Vietnam limits loans to 30% of $67b high-speed rail project

Vietnam plans to primarily use state funding to construct a $67 billion high-speed rail line connecting the capital, Hanoi, with the economic hub of Ho Chi Minh City, Transport Minister Nguyen Van Thang announced on Wednesday.

The 1,541-km (958-mile) railway, set to become Vietnam’s largest infrastructure project, is expected to receive approval from the National Assembly later this month and begin operations by 2035.

“Loans will not exceed 30 per cent of the total estimated cost,” Nguyen Van Thang told the parliament in Hanoi, adding that the government had not decided whether to take domestic or foreign loans for the project.

“If we can secure official development assistance (ODA) with low interest rates and no binding conditions, we’ll take it. Otherwise, we’ll rely on domestic loans,” he explained.

While the Transport Ministry had earlier indicated plans to fully fund the railway domestically, experts have raised concerns about the feasibility of this approach.

Thang outlined the government’s plan to allocate $5.6 billion annually over the railway’s 12-year construction period. The railway will focus primarily on passenger transport, with cargo options being considered only after 2050.

“Cargo transport will be handled mostly by the systems of waterways, roads and the existing rail line,” Thang said.

Attribution: Reuters

Subediting: Y.Yasser