Many key projects in the city such as the expansion of Nguyen Thi Dinh and Chu Van An streets, My Thuy intersection... are slow to be implemented, and the scale has changed, causing capital to increase many times.
The project to widen Nguyen Thi Dinh Street to 30m (2km long, from Giong Ong To Bridge to My Thuy Bridge, Thu Duc City) has just been approved by the Ho Chi Minh City People's Council to adjust the investment policy with a total capital of 2,100 billion VND.
Eight years ago, when the project was first approved, the total investment capital was VND1,400 billion, including site clearance and construction. Due to slow implementation, the project investment capital has now increased by VND700 billion. Of this, all the additional capital is for site clearance, while the construction remains at the old level of nearly VND295 billion.
Nguyen Thi Dinh Street, Thu Duc City from above. Photo: Quynh Tran
Similarly, the Chu Van An Street expansion project, from Binh Hoa intersection to Phan Chu Trinh Street, Binh Thanh District, has just had its investment policy adjusted with a total capital of more than VND1,000 billion. The 600-meter-long road will be expanded from 5-6 meters to 23 meters, expected to be completed in 2026. Compared to before, this project has decreased in scale, including both length and width, but the total investment has increased by nearly VND400 billion after updating compensation and site clearance costs.
Previously, many projects implemented in the 2016-2020 period but not yet completed also had their capital increased due to increased site clearance costs. Typically, the My Thuy intersection project, Thu Duc City (increased from VND 1,998 billion to VND 3,622 billion); the renovation of Hang Bang canal, from Mai Xuan Thuong street to Van Tuong canal, District 5 (from VND 188 billion to VND 779 billion). The projects to build Tang Long, Ong Nhieu bridges (Thu Duc City), Phuoc Long (connecting District 7 and Nha Be)... also had investment capital increased compared to the previously approved level.
Dr. Tran Quang Thang, Director of the Ho Chi Minh City Institute of Economics and Management and a member of the Ho Chi Minh City People's Council, said that the increase in total investment capital for infrastructure projects in the city is mainly due to increased compensation costs. "The land clearance work is too slow, leading to prices increasing over time," he said.
Analyzing the causes, this expert said that in the previous stage, the capital for compensation work was not arranged in time, and at the same time, the negotiation process of compensation prices between the government and the people often took a long time. On the other hand, some projects were adjusted to a larger scale, leading to an increase in both compensation and construction costs.
In addition, according to Mr. Thang, there is a subjective reason that officials are afraid to carry out their work, causing delays in project implementation. Many units and individuals who are slow to disburse public investment capital have been reprimanded and criticized by city leaders. However, no matter how the responsibility is assigned, the consequences must still be borne by society and the budget.
Chu Van An Street, the section from Binh Hoa intersection to Phan Chu Trinh Street, is narrow and will soon be expanded. Photo: Dinh Van
Dr. Pham Viet Thuan, Director of the Institute of Natural Resources and Environment Economics of Ho Chi Minh City, said that not only in the city, the situation of slow project implementation causing investment costs to increase also happens in many other localities. Of which, more than 90% of the cost is due to site clearance, and the construction part, if including inflation factors and labor, increases capital, only accounts for very little.
On the local side, the representative of Thu Duc City People's Committee said that for public investment projects, when preparing documents, they will provide an estimate of compensation costs as a basis for submitting for approval of the investment policy. However, many projects were approved 3-4 years ago, while land prices have increased, and are no longer suitable, so they need to be adjusted. In particular, land prices in Thu Duc City have increased after the merger of three districts, making compensation even more difficult.
On the other hand, the locality also believes that the changes in the Land Law regulations will greatly affect the implementation process because it will lead to changes in the way land types, land prices, and implementation procedures are determined. "The longer the project lasts, the more land prices increase, which will greatly affect compensation work, making the adjustment procedure very complicated," said a representative of Thu Duc City.
A leader of the HCM City Traffic Construction Project Management Board also said that the biggest difficulty in projects is site clearance. It is rare for investors to receive a clean site immediately, mostly in small, intermittent drops. This affects construction efficiency, and many projects have to be implemented at a slow pace. The delayed projects also incur additional costs for contractors and price slippage. "In fact, many projects, after being allocated land, will be completed in just 12-15 months," he said.
To overcome the situation of projects with over budget, Dr. Tran Quang Thang said that it is necessary to professionalize the site clearance work. The city has many very important departments related to infrastructure, transportation, civil works... accounting for 70% of public investment disbursement. These departments need to coordinate with the locality, understand the customs and aspirations of the people to easily receive consensus.
Vehicles run through the underpass at My Thuy intersection, Thu Duc City, after completion in phase one. Photo: Quynh Tran
In addition, according to Mr. Thang, the city should allocate capital early in the year, "not waiting until the end of the year to run" causing pressure on disbursement. Procedures also need to be reduced to speed up project progress. For example, recently a business wanted to sponsor the construction of a pedestrian bridge connecting District 1 with Thu Duc City. The design and planning plan is available, the capital source has been committed, but construction will not begin until April 2025. "Such procedures take too long, we need to study to shorten them," he said.
Meanwhile, Dr. Pham Viet Thuan proposed to review the site preparation work in the projects. In fact, many projects, from the time of surveying, preparing documents, and then waiting for the approval of the technical plan to compensate the people, at this time the land price has changed. In addition, the survey and initial estimates in the projects are not close to reality, especially the capital compensation part accounts for more than 50%, leading to the need to adjust the total investment many times. The above problem directly affects the implementation plan of the projects.
"Compensation and resettlement should be separated into separate projects to be implemented first. Construction may not start now, but preparing a clean site early will shorten the implementation time later as well as limit capital increases," said Mr. Thuan, adding that the city also needs stronger measures in the process of site clearance, because in reality, many projects only have a few cases of slow relocation but the entire project is affected.
Le Tuyet - Gia Minh
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