Japan urges Vietnam to fast track payment for Saigon metro contractor

At a meeting with Deputy PM Vuong Dinh Hue on Friday, Japanese Ambassador to Vietnam Umeda Kunio asked the Vietnamese government to amend its note on ODA loan disbursement in order to fast track payments for Japanese contractors working on HCMC's Metro Line 1.

Hue responded that the government is working to speed up the process and completely resolve payment issues. He said the government is interested in safeguarding the interests of both parties on the basis of full compliance with the law and "respect for equality in the interests of related parties."

Kunio also said that the Japanese government was actively encouraging its small and medium enterprises to invest in projects in Vietnam, and asked for a reduction in personal income tax for Japanese investors in Vietnam's economic zones.

The Japanese ambassador noted that Vietnam's economy has enjoyed good growth and was currently at an important stage, with new opportunities as well as new challenges for future development.

This is not the first time Japan is officially asking for payment of Japanese contractor Sumitomo Corporation's unpaid bills. Earlier this year, the issue was raised at a meeting with Ho Chi Minh City Chairman Nguyen Thanh Phong.

Phong had pledged then that while waiting for the metro project's adjusted total investment to be approved, the city would advance money from its own budget to pay for the works the contractor had done in 2018 and early 2019, which was estimated at over VND2 trillion ($86 million).

Approved in 2005, the Ben Thanh-Suoi Tien metro or Metro Line 1 will run 20 kilometers (12 miles) through the city's 1, 2, 9, Binh Thanh and Thu Duc districts, and the neighboring Binh Duong Province's Di An District.

Work on the line started in August 2012 with a total investment of nearly VND50 trillion ($2.14 billion), which was to be sourced from both ODA funds disbursed by the central government and from the city's budget.

For the 2016-2020 period, Ho Chi Minh City was to receive VND7.5 trillion ($326.1 million) for the project, and in 2016 and 2017 it received a total of VND2.71 trillion ($117.83 million). However, the city has yet to receive the remaining amount due to a delay in the approval of the project's adjusted total investment.

This has led to a lack of funding for the project, with the Vietnamese side not paying the Japanese contractor for work already completed. The metro line is also unlikely to be finished by 2020 as currently scheduled.