boat with Truong Giang, of those, several even had to stop their projects to avoid the loss,” he said.
Despite no price hikes of cement and steel pledged by cement and steel makers, construction companies cannot buy these directly from factories. As a result, the companies have to buy these materials at prices VND2 million-VND3 million higher per ton, the newspaper said.
To effectively tame rising inflation, Le Dang Doanh, a leading economist, proposed that the government of Vietnam should axe between 15 per cent and 30 per cent of the current construction projects nationwide. (Business Forum)
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