Basic construction debt: Contractors in trouble

• February 10, 2012 14:07

(Baonghean) - According to a quick report from the People's Committee of Nghe An province, the current debt for basic construction is approximately 5,000 billion VND with 956 projects, concentrated in key projects, projects of public significance, causing great difficulties to people's lives. This has made contractors miserable because of bank loan interest, because they do not have money to pay workers' salaries...

Mr. Hoang Cuong, a construction engineer working at a commercial center in the city, had an unhappy Tet holiday because for many months he went to work but did not receive a salary, sometimes only receiving an advance of a few hundred thousand for pocket money. His salary was agreed to be 5 million VND/month but after 4 months he still has not received it. Construction security guard and warehouse keeper Nguyen Hoan (Nghi Phu) also did not receive his Tet salary and Tet money because the contractor ran away before Tet and after Tet the director went bankrupt. After Tet, the situation of bankruptcy of companies, especially construction companies, still occurred because they could not pay hundreds of debts. Many construction owners had to turn off their phones during Tet... Many people had to sell their houses, sell their cars, and run away because debt collectors were too persistent.

Workers of Company 419 construct the northern approach bridge to Ben Thuy 2 Bridge.

On some large projects, after Tet, the construction site still needs to speed up progress but there are no workers. Because for many months, workers have not been paid, forced to look for other jobs or stay away from work to demand their salary... This situation is quite common for many companies that are constructing projects funded by the state. Because the state owes money, the company also does not have money to pay its workers.

Head of the Organization and Administration Department of Construction and Transport Joint Stock Company 419, Le Van Hoa, said: Workers are only paid once every 2-3 months, the business is facing many difficulties. Company 419 is constructing many projects nationwide such as: Cua Sot Bridge (Ha Tinh), Dong Tru Bridge, Saigon - Trung Luong project, My Thinh - Ha Tinh Bridge, Nhat Tan Bridge, Ben Thuy 2 Bridge... with a volume of over 200 billion VND, of which the Ben Thuy 2 Bridge package is 81 billion VND. However, up to now, the budget is in debt of over 80 billion VND. The Saigon - Trung Luong project package alone is currently in debt of 38 billion VND, Ban Tuc - Que Phong Bridge has been completed, handed over and put into use, but is still in debt of 6.7 billion VND.

The same goes for the Construction and Transport Joint Stock Company 479. The Ben Thuy 2 Bridge project has a contract value of 50 billion VND but is still owed 34 billion VND. Many other projects such as Do Len Bridge - Thanh Hoa, Lo River Bridge, Cua Dai Bridge - Quang Nam... are all owed. The construction value reached 400 billion VND in 2011 but the total budget debt to the company is currently over 120 billion VND. The company's Deputy Director, Mr. Nguyen Van Trong, said that the company currently has to borrow from banks with high interest rates, at times the interest rate was 25%/year, now it is 14%/year, so the income is not enough to pay the interest.

Other construction companies such as Vinaconex 16, Nghe An Petroleum Construction Corporation... are also in a similar situation. The difficulty is that most construction companies have little or no capital, mainly bank loans. Therefore, many companies believe that, in the current situation, they mainly "feed" the banks. The collapse of many construction companies in recent times is also due to the fact that small companies doing B, B' for large companies, the large companies have their capital appropriated, do not pay, leading to the consequences of them having to go bankrupt, run away when borrowing from banks, borrowing black credit, borrowing materials, owing salaries. Director of the Tax Department Nguyen Dinh Hoa said: Construction companies owe up to 670 billion VND in taxes by the beginning of February 2012, the difficulty of collecting tax debts is that the companies really do not have money.

Faced with that situation, the Government and the province have had many solutions to reduce difficulties for contractors. Such as paying capital for completed projects, cutting new projects to prioritize debt repayment... but it seems that the situation has not improved. On many projects, the longer the progress is delayed, the more wasteful it is because the completed sections, the unfinished sections are degraded and severely damaged. For example, the National Highway 1A upgrade project, faced with debt and unfinished projects, some private contractors are investing their own capital to construct, because if they stop, their efforts will be in vain, so they will face even more difficulties.

Cong Sang