China Eximbank prioritises financing for Lao Cai-Haiphong railway

Welcoming the China Eximbank delegation at the Ministry of Finance's (MoF) headquarters, Deputy Minister Chi said that during a meeting earlier the same day, Vietnamese Deputy Prime Minister Pham Gia Tuc affirmed the government's support for China Eximbank's operations in Vietnam in various forms.

"The government has also assigned the MoF to coordinate with relevant ministries and agencies to work directly with China Eximbank on technical and professional matters," he added.

Deputy Minister of Finance Nguyen Duc Chi and China Eximbank chairman Chen Huaiyu. Photo: Tran Nam (MoF)

Eximbank chairman Chen Huaiyu highlighted the Lao Cai-Haiphong railway, which will run through Hanoi, as a strategically important infrastructure project that has been identified as a priority by the senior leadership of both countries.

It will help complete Vietnam's transport infrastructure, facilitate the flow of goods from Vietnam to China and onward to Central Asia and Europe, while also enabling businesses in both countries to optimise the costs of raw materials and import-export activities, he said.

"China Eximbank regards the project as its highest priority and will follow the guidance of the bilateral railway cooperation mechanism to accelerate its implementation," Huaiyu said.

The total investment is estimated at $10.8 billion, comprising $4.3 billion in counterpart funding and $6.5 billion in loans. China Eximbank proposed dividing the loan package into two components: a preferential loan and a commercial loan guaranteed by the Vietnamese government, through the MoF.

"The bank pledged to provide the largest possible amount of preferential financing and was also ready to act as an arranger to mobilise syndicated financing from Chinese banks for the commercial loan component," Huaiyu said.

On the financing currency, China Eximbank proposed using the renminbi (RMB), citing lower borrowing costs compared with the US dollar and reduced foreign exchange risks. The proposal also reflects Vietnam's substantial imports of materials and equipment from China and the growing availability of RMB revenues generated by the two countries' expanding bilateral trade.

He also suggested that the MoF could consider issuing RMB-denominated bonds to raise counterpart funding, either through Panda Bonds in China's domestic market or through an issuance in Hong Kong. To facilitate the bank's assessment of the project, he asked the MoF to provide the pre-feasibility and feasibility study reports.

Agreeing on the strategic importance, Deputy Minister Chi said the Vietnamese government had made a policy decision to move ahead with the railway project without delay.

"The MoF has also balanced and allocated sufficient counterpart funding of $4.3 billion in the medium-term public investment plan for 2026-2030," the deputy minister said.

Regarding the $6.5 billion in loans, he said mobilising financing from Chinese financial institutions was appropriate given that the venture would use technology and materials from China.

The two sides should immediately begin developing specific financing arrangements, he said, asking China Eximbank to provide preliminary information on its preferential credit package as soon as possible.

For the commercial loan component, the deputy minister suggested that China Eximbank develop several flexible financing options for comparison, enabling the parties to select the most suitable solution.

Regarding the proposals to use RMB financing and issue RMB-denominated bonds, the MoF acknowledged the suggestions and said it remained open to these options while conducting further assessments before making a decision based on economic efficiency.

To ensure the demanding implementation schedule, he proposed establishing a permanent communication channel between the Department of Debt Management and External Finance under the MoF and a dedicated focal point at China Eximbank.

In response to the MoF's views, the chairman of China Eximbank said he would instruct the bank's specialist teams to develop detailed financing options immediately after returning from the visit, covering the loan size, tenor and interest rates. Huaiyu would personally oversee the project's progress.

Beyond the railway, China Eximbank also wishes to expand cooperation with Vietnam in green and renewable energy, including through an upcoming working session with Vietnam Electricity, as well as in the digital economy and AI.

"The bank is also interested in policy advisory services and human resource training," Huaiyu said.

Welcoming China Eximbank's broader cooperation ambitions, Deputy Minister Chi called on both sides to focus first on successfully implementing the railway, laying the groundwork for further cooperation programmes.

At the end of the meeting, Huaiyu invited Deputy Minister Chi to visit and hold working sessions at China Eximbank's headquarters in Beijing in the near future.

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