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cheat sheets


Hitachi is suing in Vietnam over Ho Chi Minh City metro delays

Ho Chi Minh City’s first metro line has met more roadblocks in its implementation with a contract dispute arising between Japan’s Hitachi, which is building the metro line and the Ho Chi Minh City Urban Railway Management Board which is paying for it, according to Tuoi Tre.

Specifically, Hitachi is suing the Urban Railway Management Board for VND 4 trillion or US$157.2 million in compensation for delays in the project’s implementation. The figure is calculated on a total project timeframe of 4,124 days or 11.3 years. The project’s general consultant NJPT has recommended approving a temporary project time frame of 2,161 or 5.9 years, presumably to tide Hitachi over until a resolution can be reached regarding the total delay period and subsequent compensation.

Issues with site clearance and delayed payments to contractors have caused repeated delays to the metro project which was originally scheduled to start operating in 2018. This is common among infrastructure projects in Vietnam and is in large part caused by a significant mismatch in the value of land versus what is offered to landowners. This stems from land price regulations which sees the central base price from which local land prices are calculated adjusted only once every five years. Of note, this is set to change when the new Land Law comes into effect next year, though possibly this year if a revised implementation date is approved. 

See also: Vietnam’s Law on Land 2024: Foreign Investor Cheat Sheet

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