HCMC traffic projects get tardy as government ups revenue intake

By Huu Cong   June 21, 2020 | 06:20 pm PT
HCMC traffic projects get tardy as government ups revenue intake
Traffic at an intersection in District 2, Ho Chi Minh City in 2019. Photo by VnExpress/Quynh Tran.
HCMC’s traffic infrastructure projects have fallen behind schedule as the central government takes a greater share of its revenues, leaving it short of money.

For the 2015-2020 term, the city had approved spending VND373 trillion ($16 million) on 172 traffic projects, but so far, just VND59 trillion, or 17 percent, has been used, according to the municipal Department of Planning and Investment.

A major factor behind this tardiness is that for the 2016-2020 five-year period, Vietnam's largest city has been allowed to keep just 18 percent of its annual revenues and submit the rest to the national budget. This ratio is five percentage points down from the previous 23 percent.

"With such a five percentage change, for every VND400 trillion, the city would lose VND20 trillion, which is a huge figure. And this happens when the expenditure for infrastructure development related funding has kept rising," said Tran Quang Lam, Director of the city’s Department of Transport.

On the other hand, disbursement from the central government's budget on transport infrastructure development for the city has been falling behind plans, Lam told VnExpress.

Asked for an example of an affected project, Lam pointed to Ring Road 2, which is expected be completed this year. The road runs 64 km (40 miles), connecting Districts 2, 7, 8, 9, 12, Binh Tan, Thu Duc, Hoc Mon and Binh Chanh. However, just one third of the work is finished and work on the rest could be delayed until next year.

Another factor in the delay is a change in the policy on calling investment for traffic infrastructure projects.

A resolution issued by the National Assembly in 2017 said the build–operate–transfer (BOT) investment form can only be applied to new roads and would no longer allowed for projects to upgrade and expand existing ones.

As a result, the city had had to change the investment forms for many traffic infrastructure projects that it had already approved for execution under the BOT form, Lam said.

Over and above the financial issues, obstacles in providing compensation, clearing sites and resettling affected households have contributed to prolonged delays in the city’s traffic projects.

Daily life impacts

With the city’s population expected to rise by 200,000 each year and the number of vehicles increasing by 10 percent each year, the pressure on the traffic system will be enormous, experts have warned.

If some infrastructure projects are not upgraded or built soon, already bad traffic congestion on the streets will get worse, impacting both economic development and daily life of people, Lam said.

Early this month, the city had petitioned the Ministry of Transport to facilitate expedited work on its third and fourth ring roads, which were approved nearly 10 years ago. However, only 18 percent of the former has been built while construction is yet to begin on the latter.

The ring roads will connect the city with part of the Mekong Delta and the city’s neighboring provinces of Dong Nai and Binh Duong, allowing vehicles, especially trucks, to move along those roads instead of going through the city to reach their destinations.

Vietnam’s largest city and economic hub, HCMC has been for decades the country's largest moneymaker and assigned the highest state budget collection target.

Last year, it earned VND412 trillion ($17.8 billion), roughly 27 percent of the national budget revenues, up 8.3 percent from 2018.

Including migrants, the mega-city is currently home to 13 million people and is among the 20 percent of localities in Vietnam that can cover their own expenditures and contribute to the national coffers.

Currently, more than 730,000 cars and 7.15 million motorbikes ply the city’s roads.

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