Lotte World Aquarium, a prominent name in the entertainment and tourism industry, has recently opened at Lotte Mall Tay Ho. However, ICM, Asia, Ltd. (ICM), the main contractor of the Lotte Aquarium project, has informed the media that it has not received the final 9% payment of the contract. Lotte World has only paid 91% of the contract value.
According to ICM, 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.
In the press conference held on December 31, 2023, in Hanoi, the Vietnamese media raised many questions about the debt between the two parties and between ICM and the subcontractors, especially when ICM has received 91% payment from Lotte World Vietnam (LWV) but has not paid the corresponding percentage to the subcontractors.
The specific content of the press conference:
Image: ICM representative at the press conference on December 31, 2023.
How many subcontractors does ICM have for the entire LWV project?
We have over 100 subcontractors and suppliers involved in the Lotte World Aquarium project. In addition to Vietnamese contractors and suppliers, there are also contractors from the United States, the United Kingdom, Germany, and the Netherlands. The total number of workers from all these subcontractors and main contractors is about 3,000.
Currently, ICM has received 91% payment from Lotte World Vietnam (LWV). So why doesn’t ICM pay the subcontractors the corresponding percentage it has received?
We use the 91% payment from LWV to pay for high-cost materials such as acrylic panels, filtration systems, fish tanks, themed decorations, MEP (mechanical, electrical, plumbing) systems. With a massive project like the Lotte World Aquarium, the quantity of these materials is extremely large.
Part of the 91% payment has also been spent on subcontractors with high costs, such as concrete construction, acrylic installation, scenery for the main tank, MEP installation, and filtration systems. All these works have been completed in the 2021-2022 period.
The remaining 9% that LWV refuses to pay is for the final stages to put the aquarium into operation, including epoxy flooring, cleaning, door system maintenance, painting, lighting, etc. All of these activities were completed before the aquarium started operations at the beginning of August 2023, but until now, we have not received any payment from LWV.
Does ICM have enough financial resources to pay 7% (out of the total of 98% completion progress that ICM has completed) to the subcontractors? Or does ICM’s responsibility as the main contractor to the subcontractors lie elsewhere?
The contract with LWV fully understands that ICM is the main contractor. As we have a Foreign Contractor License, one of our requirements is to work with local subcontractors to fulfill the contract with LWV as committed. Therefore, the amount received from LWV has relevant payment certificates (IPC) and milestone payments will be paid to subcontractors after LWV makes payment to ICM.
As commonly stated in construction contracts, 5% of the total contract package will be paid after 2 years of warranty. This means that (compared to the 91% payment that ICM has received from LWV) LWV only pays an additional 4% currently. Is it reasonable for ICM to blame LWV for slow payment leading to delayed payment for subcontractors? Where is ICM’s responsibility because the contract clearly states this as a commitment between the subcontractor and ICM? Why does ICM transfer the risk to subcontractors and workers?
For all payments with IPC, the 5% retention amount will be deducted from the total requested compensation amount (not based on the contract value). As mentioned in the answer to question number 3, ICM will pay subcontractors after LWV makes payment. LWV can fully understand this obligation. One important point to note here is that LWV has not completed the construction acceptance procedures as required 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 delaying payments?
LWV continues to postpone payments without providing any specific explanation to us. LWV can fully pay the two most recent IPC payments and milestone payments, payment for item 9 of Article 2e that has expired for a long time. All the work according to these two most recent payments has been completed with the approval of the independent quality supervision party. LWV has no right to refuse these payments.
Finally, what should subcontractors do for ICM to make the remaining payment?
We commit that immediately after Lotte makes payment according to the important milestones, ICM will pay local subcontractors.
I hope subcontractors will join ICM in meeting with LWV to request payment for the completed works.
ICM has also issued a strike notice.
In response to this information, Lotte World Vietnam Co., Ltd. (Lotte World), the investor of the Lotte World Ha Noi Aquarium project, said:
“ICM believes that the percentage of work volume that ICM has completed is 98%. However, the content that ICM provided does not match the truth. The entire part of the work that ICM has completed (including construction, bringing materials to the site, etc.) is only over 90%, and Lotte World has paid the corresponding amount. Currently, ICM does not perform, does not complete according to the contract, and does not respond to the completion request sent by Lotte World.
Lotte World will cooperate sincerely with ICM to resolve the issue and try to prevent unintended damage to the parties involved.
