Even the Japanese contractor has had enough of late payments and delays when it comes to Saigon’s Metro Line 1.
Saigon’s first-ever metro route officially broke ground in March 2007 with an estimated finishing date of late 2018. The line will begin at Ben Thanh Market in District 1 and end at the Suoi Tien Amusement Park in District 9 on the fringe of the city. However, we’re already at the predicted completion date, but progress on the metro line is only at 56%, according to Zing.
At the time of approval in 2007, Metro Line 1 was projected to cost VND17.388 trillion. This ballooned to VND47 trillion over the years. The Japan International Cooperation Agency (JICA) shoulders 88.4% of the budget in the form of official development assistance loan (ODA).
In the span of 11 years, construction on the project has been riddled with delays, mostly due to site clearance complications and slow disbursement of funding. No one is as involved and, understandably, disappointed by these setbacks as the Japanese government, which seems to be reaching the end of its rope.
Last week, Japanese Ambassador to Vietnam Umeda Kunio penned a solemnly worded letter addressed to the HCMC People’s Committee, Vietnamese ministries and relevant government agencies with a final warning. Kunio explained that unpaid bills for the metro’s Japanese contractor have reached US$100 million as of November 16.
He gave the city an ultimatum, saying that if the outstanding payment is not settled by the end of December, the project will be halted. According to VnExpress, the ambassador said that the local government has been “seriously” late in fund disbursement, despite several previous discussions between the two countries.
This is not the first time that Japan has voiced concerns over the issue. Back in October 2017, JICA held its annual press conference in Hanoi where Japanese officials also said that late payment reached US$35.42 million. At the time, Fujita Yasuo, JICA’s chief representative in Vietnam, said that the Japanese government has “refrained from commenting on the possibility of a reduction or cessation of ODA loan grants to Vietnam.”
Local media reports that the disbursement of ODA for the metro project has reached VND13.969 trillion so far, which is only 33% of the total amount. Saigon administration has also recently fronted VND1 trillion for payment while ODA remains tied up. Since 2016, the city has used VND3.273 trillion of its own money in the project, but even this is just a temporary solution.
[Photo by Le Quan via Zing]
