Vietnam is taking drastic action to fast-track Metro Line 1 in Ho Chi Minh City

After removing all bottlenecks, Ho Chi Minh City’s Metro Line 1 is expected to put into commercial operation by 2021

Last Monday, Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh chaired a meeting with municipal authorities to resolve obstacles around the disbursement of official development assistance (ODA) and concessional loans (CLs) in the city. At the meeting, the deputy prime minister has ordered ministries and agencies to speed up capital disbursement for Ho Chi Minh City’s first metro line, the Ben Thanh-Suoi Tien line.

Minh stated that it is crucial to remove the disbursement bottleneck for Metro Line 1 so that the project can be put into commercial operation in 2021. This can also help the municipal city to increase public capital disbursement.

Nguyen Thanh Phong, Chairman of Ho Chi Minh City People's Committee, pointed out some obstacles for the first metro line, especially the controversy in choosing between Japanese Yen and Vietnamese Dong to make payments. The city has sent three documents to the Ministry of Finance (MoF) and the Ministry of Planning and Investment (MPI) without receiving a response.

Another issue is related to advanced payment for construction contractors from the state budget. Due to slow responses from the ministries, the city has used its own budget to pay VND4.15 trillion ($180.43 million) to the contractors. If the amount is refunded to the city, it will help the city to boost its public investment disbursement.

On the same note, Bui Xuan Cuong, head of Ho Chi Minh City’s Management Authority for Urban Railways (MAUR) said that the 19.7km Ben Thanh-Suoi Tien line has reached 73.5 per cent completion, and the figure will reach 85 per cent by the end of this year. A total of 84.3 per cent of the work for the line’s Component 2 – the elevated sections and depots – has been finished.

To fast-track the progress, he proposed the MoF and MPI to define the value of ODA allocated to the project from the state budget in Japanese Yen. The government considers approving the remaining ODA capital for the project around ¥17.81 billion ($165.37 million). At the same time, MPI continues to disburse VND3.6 trillion ($155.5 million) allocated for the project as part of the 2016-2020 ODA budget for the mid-term.

In response to Ho Chi Minh City’s requests, Deputy Prime Minister Pham Binh Minh said that Ho Chi Minh City is home to many ODA-fund projects in Vietnam. Therefore, the slow disbursement of ODA loans in the city will affect the country’s overall disbursement progress. Among them, if we can remove the obstacles for Metro Line 1, it will help increase public investment disbursement in the city.

In 2019, the Government Office issued a letter of confirmation while the Ministry of Finance also agreed that loans will be paid in Japanese Yen. With regard to the advanced payment for contractors, the Ministry of Finance is expected to complete the refund for the municipal city in July.

“If the city does not make advanced payments, it will make project performance sluggish. Therefore, the city’s move is necessary to ensure the first line begins test runs in October last year and slated to be operational by the end of 2021,” said the deputy prime minister.

Vu Dai Thang, Deputy Minister of Planning and Investment, said that many ODA-funded projects have transformed the façade of the city, contributing to socio-economic development in the past years. Between 2016 and 2020, there are some obstacles in the disbursement and allocation of ODA fund due to the changes in legislation. Between 2018 and 2020, the new fund is limited.

However, he noted that MPI has developed a five-year development scenario and implemented the socio-economic development strategy 2021-2030, in which ODA and CLs play a very important role. In particular, MPI is determined to keep the first metro line on track without a shortage of capital like before. The ministry is proposing the prime minister to solve the issues to fast-track the disbursement of the first metro line project in the coming time to commence the commercial operation of the project soon.