Foreigners Hold EPC Contracts

The statistics from the Ministry of Construction and the Vietnam Association of Mechanical Industry (VAMI) showed that most coal-fired power plants, cement and fertiliser plants, and oil refinery projects were executed by foreign main contractors, especially from China.

Many projects are reportedly using imported equipment, including coal-fuelled thermal power plants (Hai Phong, Quang Ninh and Cao Ngan), Nghi Son 2 cement plant, Ca Mau and Ninh Binh fertiliser plants, DAP Hai Phong plant, and the Nghi Son refinery and Long Son refinery.

 

Concerning projects already underway, 23 hydropower plants with the capacity of 50-240 MW reportedly have electrical mechanical equipment provided by foreign contractors. Among 11 coal-fired thermal power plants, only Uong Binh plant has a domestic general contractor, Lilama Corp, while the other 10 have foreign main contractors. Among 18 cement plants, only Song Thao cement plant project is carried out by a Vietnamese general contractor, also Lilama, while the other 17 have foreigners, mostly Chinese, use general contractors.

 

This means that Vietnam has to import nearly 100 per cent of its resources for the projects, including materials Vietnam can exploit and provide.

 

Mr Nguyen Van Thu, Chairman of VAMI, said that this not only hinders the development of the mechanics and other industries, but also affects job creation, living conditions of labourers and social security.

 

Mr Doan Van Kien, President of the Vietnam National Coal and Mineral Industries (Vinacomin), affirmed that Vietnamese enterprises could undertake EPC contracts as they did in Na Duong, Ca Mau, Nhon Trach and Uong Bi thermal power plants.

 

Economists said that in principle, big industrial groups in the world have to undertake 5-7 projects under the mode of EPC (engineering, procurement, construction) to become professional. Therefore, they said that Vietnam needs to have a strategic plan to develop the industrial groups capable of serving as EPC contractors.

According to the Ministry of Industry and Trade, in the energy sector, construction materials and chemicals alone, Vietnam will have to spend US$110 billion in the 2000-2015 period on imports of synchronous equipment. If other industries are included, the value would reach US$250 billion in that same period. Meanwhile, Vietnam does not have any measures to obtain 40-50 per cent of the market share, or US$100-130 billion worth of locally sourced components.

 

Statistics show that in the field of construction investment, every year, Vietnam undertakes a volume of works worth US$25-30 billion, or 35-40 per cent of GDP of Vietnam, including US$10-12 billion worth of imported technologies and equipment.

 

Lilama General Director Pham Hung said that it is necessary to put national interests as the top priority. If only 50 per cent of the workload is carried out by domestic contractors, this would help raise GDP considerably. Moreover, profit will remain in the hands of the Vietnamese.

It would also help create jobs for more labourers. 2.5 million labourers are needed to work for a US$250 billion project.  

 

For example, the Dung Quat oil refinery, which has the investment capital of US$2.5 billion, had 22,000 labourers at its peak time. If local contractors can handle the work, more Vietnamese people will be employed.