Chinese Firms Win 90% of Vietnam EPC Contracts

Chinese companies have won up to 90% of engineering, procurement and construction (EPC) contracts of Vietnam’s major projects.

Most of the projects are upstream or related to the national energy security, focusing in the areas of power, mining, petroleum, metallurgy and chemicals, the newspaper cited a preliminary report released last July by the Vietnamese Ministry of Industry and Trade.

The report indicated that up to 30 Chinese companies are acting as EPC contractors for 41 Vietnamese projects, including 12 in power projects, seven in light industry and services areas, five in mining, five in chemicals and four in petroleum.

Shanghai Electric Power Generation Group and Dongfang Group have participated in Quang Ninh 1 & 2, Haiphong 1 and Vinh Tan 2 thermal power plants.

Early July, China Huadian Engineering Co. Ltd. (CHEC) signed a $2-billion EPC contract in Beijing with Tan Tao Energy Corporation for the 1,200-MW Kien Luong 1 coal-fired power plant in southern Vietnam.

China Aluminum International Engineering Company has won a $466-million EPC contract of alumina bauxite complex in the Central Highlands province of Lam Dong. Many other Chinese companies such as CNOOC, A Xin Ao Group and CMG Group are carrying out big metallurgy projects in Vietnam.

Chinese companies often offer much lower bidding prices than those from other countries. This is attractive to Vietnam where in short of capital for major projects, particularly in the power sector, said Head of Energy Department from the Ministry of Industry and Trade Ta Van Huong.

However, Huong warned that the massive participation of Chinese contractors may lead to environmental pollution for Vietnam due to low-cost production technology and untrained workers that they bring to the nation after winning bids.

Despite being the largest EPC contractor in Vietnam, China invested $3.17 billion in 733 projects in Vietnam as of end-July, accounting just 1.5% of the country’s total pledged foreign direct investment (FDI). 

Head of Institute of Chinese studies Do Tien Sam said the Chinese government encourages local firms to become EPC contractors abroad, aiming to boost technology export and job creation.

Currently, China is the trade partner of 220 countries and territories and contractor in 180 economies. It has also poured FDI in 129 markets and provided official development assistance (ODA) for 90 countries and territories.

In the first half of 2010, Vietnam incurred a trade deficit of $6.3 billion with China, in which the Southeast Asian country spent $9.1 billion on imports, including $2.8 billion worth of machinery equipments. (vnr500.vietnamnet.vn)