North-South express railway to drive economic growth

By Prof. Dr. Nguyen Mai

Sun, November 27, 2022 | 8:27 pm GMT+7

A high-speed railway linking the north and south of Vietnam needs be built to spur the country’s socio-economic development, says Prof. Nguyen Mai, former vice chairman of the State Committee for Cooperation and Investment.

The North-South high-speed railway project was initiated by the Ministry of Transport (MoT) in 2005. Its pre-feasibility report was approved by the State Appraisal Council in 2009 and its investment plan also received the Politburo’s nod. However, at its session in May 2010, the National Assembly, the legislative body of Vietnam, did not approve the project.

In February 2019, the MoT improved the project's pre-feasibility report and submitted it to the Government. On July 11, 2019, the Prime Minister decided to establish a State Appraisal Council to evaluate the report. The project also obtained the consensus of many ministries, sectors, localities and experts. However, there remain mixed opinions regarding the mobilization of investment capital, implementation time, phases, combination of passenger and freight transport and other issues.

Looking to the world

Japan built the first high-speed railway in the world named Shinkansen (meaning New Lifeline), which has become an international symbol for both efficiency and speed. The railway, connecting Tokyo with Osaka, was inaugurated in 1964 with a maximum speed of about 320 kph. The speed in the trial period in 1996 was 443 kph and reached a record of 581 kph in 2003.

With Shinkansen, the travel time from Tokyo to Osaka was shortened to four hours from 16 hours and 30 minutes in 1889. Now it takes only two hours 25 minutes to cross the 500-kilometer distance.

In 2017, the Tokaido Shinkansen route transported 159 million passengers with 13 trips per hour and more than 1,300 passengers per trip. Currently, there are eight Shinkansen trains running on routes with a total length of 2,387 kilometers.

Shinkansen is a symbol of safety, with no accidents in nearly 60 years of operation. It is also famous for punctuality, with the delay per train averaging a mere six seconds in 2003.

France has operated the TGV high-speed rail link between Paris and Lyon since 1981. Like Japan, France has successfully exported this technology to other countries.

Spain, Belgium, Korea, the U.K., Italy, Germany, Netherlands, Taiwan, Turkey and Saudi Arabia currently operate many specialized high-speed train systems connecting major cities, competing directly with airlines on domestic and international routes.

India and Thailand planned to expand their high-speed rail networks from 2020, while the U.S. intended to build high-speed rail lines in California and Texas.

Mainland China had a high-speed rail network with a total length of 37,000 kilometers by the end of 2020, which is expected to double in a few decades.

In short, high-speed railway development is the story of all countries in the process of industrialization and modernization.

Looking at Vietnam

In 1881, construction started on the first railway line in Vietnam with a length of 71 kilometers, connecting Saigon with My Tho. In 1936, Vietnam boasted the earliest railway system in Southeast Asia, with 2,600 kilometers stretching across all its three regions. The railway accounted for 30% of the passenger and cargo transport market share.

Currently, Vietnam's railway network has a total length of 3,162.9 kilometers. The 1,000-millimeter-gauge lines still account for 84% of the total, with 2,656.2 kilometers, while most countries in the world use 1,435 millimeter-gauge lines. The speed is 50-60 kph for freight trains and 80-90 kph for passenger trains. Vietnam’s railway still uses the second technology - diesel while developed countries use the third technology - electrification and the fourth technology - electromagnetics.

Statistics show that the railway’s passenger transport decreased by 0.6% per year in 1991-2000, increased by 1.3% per year in 2001-2010 and fell by 3.6% in 2011-2019. Meanwhile, the average annual growth rate in the above periods was over 9% for road transport and 17% for air transport.

In 1990, the railway sector carried 10.4 million passengers, accounting for nearly 3% of the total. The 2019 figures plunged to 4.7 million and 0.2%, respectively.

The volume of freight carried by railway in 1990 reached 2.3 million tons. After 30 years, it reached 5.1 million tons, up 4.2 times, as compared to nearly 29 times by road, 20 times by inland waterway and 130 times by air.

The above figures have shown the main cause of the serious imbalance between the transport sectors. Road transport bears the heaviest burden in both passengers and freight, while air transport, despite rapid growth, has become overloaded, especially at major airports, with logistics costs too high compared to many countries in the region. These have negatively impacted economic growth, transportation costs of import and export goods, and economic efficiency of the railway sector and transport industry in general.

Discussing action

I agree with some articles related to high-speed rail when using the phase “missing the schedule” for 17 years, through three terms of the National Assembly and Government. I hope that this project will pass the rigorous "test" of competent authorities so that it can be implemented soon.

