VinSpeed cannot participate in North-South high-speed rail project under PPP model: exec

Pham Nhat Vuong, founder of VinSpeed High-Speed Rail Investment and Development JSC, has mapped out a clear 30-year financing plan for the gigantic North-South high-speed rail project, said an executive at Vingroup, a VinSpeed investor.

“We have outlined plans for the projects with meticulous calculations and are fully confident in them,” said Nguyen Viet Quang, vice chairman cum CEO of Vingroup.

In an exclusive interview with Thanh Nien (Young People) newspaper, Quang noted that the rising number of companies registering to invest in the project signals a growing sense of responsibility among Vietnam’s business community in the current context.

However, VinSpeed is sticking to its original plan of direct private investment, with the state lending 80% of the total investment over 30 years at zero interest, while the investor arranges the remaining 20%, he stressed.

The executive noted that VinSpeed cannot participate under a PPP model, as that would require the company to raise 80% of the capital itself - an unfeasible approach for a project of such massive scale and negative returns.

Quang also pointed out that VinSpeed’s proposed model offers clear benefits for both the budget and the economy, saying the state would lend only 80% of the total investment, rather than covering 100% of the cost.

Additionally, cash flows could return over 30 years, instead of 140 years or more, while the line could become operational within five years rather than 10, providing a boost to economic growth and interregional connectivity.

The model also shields the state from cost overruns and schedule delays, he stressed, noting a domestic high-speed rail industry could emerge without the government having to directly inject capital.

Quang cited international studies and experience from multiple countries showing that most high-speed rail projects run long-term losses, with the exception of China’s Beijing–Shanghai.

For the North-South route, he said, VinSpeed expects losses to reach tens of billions of dollars.

A pre-feasibility study approved by the National Assembly - Vietnam’s legislature - also shows average annual revenue during the first 30 years of operation would reach around $5.6 billion, while direct operating costs, excluding depreciation and interest, would total $4.2 billion per year, Quang argued.

To achieve passenger volumes supporting this revenue, the company would need to invest an additional $18.06 billion to expand capacity - a cost not included in the initial $61 billion investment estimate, he said.

With $10.51 billion in loans, interest payments are expected to reach about $1.05 billion per year during the first 10 years. After 30 years of operation, total recoverable cash flow would amount to only around $10.5 billion - far below the $49.08 billion owed to the state, not including VinSpeed’s initial $10.51 billion equity contribution.

After each 30-year cycle, nearly all trains and equipment would also need to be replaced, he added.

For the above-said 30-year financing plan, Quang said it prioritizes using dividends from billionaire Vuong’s companies. If additional funds are needed, shares in his private companies such as GSM, VinEnergo, and V-Green could be sold. As a last resort, after 30 years, a portion of Vingroup shares could be sold.

“There is no question of abandoning the project,” he affirmed, addressing concerns that the company might pull out.

Quang also strongly rejected reports suggesting the high-speed rail project was intended to pave the way for real estate development along the route.

He noted that train stations are usually located far from city centers, making transit-oriented development (TOD) unlikely to generate significant profits. VinSpeed proactively proposed to the Ministry of Construction that the TOD component be removed from the project to demonstrate goodwill.

VinSpeed and Vingroup will respect any decision by the government - whether the project proceeds as a public investment, a PPP, or is assigned to another company.

“If we are not awarded the project, we will regret missing the chance to contribute to a venture of great national significance. But from a business perspective, it would also significantly reduce the pressure,” he said.

VinSpeed was established in May with Vuong - chairman of Vietnam’s leading private conglomerate Vingroup (HoSE: VIC) - holding a 51% stake, and his two sons, Pham Nhat Minh Hoang and Pham Nhat Quan Anh, each owning 0.5%.

The shareholder structure includes Vingroup with a 10% stake, Vietnam Investment Group JSC holding 35%, and Pham Thuy Hang – vice chairwoman of Vingroup – with 3%.

On May 14, 2025, VinSpeed officially submitted its investment application for the North–South high-speed rail project, with total capital of around VND1.5 quadrillion ($61.35 billion). The company would arrange 20% of the funding itself while the remaining 80% is proposed as a 30-year, zero-interest state loan.

VinSpeed aims to complete the project by 2030, laying the foundation for Vietnam’s rail industry and creating a new growth driver for the economy.

Apart from VinSpeed, Vietnamese private conglomerate Thaco Group has also proposed to invest in the project. In a proposal submitted to Prime Minister Pham Minh Chinh, Thaco said that of the $61.35 billion in investment capital, 20% will come from its equity and the remaining from foreign and domestic loans. The cost does not include compensation and resettlement expenditures, which belong to a separate project handled by the state.

Thaco proposed that the Government guarantee and pay all loan interest for 30 years. The loans are secured by project assets.

Most recently, an alliance between Mekolor, a relatively unknown Vietnamese company, and American entity Great USA showed an intention to participate in this national project.

The alliance said it will arrange and demonstrate sufficient cash resources to ensure the smooth implementation of the project with $100 billion from investment funds under the Great Core Fund and Mekolor Capital - part of the Mekolor-Great USA ecosystem.

Approved by the National Assembly on November 30, 2024, the high-speed rail project will stretch 1,541 kilometers from Ngoc Hoi Station (Hanoi) to Thu Thiem Station (Ho Chi Minh City), passing through 15 provinces and cities after recent administrative reorganizations.

Designed for speeds of up to 350 km/h, the dual-track railway will use standard gauge (1,435 mm) and accommodate 23 passenger stations and five freight stations. While primarily focused on passenger transport, the line will also be equipped for dual-use purposes, including national defense and emergency freight capacity.

Prime Minister Pham Minh Chinh has requested localities to start land clearance en masse for the gigantic North-South high-speed railway project on December 19.