A necessary awakening

(Baonghean) - This past week, the refusal by Da Nang Port Joint Stock Company to accept ODA funding from Japan for the second phase of the Tien Sa Port expansion project has caused considerable shock within the business community nationwide. While many places yearn to receive this preferential funding, the company that received it flatly refused!

There are many opinions surrounding this move, but the most convincing seems to be when the leader of Da Nang Port Joint Stock Company stated that they did not borrow ODA funds because in phase 1 they had already used ODA loans from Japan. However, the yen exchange rate continuously increased, and they had to convert Vietnamese dong into yen to repay the loans, resulting in significant losses. Therefore, they feared that this would repeat itself if they continued to borrow in phase 2. That's just what they said, but in reality, not only this company but many other businesses have realized that borrowing ODA funds, although with preferential low interest rates, is not much cheaper than other sources of capital when calculated meticulously.

Because when providing ODA funding, most donor countries always impose certain loan conditions, especially the requirement to use contractors and equipment from the donor country. Therefore, borrowers have no control over pricing and must accept the prices offered, leading to significant disadvantages in terms of cost, contractor selection, and technology. What seems cheap turns out to be expensive; what appears to have low interest rates ultimately becomes just as high as borrowing on the commercial market. Furthermore, borrowers are subject to numerous restrictions. Therefore, the best approach is to self-finance to gain autonomy.

Many people and places know this fact, but not many have the courage to refuse this loan. The reason is simple: preferential interest rates and no immediate repayment. But if the borrower doesn't have to repay, their descendants will have to, and then it won't be preferential interest rates anymore. The better the loan, the greater the debt. And of course, debt cannot be left unpaid, both principal and interest. Borrowing large amounts of ODA may be beneficial for development today, but if used improperly and indiscriminately, it will be a threat to the future.

Therefore, the refusal of ODA loans by Da Nang Port Joint Stock Company should be seen as a positive sign. It represents a reassessment of the advantages and disadvantages of borrowing at low interest rates, leading to a more appropriate and accurate choice for the sustainable development of each enterprise. Thus, this refusal should be considered a necessary wake-up call to end dependence on ODA and develop the economy using its own internal resources.

Duy Huong