According to the MoT’s pre-feasibility study report approved by the Ministry of Planning and Investment (MPI), the North-South high-speed railway will run through 20 provinces and cities from Hanoi to Ho Chi Minh City. It will start at Hanoi’s Ngoc Hoi Station and end at Ho Chi Minh City’s Thu Thiem Station. The 1,435-millimeter dual-gauge railway will be around 1,545 kilometers in length, using electrification technology. It can allow a speed of 180-225 kph.

The MoT had proposed two options for feedback from relevant ministries and agencies. The first is to upgrade the existing 1,000-millimeter dual-gauge railway to carry passengers and cargo, with a capacity of 170 trains per day and an estimated investment of about $42 billion. The second option is to build a 1,435-millimeter dual gauge railway to carry passengers and cargo with a speed of 180-225 kph and a total investment of about $58.71 billion. Finally, the MoT chose the second option.

Based on the world experience and the economic potential of Vietnam, I agree with the second option chosen by the two ministries and experts.

The project is proposed to be carried out in two phases, with the first building the Hanoi-Vinh and Nha Trang-HCMC sections with a total length of 665 kilometers at a projected cost of $24.7 billion. Construction will start in 2027 and complete in 2032. In the second phase, the 894-kilometer Vinh-Nha Trang section will be built at an investment of $33.9 billion. The Vinh-Danang section is expected to be put into operation in 2040 and the Danang-Nha Trang section in 2045-2050.

The MoT attributed the two-phase division to the arrangement of annual investment capital and the transport sector’s demand for passenger and freight transport. In my opinion, those two reasons are not convincing, as transportation needs have become more urgent than ever while the outdated railway system must be improved as quickly as possible.

I agree with some experts who say that in order to implement the Party and State's policy on building a synchronous and modern technical infrastructure system, and accelerating the modernity-oriented industrialization process, it is necessary to speed up the construction of a high-speed railway in order to soon put it into operation, ensuring high socio-economic efficiency. The longer the construction period is, the higher investment costs will be, like the Cat Linh-Ha Dong metro line in Hanoi, and the longer transport bottlenecks will remain.

Therefore, competent authorities should submit the project to the National Assembly for approval at its session in late 2022; make and approve the feasibility report in 2023, and prepare necessary conditions for project implementation, especially compensation for site clearance for the first sections in 2023 and 2024; and kick off construction in early 2025.

Regarding the two-phase division, attention should be paid to the socio-economic efficiency of the project and construction capacity of domestic enterprises. Phase 1 from 2025-2030 will construct the HCMC-Nha Trang and Hanoi-Da Nang sections to have a large enough number of passengers and freight. Phase 2 from 2030-2035 will build the remaining sections.

Investment capital, in my opinion, is not a concern as the North-South express railway project will be implemented over 10 years. In recent years, our country's annual social investment capital is equivalent to 30-32% of GDP. According to the Statistical Yearbook 2021, Vietnam’s GDP was $346.62 billion last year. With an annual growth rate of 6.5%, the 2025 figure will reach $520-530 billion and thus social investment capital $160-170 billion. Meanwhile, the high-speed railway project needs about $6 billion per year, making up less than 3% of total social investment capital.

There are three main capital sources for infrastructure construction, including railways: state budget, ODA and private capital. We do not lack budget capital but the issue here is slow disbursement. Attracting ODA from some countries is quite easy while private capital depends on the public-private partnership (PPP), which needs amendments to become more attractive to investors.

Another source of investment capital is project bonds, issued to mobilize public money. In the context of increasing credibility of Vietnam's currency stability and rising exchange rate, the issuance of project bonds in some foreign markets should be taken into account.

From experience in expressway development, high-speed railway projects need to be divided into several sub-projects with clear tasks and reasonable economic-technical norms.

Provincial and city administrations will be in charge of site clearance and compensation; open and transparent biddings will be held to select capable investors and contractors; and locomotives, carriages and control systems will be imported.

In addition to inviting foreign consultants, it is necessary to encourage domestic consulting organizations to get involved in the implementation of large-scale projects in order to improve the capacity of local players, along with human resources.

In order to show the National Assembly members and people the urgency to build the North-South high-speed railway, the MoT and the MPI, in addition to calculating the direct effect of the project on transportation, should take into account national socio-economic efficiency, especially in the provinces and cities the high-speed railway would run through, in order to increase the economic growth rate and incomes of people of all classes.

Hopefully in the next 12-13 years, people in Hanoi can board a train at Ngoc Hoi Station at 10 p.m. and arrive at Thu Thiem Station in HCM City at 7 a.m. the next day after a good sleep.

* Prof. Nguyen Mai is now chairman of Vietnam's Association of Foreign Invested Enterprises (VAFIE).