Bad debts running rampant in construction sector

The debts owed by construction investors to 2T have amounted to over VNĐ200 billion (US$8.5 million), two times higher than its charter capital of VNĐ100 billion. Regarding legal loopholes, contractors are required to have various types of bank-issued guarantees, including performance security, to be qualified for a contract. Nguyễn Quốc Hiệp, Chairman of the Việt Nam Association of Construction Contractors, said the debt defaults were vertically spilling over into other construction players. "Investors owed contractors, contractors owed sub-contractors, sub-contractors owed suppliers, and so on," said Hiệp. He cited legal loopholes as the main cause of the situation.