National Assembly delegate: The lower the bidding price, the slower the project progresses

On the afternoon of April 21, the National Assembly discussed in the hall about the medium-term public investment plan. According to Vice Chairman of Quang Tri Provincial People’s Committee, bidding policies have long been designed to reduce prices, to save budget, thereby increasing investment efficiency.

However, besides the positive factors, Mr. Tan said that over the years, reality shows that “the lower the bidding price for a project, the more likely it is to have low quality, slow progress, and prolonged unfinished works.”

He cited a 1,000 billion VND drainage project using ODA capital, the average price reduction of construction packages is about 24%, with some packages reducing by 40%, helping the budget save 200 billion VND. However, when implemented, the low bid packages were delayed, causing the project to be 3 years behind schedule, causing great damage.

“The reason is that the price is low, so the contractor has no profit or loss, so they prioritize other projects. Difficult investments also cause the project to incur many procedures,” the delegate stated.

Similarly, a project to build 6 classrooms with an investment of 8 billion VND was also implemented by a low-priced contractor. According to Mr. Tan, the contractor’s weak capacity took nearly 4 years to complete, causing great inconvenience to the school.

Faced with this reality, Vice Chairman of Quang Tri suggested that it is necessary to amend the relevant law, including increasing the level of designated contractors for projects with uniform standards, for example, classrooms from 2 billion can be increased to 10 billion VND.

From now to 2030, the Government proposes a total public investment capital of 8.22 million billion VND – 2.7 times more than what was done 5 years ago. Of which, the central budget is 3.8 million billion VND and the local budget is 4.22 million billion VND.

Ms. Pham Thuy Chinh, Deputy Head of the Economic and Financial Committee, said that it is necessary to strongly shift from the mindset of “disbursement to high efficiency”. Because according to her, in reality over the years, capital has not been a big problem, but in the investment preparation stage, slow site clearance, limited project implementation capacity, leading to waste of resources.

At the same time, she proposed applying a disbursement mechanism based on output results, establishing the principle that if the previous period’s goals are not met, capital will not be allocated for the next period. Disbursement rate and project efficiency need to be publicized to avoid scattered investment.

“Evaluation of public investment projects must be based on financial indicators such as rate of return, break-even point, and socio-economic efficiency,” Ms. Chinh said.

In this aspect, Vice President of Quang Tri Hoang Xuan Tan said that it is necessary to increase the responsibility of investors in choosing capable contractors.

For localities, especially large urban areas such as Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, delegates suggested flexible application of financial tools such as urban development models associated with public transportation (TOD), local government bonds… This is to effectively exploit local resources and promote sustainable development.

Explaining later, Minister of Finance Ngo Van Tuan said that effective use of public investment capital is a “mandatory requirement”. With the bidding process currently lasting 6 months to 1 year, Minister Tuan said he will ask units to review the implementation stage, problems with premises, norms, and prices of construction materials.

He said that this week Prime Minister Le Minh Hung will direct a national conference to review all public investment disbursement. The review is conducted from the procedural process, including administrative procedures for investment preparation.

The National Assembly plans to vote to approve the medium-term public investment plan on April 24.