Multi-billion dollar projects raise big worries
Multi-billion dollar projects raise big worries
Local authorities all try to attract as many multi-billion dollar projects as possible, while they don’t care if the projects break the national development programs or bring benefits to the local economies.
The dream of multi-billion dollar projects
The National Committee for International Economic Cooperation, an arm of the Ministry of Industry and Trade, in its report about the localities’ integration capability, has mentioned the so called “achievement disease.” Local authorities all try to attract as many investment projects as possible, because the number of projects is considered the meter that “measures” their ability.
The localities which have the highest integration indexes are mostly the big provinces and cities, big economic centers in Vietnam, or the localities which have big foreign invested projects like Thanh Hoa or Bac Ninh.
Meanwhile, the localities with low integration indexes are the remote or mountainous areas which don’t have natural and geographical advantages and, therefore, cannot attract many investment projects. These include Cao Bang, Bac Kan, Bac Lieu or Soc Trang.
Nguyen Thanh Trung, Head of the report compilation team, noted that local authorities always have to choose between long term vision strategies and short term benefits.
In Vietnam, local authorities exist in 4-5-year terms. Meanwhile, economic development strategies need the long term 20-30 year vision. And the majority of leaders choose short term benefits, i.e. they try to attract more investment projects as the achievements during their terms.
“Local authorities believe that big investment projects will help improve their positions. This explains why Thai Binh, the rice granary, specializing in agriculture production, also dreams of having a big steel mill,” Trung said.
The fine allusion
The licensing to mammoth oil refinery projects have raised big debates recently between local authorities and economists.
Both the $27.5 billion oil refinery project registered by Thai PTT Group in Binh Dinh province, which has the designed capacity of 30 million tons per annum, and the $12.5 billion petrochemical oil refinery project in Ha Tinh province invested by Formosa Group, which has the expected capacity of 16 million tons per annum were not included in the industry development program.
Ignoring the economists’ warnings about the feasibility of the projects and the oversupply, the local authorities still have been making every effort to seek the Prime Minister’s nod on the projects.
Meanwhile, other localities dream of multi-billion dollar casino projects. More and more casino projects have been drawn up, even though these are listed as “delicate” projects which are not encouraged by the government.
Under the current laws, the government would only consider granting licenses to the casino projects capitalized at $4 billion at minimum. However, according to Trung, in many cases, the projects are just “cake picture,” because the investors cannot arrange the sums of capital their promise.
The Ho Tram resort complex with the registered investment capital of $4.2 billion is a typical example. By the end of 2012, or after five years of making investment in Vietnam, only $350 million had been disbursed.
Dr. Tran Dinh Thien, Head of the Vietnam Economics Institute, noted that local authorities try to attract foreign direct investment just to increase their GDP, while the investment, in fact, does not bring benefit to the local economies.
vietnamnet
