» » Construction industry to slash spending, projects

The Ministry of Construction recently decided to suspend the progress of several projects after the the Government’s order to limit public expenditure in a bid to control inflation.

Out of the 505 projects planned in the beginning of the year, 52 projects were cut, 63 delayed and 87 extended. Most of the projects on the list have to do with housing and infrastructure.

Meanwhile 11 new projects were added.

More than VND4 trillion (US$250 million) was cut out of the investment capital registered at the beginning of the year, totalling more than VND40 trillion ($2.5 billion).

According to Deputy Construction Minister Dinh Tien Dung, the capital cut was mainly concentrated in five areas: electricity plants, housing, urban infrastructure development, cement plants and construction materials projects.

Electricity plants projects have had the most capital reduced: nearly VND2.3 trillion ($143.8 million).

Experts said that the capital reduction for hydroelectricity plant projects is a reasonable cut as these projects require large amounts of investment with high bank loans, while interest rates are fluctuating and construction material prices have sharply risen.

Investment capital for housing and urban infrastructure was also reduced significantly, staying at VND10.37 trillion ($648 million). More than VND2 trillion ($125 million) was reduced, with 25 projects delayed and 45 others extended.

The capital reduction for housing and infrastructure projects was attributed to difficulties in capital mobilisation and the fact that the property market was frozen. Moreover, some projects faced difficulties in administrative procedures, land clearance and compensation so the cut seemsed reasonable.

Seven cement plant construction projects had their progress suspended with VND766 billion ($47.9 million) cut.

As the cement industry aims to meet its 2010 target set by the Government of producing 50 million tonnes of cement and stabilising cement supply for the domestic market, ongoing cement projects have not seen a reduction in their investment capital.

Vietnam Real Estate

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