Vietnam has said the Japanese insistence that its official development assistance (ODA) consultants should be paid $30,000 a month is unreasonably high.
“This is 20-25 percent higher than the average foreign consultant’s salary for projects funded by ODA loans and government preferential loans,” the Ministry of Finance (MOF) said in a recent report to the government.
“This is twice as much as the average income declared by taxpayers with Japanese nationality working in Vietnam in 2016.”
According to a report on Vnexpress, consultancy accounts for 5-8 percent of the total cost of projects funded by Japanese loans compared to 4.5-6.5 percent in other cases, it said.
There are no regulations related to international salary scales for projects funded by foreign loans, it added.
Japan is the largest provider of ODA loans to Vietnam. According to MOF figures, the country had provided $23.76 billion as of June 30, or 26.5 percent of the total funds borrowed by the Vietnamese government.
In the last few years Vietnam has been borrowing $1.5-1.7 billion a year from Japan, accounting for 37 percent of the total foreign borrowing.
The ministry acknowledged that Japanese ODA has provided Vietnam with large, long-term funds for infrastructure development.
But Japan also imposes conditions that heavily benefits Japan companies, it said. They include tax policies to benefit Japanese contractors and consultants.
MOF said these practices are not in “accordance with the provisions of Vietnamese law.”
In the report, the ministry also raised the issue of lack of equitability in the appraisal and negotiations for loans, saying Japan frequently changes the borrowing conditions — once a year — and only announces the change at the time of signing a loans agreement. Meanwhile, Vietnam has to assess and agree to all the conditions right from the loan proposal stage, it said.
MOF also sought assistance from other ministries of construction, and labor, invalids and social affairs to resolve the problems.
In a report to the government last Thursday the Ministry of Planning and Investment said Vietnam’s public debt is likely to reach 63.92 percent of GDP, or VND3,530 trillion ($151 billion) by the end of this year.
It increased by 6.8 percentage points between 2013 and 2017.