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HCMC seeks autonomy for metro line construction
The Saigon Times Daily
Thursday,  Jun 14, 2018,17:09 (GMT+7)

HCMC seeks autonomy for metro line construction

The Saigon Times Daily

A metro line running along Hanoi Highway is under construction in HCMC - PHOTO: THANH HOA

HCMC - The HCMC government has written to the Ministry of Transport seeking decision-making power on urban railway projects, Nguoi Lao Dong newspaper reported.

In a report on the 10-year implementation of Vietnam's railway transport development strategy sent to the Ministry of Transport, the HCMC government noted the proposal was aimed at removing obstacles encountered during the metro line construction process.

HCMC Vice Chairman Tran Vinh Tuyen said metro line projects often require significant investments amounting to billions of U.S. dollars and are listed as national projects, so they must be approved by the Prime Minister. However, it takes the relevant ministries and agencies a long time to consider metro line projects before they are submitted to the prime minister.

In addition, two to three years of preparations are required for each metro line project, so the designs and capital for these projects tend to be adjusted up accordingly.

In particular, the city has encountered numerous difficulties with the construction of metro line No.1, linking Ben Thanh Market in District 1 with Suoi Tien Park in District 9. The project started in March 2007 and is expected to be completed by 2020.

According to the HCMC Urban Railway Management Board, the project was initially estimated to cost VND17.4 trillion (US$763 million), but the investment was later revised upward to VND47.3 trillion. Such higher-than-expected costs are the result of input material price and minimum wage hikes over the past years and increases in the workload.

Besides this, the investment surge was attributed to changes in exchange rates and price escalation. In a report sent to the HCMC Department of Planning and Investment, the HCMC Urban Railway Management Board stated another reason for the project delay, saying adjustments to the project evaluation process, technical design and estimated investment must be approved by ministries, agencies and the Prime Minister, which is time-consuming.

In addition to metro line No. 1, the city is introducing metro line No. 2, connecting Ben Thanh Market and Tham Luong Depot in District 12. In 2010, the investment for this project was estimated at VND26.1 trillion, but the amount has since soared to some VND48 trillion.

Ngo Viet Nam Son, an architect, agreed that if the city has full autonomy, work on metro line projects can be accelerated.

The city has qualified human resources and a sufficiently strong financial capacity to roll out these projects. At present, the metro line No. 1 project is lagging behind schedule, resulting in an investment surge due to the involvement of multiple ministries and central agencies.

The National Assembly has passed a resolution to pilot special mechanisms for HCMC’s development. To effectively execute the resolution, local officials should be given more power to make decisions, Son added.

Vo Kim Cuong, former deputy chief architect of HCMC, noted it is a great advantage for the city to enjoy such a mechanism, pointing out it is unreasonable for ministries and central agencies to decide on procedures for projects conducted in the city.

The State should map out basic strategies only, and the local government should manage the projects directly. Agencies responsible for monitoring the project’s execution can be set up, he added.

Another problem is that the city has missed out on a large amount of capital from real estate projects along metro line No. 1. The value of these projects has risen sharply, benefiting property investors while the State gains nothing, Son noted.

Therefore, the city should recover the capital poured into other metro lines from real estate projects along affected roads by taking back land along metro lines and offering compensation equivalent to the market prices, he continued.

Son pointed out that investors are willing to cooperate with the city government to provide money for compensation, but they should be offered tax incentives or prioritized for choosing prime land lots in return.

Alternatively, Son proposed, the city can issue municipal bonds with interest rates lower than banks’ rates to attract buyers.

Meanwhile, Nguyen Van Hau, chairman of the Vietnam Lawyers' Commercial Arbitration Center, said the 2014 Law on Public Investment should be amended as currently, provincial and municipal governments are not allowed to approve urban railway projects.

The city should also clarify the challenges it faces in executing these projects to make its proposal more convincing and should draw up detailed plans on capital mobilization, project evaluation and estimated investment if the proposal is approved, stated Pham Sanh, a transport expert.

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