Proposal of US$2.8 billion funded project on boulevard along Saigon river rejected

Unreasonable contents in the project proposal

In an official letter sent to the Ho Chi Minh City Department of Planning and Investment in July, Tuan Chau Group proposed to be the investor of construction project of boulevard along Saigon river with a total investment capital of about VND 63,500 billion (equivalent to US$2.8 billion) under BT (Build-Transfer) contract.

The boulevard is expected to be 63km long running along the Sai Gon river from district No. 1 to Cu Chi district, Ho Chi Minh city (HCMC). Expectedly, the project will use a land fund of 12,398 hectares.

As regulated, the project proposal must prove the suitability with the development planning and plan, and offer the general expected plan for compensation, site clearance, resettlement...

However, this project proposal has not clarified the project’s suitability with HCMC’s transport development planning to 2020 and the vision after 2020 and HCMC’s master plan for socio-economic development.

The project proposal states the State’s investment capital for execution of the project. The investor proposes having capital allocated by the State on expenses of land clearance, construction, consultancy and contingencies at the total amount of VND57,568 billion (roughly US$2.54 billion), excluding the investor’s interest expense.

But according to regulations, the State’s investment capital is used to support only projects collecting fees from users but the revenue is not sufficient enough to recover its investment capital and make profit. At the same time, the project must be the one proposed by the ministry, department or provincial-level People's Committee or the one using ODA and foreign initiative loans.

Therefore, MPI found that the contents in the investor’s project proposal are not in accordance with current regulations.

Tuan Chau Group proposed HCMC People's Committee to allocate a land fund to implement the project and make a payment to Tuan Chau Group equivalent to about five per cent of the total area of HCMC.

The MPI asked HCMC People's Committee to consider the feasibility of allocating land in the context of limited land resources. At the same time, due to the large-scale boulevard construction project, it is necessary to assess socio-economic, national defense, security and environment impacts on people in the surrounding area and HCMC. Therefore, HCMC People's Committee should consult with relevant authorities on these issues.

Regarding selection of investor, in accordance with the Law on Tendering, the investor proposes to be awarded to carry out projects related to intellectual property, trade secrets, technology or capital arrangements.

However, the information provided by the HCMC Department of Planning and Investment shows that the boulevard project along Saigon river does not fall within the above cases. Therefore, the MPI proposes to open bidding to select investor to implement the project to ensure competitiveness, equity and economic efficiency.