Emphasizing the need for investment, the Government believes that implementing the project will realize the Party’s policies and orientations on developing modern transport infrastructure, with railways being an important method.
Construction of the road will shorten the distance between localities and regions, reduce pressure on population concentration and infrastructure overload in large cities, open up space for economic development, and effectively exploit land funds. …
Transferring risk to the private sector is ineffective
At the same time, the high-speed railway will meet transport needs on the North-South corridor. The investment in the route also helps create a construction market with 33.5 billion USD and millions of jobs. With a sustainable and modern transportation method, it contributes to reducing traffic accidents and environmental pollution…
On that basis, the Government’s proposal proposed that the North-South high-speed railway have its starting point in Hanoi City (Ngoc Hoi station); End point in Ho Chi Minh City (Thu Thiem station). The project has a total length of about 1,541km with 23 passenger stations, 5 freight stations, and a high-speed railway expected to pass through 20 localities with the “straightest possible” route.
High-speed rail transports passengers, meets dual-use requirements for national defense and security, and can transport goods when necessary.
The route is built with double iron, 1,435mm gauge, electrification, design speed of 350km/h, load of 22.5 tons/axle, with a total preliminary investment of 1,713 million VND (about 67,000 USD). 34 billion USD).
From economic scale, ability to mobilize capital, and ensure project success, the Government proposes a form of public investment.
Citing evidence from 27 projects around the world, the report clearly states that investment in the public-private partnership (PPP) method is not more effective than public investment.
“Transferring risks to the private sector is ineffective,” the Government said, saying that some countries invested in the PPP method but were not successful, had to nationalize or increase the level of state support for the private sector. PPP projects are very high like Taiwan (China).
In addition, a number of projects in the world apply the PPP method, but the investment scope is mainly commercial areas, central stations or investing in vehicles to exploit some effective route sections, according to the Government.
Investment resources are no longer a major obstacle
With the scale of Vietnam’s economy reaching 430 billion USD in 2023, public debt is at a low level of about 37% of GDP. It is expected that when construction begins in 2027, the economic scale is estimated to reach 564 billion USD, so there are resources to invest in the North-South high-speed railway. Therefore, the Government believes that investment resources “are no longer a major obstacle”.
Accordingly, it is expected that the budget capital will be allocated for about 12 years, with an average of about 5.6 billion USD per year. This annual capital allocation is equivalent to about 16.2% of the medium-term investment plan for the period 2026 – 2030.
If the medium-term public investment rate remains unchanged at 5.5 – 5.7% of GDP as at present; about 1.3% of GDP in 2023, about 1.0% of GDP in 2027 (project start).
Therefore, on the basis of mobilizing diverse legal capital sources, the Government recommends using domestic capital for investment, avoiding dependence on binding conditions for ODA loans. In case there are sponsors who provide low-cost, low-stringent loans, competent authorities will be asked to consider using this capital source.
According to the Government, the medium-term public investment plan for the coming period can balance project investment, with little impact on other important national projects. At the same time, financial targets when investing in projects and from exploiting land funds will improve revenue sources, so it is possible to balance capital to deploy the construction of the North-South high-speed railway.