Vietnam gov't seeks parliamentary green light for colossal high-speed railway project

An ambitious plan to build a transnational high-speed railway route has been proposed to the Vietnamese parliament for approval amid concerns about the project’s financial feasibility.

Presenting the plan Wednesday at the ongoing sitting of the National Assembly, Minister of Transport Nguyen Van Thang stressed the project’s strategic significance to the country’s socioeconomic growth, security and defense, saying it would open up new development spaces.

According to the plan, the route will run 1,541 kilometers through 20 provinces and cities with a designed speed of 350 km/hour.

The project requires clearance of 10,827 hectares of land and resettlement of 120,836 residents.

Its preliminary cost estimate of $67.34 billion will be sourced from the government’s middle-term investment plan.

With kickoff scheduled for 2027 and competition for 2035, the project will need $5.6 billion per year on average, or 1.3% of 2023 GDP and 1.0% of 2027 GDP.

During its construction, the project will add 0.97 percentage points to GDP growth per year and need 33.61 years to fully recover the investment, Thang said.

He noted the investment will create a construction market of $33.5 billion; and a vehicle and equipment market worth $34.1 billion, apart from millions of jobs.

The minister stressed that the nation was capable of funding the project.

In 2019, when a pre-feasibility study for the project was conducted, Vietnam’s GDP was $266 billion with public debt at 56.1% of GDP. In 2023, the respective figures were $430 billion and 37%.

In 2027, when construction is slated to begin, Vietnam’s GDP will come in at $564 billion. “Resources for the North-South high-speed railway will not be a major challenge,” Thang asserted.

In presenting the project’s verification report, Vu Hong Thanh, Chairman of the NA Economic Committee, highlighted the importance of such a massive project, the first of its kind in the country. He cited the pre-feasibility report as saying that the project is economically feasible.

However, Thanh asked the government to build scenarios to handle global economic and political changes promptly. The government should also provide a more comprehensive financial assessment and projected travel demand on the route, he added.

The NA committee also asked the government to provide details on the capital needed in each phase to ensure compliance with the Public Investment Law.

A report by the State Appraisal Council has pointed out that projected revenues and revenue growth are unreasonably high. The council has proposed that the government provide more accurate projections to assess the project’s financial effectiveness and the use of the state budget to cover potential losses when it becomes operational.

The NA will discuss the proposed plan on November 20 and vote on it on November 30, the last day of the ongoing session.