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Nov 23, 2018 / 15:26

Japan threatens to halt HCM City’s 1st metro project due to sluggishness

HCM City pledged to use its own budget to make advance payment for the contractor but they failed to pay within deadlines.

Japanese Ambassador to Vietnam Umeda Kunio has said in a letter sent to the Vietnamese government and Ho Chi Minh City's government that Japan would stop funding the metro No.1 project if Vietnam fails to pay more than US$100 million to a contractor by the year-end. 
Metro line under construction. Photo: Vnexpress
Metro line under construction. Photo: Vnexpress
The government and the municipal city have been extremely slow in approving an upwardly-revised investment cost, resulting in a lack of funding for the project.

The Ben Thanh-Suoi Tien metro line, the largest of its kind in Vietnam, was approved in 2007 and built with finance from Japan’s official development assistance (ODA).  

The project’s initial cost was around VND17.4 trillion ($740 million). But in 2009, consultants recalculated the investment at VND47.3 trillion ($2 billion).

Due to its large scale, the metro line is considered a key national project that requires the National Assembly (NA)’review and needs to get the NA’s approval for any financial decisions.  

HCM City pledged to use its own budget to make advance payment for the contractor but they failed to pay within deadlines.  

Given that situation, the Japanese ambassador said that Ho Chi Minh City should report the adjusted investment plan to the Politburo and the National Assembly’s Standing Committee to speed up budget allocation.   

Work on the city’s first metro line started in August 2012 with 20 kilometers through five districts of 1, 2, 9, Binh Thanh and Thu Duc to Di An district in the neighboring province of Binh Duong.

So far, more than half of the project has been completed. A consortium of Vietnam’s Civil Engineering Construction Corporation No. 6 (Cienco 6) and Japan’s Sumitomo Corporation is the contractor.

The metro line, which is expected to help the city deal with its chronic traffic jam, was initially set to open in 2017 then 2020, but this deadline is unlikely to be met.