North-South Expressway bids open only to Vietnamese investors

But first they will have to take part in a qualifying round next month before they can bid for the work.

Nguyen Danh Huy, director of the Ministry of Transport’s public-private partnership department, said local investors still need to have funds equivalent to 20 percent of the project cost, but criteria related to capability and experience are being reviewed to make them less stringent than they were for foreign investors, he told VnExpress.

A number of Vietnamese investors had qualified in the recent international evaluation round, but need to be reevaluated for the new tender, he said. His department would seek to speed up tender procedures so that could begin as scheduled.

The ministry on Tuesday ruled out foreign investors for the eight sections of the expressway saying only few qualified and this could lead to a low level of competition.

Sixty investors, half of them Chinese, submitted expressions of interest for the eight sections, but four failed to attract any investor meeting all requirements, while the rest attracted only one to three each, the ministry said in a statement.

It then decided not to invite foreign bids, which would also "ensure national security and expand Vietnamese firms’ capability in infrastructure construction," it said.

Local investors, who had previously expressed concern that experienced foreign rivals with deep pockets would outbid them, approved the ministry’s decision.

Tran Van The, deputy chairman of major transport company Deoca Group, said local companies would now have an opportunity to build the expressway.

But it is unclear yet what the new criteria are in terms of capital and experience, and if the minimum amount required is high, most Vietnamese companies would not be able to join the bid, he said.

Vu Duc Nhan, deputy CEO of construction firm Phuong Thanh Tranconsin Jsc, said since many build-operate-transfer (BOT) projects have suffered losses in recent years, banks are reluctant to provide credit for them.

Many require investors to mortgage security worth 50-60 percent of the value of the investment, he added.

The North-South Expressway are among the transport ministry’s top priorities this year as a rapidly growing economy is putting strain on the country’s outdated infrastructure.

Three sections are publicly funded and the rest are to be built under the PPP model. Work on the first of the state-funded sections began last week, while work on the eight PPP sections could begin next April, the ministry said.

The 11 will together cost over VND100 trillion ($4.3 billion), with the government providing VND40.3 trillion ($1.74 billion).