The newly opened Lotte World Aquarium at Lotte Mall Tay Ho, a prominent name in entertainment and tourism, is reported by ICM, Asia, Ltd. (ICM), the main contractor of the Lotte aquarium project, to have not paid the remaining 9% of the contract. 91% of the contract value has been paid by Lotte World.
ICM stated that due to this reason, they have also not paid some subcontractors, construction material suppliers, and local service providers for the Lotte World Aquarium project after completing the work.
During a press conference held on December 31, 2023, in Hanoi, the Vietnamese media raised many questions about the debt issue between the two parties and between ICM and subcontractors, especially when ICM received 91% of the payment value from Lotte World Vietnam (LWV) but did not pay the corresponding subcontractors according to the percentage that ICM received.
Specific details from the press conference:
Photo: Representative of ICM at the press conference on December 31, 2023.
How many subcontractors does ICM have in the entire LWV project?
We have more than 100 subcontractors and suppliers participating in the Lotte World Aquarium project. In addition to Vietnamese subcontractors and suppliers, there are also subcontractors from the US, UK, Germany, and the Netherlands. The total number of workers from all subcontractors and main contractors is about 3,000 people.
Currently, ICM has received 91% payment from Lotte World Vietnam (LWV). So why doesn’t ICM pay the corresponding subcontractors according to the percentage that ICM has received?
We use the 91% payment from LWV to pay for high-cost materials. For example, acrylic panels, filtration systems, fish tanks, themed decorations, MEP (mechanical, electrical, plumbing) systems. With a large-scale project like Lotte World Aquarium, the quantity of these materials is extremely large.
Part of the 91% payment has also been used to pay subcontractors with high costs such as concrete construction, acrylic installation, scenery for aquariums, MEP installation, filtration systems… All of these jobs have been completed in the 2021-2022 period.
The remaining 9% that LWV refuses to pay, we cannot disclose the specific value of the money due to contract terms. This 9% is for the final steps to put the aquarium into operation, including epoxy floors, cleaning, door system maintenance, painting, lighting… All of these activities were completed before the aquarium went into operation in early August 2023, but until now, we have not received any payment from LWV.
Does ICM have enough financial resources to pay the remaining 7% (out of a total of 98% completion of ICM’s work) for subcontractors? You affirm that it does not, so where does ICM’s obligation as the main contractor with the subcontractors lie?
The contract with LWV is fully understood that ICM is the main contractor. Because we have a Foreign Contractor License, part of our requirement is to work with local subcontractors to fulfill the contract with LWV as committed. Therefore, the amount received from LWV has payment certificates according to terms and contracts (IPC), and payments according to important milestones will be paid to subcontractors after LWV makes payment to ICM.
According to the commitment commonly seen in construction contracts, 5% of the total package will be paid after 2 years of warranty. This means (compared to the 91% that ICM has received payment from LWV), LWV only pays an additional 4% at the current time. ICM claims that LWV’s slow payment results in delayed payments to subcontractors, is it reasonable? Where is ICM’s responsibility because when signing the contract, it is clear that this is a commitment between the subcontractor and ICM? Why does ICM shift the risk to subcontractors and workers?
For all payments with IPC, the retained 5% will be deducted by LWV from the total requested compensation amount (not based on the contract value). As mentioned in answer 3, ICM will pay subcontractors after LWV makes payment. LWV fully understands this obligation. There is an important point to note here is that LWV did not complete the project acceptance procedures after completion according to the regulations in Article 23 of Decree No. 06/2021/ND-CP before putting the aquarium into operation.
When ICM works with LWV, what reasons does LWV give for the delayed payment?
LWV continues to delay payments without providing any specific explanations to us. LWV can fully pay for the latest two payments of IPC10 and the important milestones, pay the outstanding payment for item 9 of Article 2e for construction projects over a long period. All the work according to the two latest payments has been completed with the approval of independent quality supervision. LWV has no right to refuse these payments.
Finally, what should subcontractors do so that ICM will pay the remaining amount?
We commit that as soon as Lotte makes payment according to important milestones, ICM will pay the local subcontractors.
I hope subcontractors will join ICM in meeting with LWV to request payment for the work performed.
ICM has also issued a strike notice.
