3:26:39 PM | 7/8/2005
Vietnam currently has some 1,000 construction consulting units specialising in providing services related to project surveying and planning, architect designing, programming, urban space designing, supervision and project management. However, these units lack well-trained specialists and international-levelled project managers while other experts are slow at technological renovation and modern equipment. Therefore, they are not reliable enough to undertake foreign-funded projects as official contractors.
Mr. Vu Ngoc Thanh, deputy director of the Vietnam Civil Construction Consultants Co., shared this viewpoint, adding that “Due to insufficient management experience, numerous consulting organisations in Vietnam are currently operating in a seasonal basis with variable workforces and unsatisfactory business strategies, which then leads to improper management quality stages.”
In talking over consultancy fees in construction projects, Mr. Nguyen Canh Chat, vice chairman and general secretary of the Vietnam Construction Consultation Association, said, “Although a lot of improvements have been made, the consultancy fee in local construction projects currently stands from between 1.3 per cent to 2.5 per cent of the project value. In the meantime, the fees in foreign projects is normally between 4 and 12 per cent. In addition to the low fees, payment procedures are overlapping, there’s also unsystematic abatement, undue payments and even financial losses.”
A lot of consultation enterprises complained that the current 28-per-cent corporate income tax is too high, discouraging investment in business expansion, technological renovation and human resource training. This is the core reason for the standstill of the Vietnam’s construction consultation and the hardship for progressing capacity and meeting high requirements in the process of international integration. As a result, they have to yield the local market up to foreign partners. Regarding foreign-funded projects, foreign firms are normally contractors while local enterprises are subcontractors. Worse still, local consulting firms have even smaller room to negotiate when foreign partners have accepted reduced fees below the government-fixed rate. This is the main challenge facing the local construction-consulting sector.
Architect Vu Ngoc Phuong, director of the Construction and Development Consultation Co. Ltd., said that increased training has driven the number of architects and construction engineers to over 20,000. Vietnam has among highest percentage of architects in the world, but also the highest number of unemployed architects as well.”
When economic development mainly depends on grey matter, exportation of consultancy models is inevitable. However, to penetrate into the regional market, Vietnam’s construction consultation must overcome several challenges such as national languages and common practices. According to Mr. Pham Si Liem of the Vietnam Construction Federation, international integration is urgent but it will bring out unpredictable difficulties because until now Vietnam has not introduced a development strategy for consultancy fields such as fees and taxes. Hence, Vietnam’s construction consultation has not reached the regional level while the consultancy market is still floating and is not institutionalised. Mr. Liem said, “I pressingly propose the Government to empower the Vietnam Construction Consultation Association and the Vietnam Union of Science and Technology Associations to take over the consultation service development strategy project and the consultation service sector institution project, respectively. These two projects will be put up for tender to choose the most successful one to be applied in 2006-2007. This will in turn eliminate idle negotiation as well as idle projects. It is sad to know that there is a viewpoint that consulting firms should develop with their own capital and therefore fees must be low, taxes must be high and commission rates must be high. This insular point of view has triggered very negative impacts and put the brakes on the development of Vietnamese construction consultation services”.
In answering the question of how to improve the construction consultancy service competence in Vietnam, Minster of Transport Dao Dinh Binh said that: “Investment needs to be focused on developing human resources, information exchange needs reinforcing, old viewpoints need adjusting, global advanced construction consultancy sciences and technologies need to be applied in Vietnam. In particular highly professional and independent consulting enterprises need to be set up to compete with foreign-run consultancies in the Vietnamese market.”
Currently, the Vietnamese Government is advocating enterprise privatisation. This policy plays an important role in determining the independence of a consulting organisation in providing its services. Privatised enterprises must face life or death issues because State subsidies aren’t available. This challenge encourages them to put forward suitable business and marketing measures for survival. Integration requires that Vietnam’s construction consultancy sector improve its competitiveness and self-affirms their footings before foreign consultancies. It is necessary to remove the fact that foreign specialists earn several thousand US dollars in a project while Vietnamese consultancies bag only several thousand.
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