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Interest of $129,000 payable daily for Thu Thiem

Released at: 15:58, 10/09/2015

Interest of $129,000 payable daily for Thu Thiem

Repayment of commercial bank loans for construction of new urban area a significant burden on Ho Chi Minh City.

by Thu Hoang

In a recent document sent to the Prime Minister, the Ho Chi Minh City People’s Committee reported that the city’s government pays interest of more than VND2.9 billion ($129,000) every day on loans used for developing the Thu Thiem New Urban Area, used for site clearance compensation and resettlement and infrastructure investment.

Of loans totaling VND29 trillion ($1.29 billion), VND12 trillion ($534 million) are commercial loans from credit institutions and subject to interest.

The city’s government faces major pressure in repaying the principal and the interest in the years to come. In 2015 interest payments will total VND902.6 billion ($40.2 million). In 2016 it will have to repay principal of VND5.24 trillion ($233.3 million) and VND828.9 billion ($36.9 million) in interest.

Future demand for investment in the Thu Thiem New Urban Area is enormous, including compensation for site clearance in remaining cases, resettlement costs, and investment in infrastructure.

The city’s government also proposed the PM designate investors rather than using a bidding process for projects in the new urban area, to generate larger revenues for the city’s budget.

The Thu Thiem New Urban Area is located to the east of the Saigon River, opposite District 1, on a total area of 657 ha. It is to be a new modern central district, enlarging the existing center of Ho Chi Minh City. The City People’s Committee continues to call for investors to develop projects.

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