VietNamNet Bridge - Although the offered low-cost loans from AIIB (Asian Infrastructure Investment Bank) are very attractive, economists say Vietnam needs to think carefully before borrowing money.


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A senior official of the Ministry of Finance (MOF) said at the meeting with the Vietnamese side, D.J.Pandian from AIIB offered to provide loans to Vietnam to fund its infrastructure projects.

AIIB said that if Vietnam needs loans worth $100-230 million and has feasible infrastructure development projects, AIIB is willing to provide loans to implement the projects.

AIIB offered the invitation at a time when Vietnam is thirsty for capital to implement its projects on infrastructure development.

Dinh Trong Thinh from the Finance Academy said this was a great opportunity for Vietnam to access international preferential loans.
Although the offered low-cost loans from AIIB (Asian Infrastructure Investment Bank) are very attractive, economists say Vietnam needs to think carefully before borrowing money.

Thinh cited three good points in borrowing money from AIIB. First, the capital cost is low. Second, AIIB does not set hard requirements on borrowers and it does need t mnitor as closely as western democracies. Third, this will help the economic development. 

However, Thinh said Vietnam needs to think carefully before borrowing money and should consider the feasibility of every project.

AIIB, like any other international financial institution, has its principles and problems. “The easy requirements and permissiveness in appraising projects, lending and capital management are what we should be wary of,” he said.

The expert also mentioned the opinion of some analysts that AIIB is the bank with China as the founding member (China contributes 30 percent of shareholders’ capital). 

Meanwhile, many Vietnam’s large-scale projects implemented with Chinese capital are facing big difficulties, including slow pace of implementation, problems with contractors and unforeseen higher required capital.

Thinh warned that if Vietnam accepts loans from AIIB while not finding measures to settle problems, it would bear serious consequences because of the conditions to be set by AIIB. 

Meanwhile, an analyst warned that the capital cost may not be as low as Vietnam expects, because Vietnam may have to pay higher amounts for the loans in the context of the unstable Chinese yuan.

"AIIB will use currencies beneficial to China and key members of the bank, including the Chinese yuan," he said.

“The Chinese yuan is weak at this moment. But it may appreciate in the long term. This will be a big matter if we borrow for tens of years,” he said.

Nguyen Hong Nga from the HCMC Economics & Law University, in an interview with Dat Viet, also commented that Vietnam should not be hasty to get loans from AIIB. It would be better if it considers and approaches all possible competitive sources of loans.


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