Private sector in line for railway investment

Vietnam Railway Corporation has already proposed four projects for private investors

Despite its modest size, the build, operate and transfer (BOT) project for Yen Vien logistics railway centre, presented by ITL Railway Logistics - a joint venture between ITL Indo Trans Logistics and state-run Vietnam Railway Corporation (VRC), is regarded as one of the first projects opening its door for private investors to step into railway infrastructure development which had previously been almost the sole investment preserve of VRC.

ITL hopes to raise around $85 billion ($4 million) for building a logistics centre and modernising the associated cargo handling and storage system at the 22,000 square-metre container site at Hanoi’s Yen Vien railway station.

The logistics centre is one of four projects VRC has proposed the Ministry of Transport (MoT) to seek investment capital from the private sector.

The other three include modernising cargo handling and storage systems at Song Than railway station in the southern province of Binh Duong, Dong Dang railway station in the northern highland province of Lang Son and the Xuan Giao A station project.

“In the past, railway sector investments were mainly entrusted to businesses within the sector. Now, we’re welcoming all potential investors,” said Tran Ngoc Thanh, chairman of VRC.

“The investor may even buy a whole train to operate. The railway sector will provide infrastructure and support in other associated services,” Thanh added.

Advocating the VRC proposal, Minister of Transport Dinh La Thang has urged greater speed in the second quarter as one of the railway sector’s first projects to get private investors’ involvement.

In a recent meeting on the issue, Minister Thang unveiled that Vingroup - Vietnam’s largest property developer, had announced that they were interested in running Hanoi, Ho Chi Minh City and Danang railway stations. In exchange, Vingroup will pump capital into building modern railway stations in new places to help promote greater public transport use.

“Danang’s authorities have plans to relocate the railway station, so that transferring the former railway station infrastructure is viable, whereas for Hanoi and Ho Chi Minh City, further studies are necessary to ensure building new state-of-the art railway stations outside of the state budget while still harmonising development requirements and restoration needs at historical railway works,” Thang said.

Sun Group, another major property developer, voiced its proposal to buy key trains. According to Sun Group’s chairman Tran Thanh Son, the group envisages to possess 20 luxury train carriages to serve their customers on some key routes, including Hanoi-Danang, Saigon-Danang and Hanoi-Lao Cai.

“Initially, these trains will primarily serve our customers before the wider public can use them at a later period,” Son said.

The Vietnam Railway Administration has just submitted a wish-list to the MoT which consists of 12 routes proposed for upgrading under the public-private partnership model or transferring operations and four projects on building new routes under the BOT model with the total investment capital reaching $5 billion.