Focus on rail from home and abroad

Nguyen Ngoc Dong

Private local and foreign investors are very interested in public-­private partnership (PPP) transport projects. What are such ventures that the Ministry of Transport is calling for investment in?

The transport sector is mainly looking at transport infrastructure development. We are now focusing on preparations for the country’s key transport projects, namely the Eastern Cluster of the North-South Expressway, Long Thanh International Airport, the North-South High-Speed Railway, and also the expansion of Tan Son Nhat International Airport.

Currently, we are offering international bidding that will last until March 2020, in order to select capable investors for eight PPP sections of the Eastern Cluster of the North-South Expressway, which has a total length of 654 kilometres and costs VND118.7 trillion ($5.16 billion). So far, about 60 foreign and domestic ­contractors and consortiums of contractors have submitted ­bidding documents. We are also planning to develop new railways in which the state will fund development of rail and signalling systems, while investment in stations and locomotives will be sourced from the private sector in a model that is applied in many countries. For the Long Thanh project, we will also conduct international bidding. Capable foreign investors are able to join some sections of this development, including freight depots, catering services and hangars.

Sectors are adopting advanced technology to transform their business amid big impacts of Industry 4.0. How can international technological businesses join this digital transformation in the transport sector?

International technological businesses are more interested in road transportation such as ride-hailing services, with Singapore’s Grab and Indonesia’s Go-Jek being outstanding examples. Many others including those from Japan, Germany, and France are very keen on providing technological solutions for road construction, foundation works, and advanced road surface texturing.

Transport infrastructure development in road, aviation, seaport, and even railway are boosting technological application to increase their operational efficiency, thus creating huge opportunities for both foreign investors and technological firms to join. Specifically, design, materials, and construction are among the needs in road, aviation, and seaport, while railways require new technology in sleepers.

What are the transport sector’s incentives to lure more foreign investment and also scientific and technological interest?

To attract such private investment in transport PPP projects, it is necessary to have a risk-sharing mechanism between the state and investors which is expected to be dealt with in the Law on Public Private Partnership. Currently, the Ministry of Planning and Investment is working on the draft law. As planned, it was submitted to the government in July and will be handed to the National Assembly for discussions in October 2019. While waiting for the landmark law, we are striving to attract private investors to develop transport infrastructure to meet growing demands. For example, we are working on some advantages and supporting policies to facilitate financiers in the Eastern Cluster of the North-South Expressway. In particular, for site clearance, the state takes responsibility for project site clearance and commits to hand over cleared land to those who join the eight PPP sections.

Furthermore, the country has approved the use of VND27.5 trillion ($1.2 billion) as state capital contribution in PPP investments, thus making it more bankable for PPP ­projects. Investors are also being encouraged to apply new environmentally-friendly technological solutions in construction cost reductions, in order to gain profit and increase operational efficiency.

Regarding technology, we are also encouraging technological adoption. While the transport sector does not have its specific own incentives for technological investment attraction, the government is going to enact a new foreign direct investment attraction strategy heading towards 2030, in which the country is expected to offer high incentives for application and transfer of high technology, research and development, and innovation. In this context, in highly-­developed localities such as Hanoi, Ho Chi Minh City, Haiphong, and Danang – which have higher economic growth and are aiming to ­become smart cities – incentives will be available to high-tech industries related to the Internet of Things, Artificial Intelligence, and Big Data.

All the new expected incentives are pinning high hopes on a new wave of foreign investment from technological giants across all sectors in general and in the transport sector in particular in the months to come.