Investment policy of basic construction is too tangled and entangled

VCN- Being an important area in the economy, but in Vietnam, the construction sector has many overlapped complicated regulations, causing many obstacles and difficulties; In addition, the performance of government officials has not met the desire of the business community. Many opinions suppose that if these issues are improved, it will spread out the growth in investment, thereby helping to boost GDP growth.
investment policy of basic construction is too tangled and entangled
The construction sector still has many complicated and overlapping regulations, causing many obstacles and difficulties. Picture: ST.

Delayed by appraisal

The overlapping of laws and legal documents is considered the biggest obstacle in improving the procedures of construction investment. Currently, relating to construction investment, the Ministry of Construction has been the agency drafting, directing and monitoring the implementation of 4 laws: Construction Law, Urban Planning Law, Real Estate Business Law , Housing law. The Ministry of Planning and Investment drafts and directs the Law on Tendering, the Law on Investment and the Law on Public Investment. The Ministry of Natural Resources and Environment is the agency that drafts the Land Law and the Law on Protection of Natural Resources and Environment. The Ministry of Public Security is in charge of the Law on Fire Prevention and Fighting ... Thus, the adjustment of construction investment has to deal with dozens of laws, but the important thing is the problem between a law and another law with the differences of them. This leads to many difficulties for implementing units.

Dr. Duong Van Can, vice president and general secretary of the Vietnam Association of Civil Contractors (VACC), said that both the Law on Bidding and the Law on Construction jointly provided guidance on the contents of the contract. There are different guidelines, which causes many problems in implementation. Therefore, it should only be stipulated in a law of Construction, and in international bidding only, it shall comply with the guidance of FIDIC (International Association of Consulting Engineers). At the same time, the law requires the investor to comply with contractual regulations, because the state chooses to remove unfavorable regulations for investors such as penalties, compensation, ground clearance , prolonged time ... is happening quite often.

There are 3 phases of project preparation: project preparation, project implementation and completion of project implementation. According to Assoc. Prof. Tran Tung, the former head of state quality inspection of construction works (Ministry of Construction), the problems related to construction investment at the stage of the outstanding investment preparation are project evaluation. According to Article 58 of the Construction Law, there are five main groups of appraisal including: appraisal of legal elements, technical technology, finance, organization of project management and project effectiveness. With a fairly large workload, limited workforce and the limitation of in-depth knowledge of the field of civil servants in the specialized agency on construction while the project is on the rise. This leads to many investors complaining about the delay in the appraisal, affecting the effectiveness of the investment, the opportunity and the disbursement of investment capital. Difficulties in co-ordination between authority agencies also leads to time delays.

"The biggest obstacle is the content of the circulars. Civil servants base on the circulars to comply with the law but many extra contents are imposed. The formulation and promulgation of this circular is largely due to departments that govern the field of the drafting, and this is considered the habit of managing or "setting" the obliged conditions for all involved subjects to form the mechanism "Ask" and “give” for them”, said Associate Professor Tran Chung.

Long-standing construction debt

Recently, the comments on the adjustment of the Law on construction investment, business community of Vietnam Association of Contractors has proposed to reform the procedure of project appraisal, evaluation of fire and explosion prevention, environmental protection, and even national security. According to this association, it is difficult for many investors to appraise the contents of this report, which is difficult for the investors because they have to apply for permission from many competent agencies, leading to the extension of the appraisal time. It is therefore important to focus the assessment on a project appraiser, and this body is responsible for coordinating with other competent state agencies to synthesize the results of the final appraisal.

Relating to the guarantee of contract, many comments suppose that the lack of regulations on contractual guarantee for investors is the main cause leading to the situation of rampant construction debt in recent years. According to TS, in the contractual relationship the contractor must perform the contract guarantee, the payment guarantee, but the investor shall not take responsibility for anything. This is not equal and this is the cause of the construction debt over many years. Therefore, in order to curb construction debt, Dr. Duong Van Can said that there should be sanctions for investors on the principle that the investor must provide guarantees to secure capital for the contractor to perform the bidding package. Accordingly, when the payment is 30% of the value of the contract, the investor must guarantee the value of payment to the contractor. The contractor has the right to stop construction if the investor does not commit to pay the capital when the contractor has completed the workload and fulfilled the payment procedures as prescribed, causing the construction debt to be incurred. According to TS, Mr. Duong Van Can, Decree 37/2015 / NĐ-CP also mentioned this issue but there is no basis and is not specific, proposed sanctions should be included in the Law on Construction.

Another problem faced by many businesses and experts is the current regulations on the rights and obligations of related parties in some laws such as the Law on Construction, the Law on Public Investment ... based on the type of the used capital . However, according to Nguyen Anh Tai, deputy general director of EVN, the definitions of capital sources are incomplete and inconsistent (such as the concept of state capital, non state budget capital, foreign capital, etc.) leading to difficulties in understanding and applying correctly according to regulations. Therefore, in order to facilitate the application of the legal system, it is necessary to consider the uniform provisions on the definition of capital sources in the implementing decrees.

It is assumed that the construction law must establish a mechanism so that each individual or involved unit in construction investment must be aware of social responsibility and their existence associated with the quality of the building at the beginning of the project. Assoc. Prof. Tran Tung suggested the law on construction investment is not only a guide, but should also strengthen the examination of compliance law in practice. The inspection and handling are not only for individuals, but also for state management agencies and civil servants who fail to comply with the laws, causing social, economic and human consequences.

Mr. Nguyen Quoc Hiep, Chairman of VACC said that the appraisal time is 15 days but it can be extended to 5-6 months normally and This is the reason why foreign investors would rather buy the project through M & A at a slightly higher cost so that they do not have to go through the "administrative battle" when applying for a project license.
By Hoài Anh/Bui Diep

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