Vietnam’s railways to attain rise in private participation

Some domestic companies are looking to produce new rail carriages

The National Assembly Standing Committee on March 10 discussed draft amendments to the railway regulations, with supporting policies that are expected to help increase private participation in the industry, improve operation quality, reduce financial pressure on the state, and ensure control over public assets.

The draft adds several regulations to maximise the mobilisation of resources for railway infrastructure development, in which the state budget plays a leading role. It will encourage organisations and individuals to participate in investing in railway infrastructure through many different models, such as build-transfer, build-operate-transfer, leasing, and more.

It also supplements regulations on using land near railway stations to maximise resources for developing railway infrastructure and specifying responsibilities.

Another notable point is regulation on leasing and transferring for a limited period and the right to operate railway infrastructure assets invested in by the state.

Deputy Minister of Construction Nguyen Danh Huy said, “The objective of the draft is to continue institutionalising the Party and state’s policies and guidelines on railway development; solving existing institutional shortcomings and inadequacies, creating new momentum, and encouraging the competitiveness of railway transport.”

The amendment focuses on five important innovations to create a legal corridor for railway development: infrastructure development, infrastructure management and operation, railway transport activities, connections, and industrial and personnel development.

In a study of almost 30 public-private partnership (PPP) railway infrastructure projects worldwide, very few were successful due to large investment capital requirements and difficulties in getting capital return, Huy said.

“Meanwhile, private participation in transport operation, transport services, and value-added service business at stations and around stations have proved effective. Therefore, the draft should have special policies to lure private investment,” he added.

Experts have said that some specific amendments should be added to increase feasibility and enable investors. Prof. Dr. Bui Xuan Phong, former chairman of the Vietnam Railway Transport and Economics Association, said, “It is necessary to propose specific solutions and incentive policies to remove obstacles and accelerate investment in urban railway systems, while ensuring capital support for railway investment, and urban railways in particular.”

Senior railway expert Nguyen Ngoc Dong added that countries around the world mainly invest in high-speed railways for passenger transport, while freight transport is also being exploited in some countries, but not widely.

“High-speed rail investment around the world is mostly in the form of public investment. A few routes are invested in the form of PPP but still need large state support such as support for construction costs or in the form of state payment for operating and maintenance costs to reduce revenue risks for investors,” he said.

He suggested that it was necessary to supplement the draft law with regulations on the role of the state in mobilising resources to prioritise investment in developing high-speed railways, and the responsibility of localities participating in high-speed railway projects.

According to the Vietnam Railway Authority, a number of foreign-invested enterprises and domestic ones are interested in the industry. For instance, last week, a delegation of Chinese businesses worked with the authority on the possibilities of cooperating in railway projects.

Tran Thien Canh, director of the Vietnam Railway Authority, told VIR, “These businesses are interested in the Lao Cai to Haiphong railway, Hanoi to Dong Dang, and others. We are discussing on how we will cooperate.”

The 390-km Lao Cai-Haiphong railway plans to have a total capital of $8.37 billion, connecting nine cities and provinces including the capital of Hanoi. The plan is for it to be completed by 2030.

Also in early March, China Railway Second Bureau worked with authorities in the Central Highlands province of Lam Dong on restoring the historic Dalat-Thap Cham railway, which was constructed between 1908 and 1932 and was known as the world’s first mountain railway.

Guan Huapinh, deputy general director of China Railway Second Bureau, said that the group has carried out many railway and transport projects in 50 countries and territories, and expressed interest in the restoration. “We hope Lam Dong will provide information on the planning related to the railway. After that, we will prepare a feasibility report and make the next steps,” he said.

In 2024, Vietnam Railways received many international business delegations seeking cooperation opportunities in the industry, including operation, maintenance and implementation of railway projects, including the Trans-Asian Railway. They also included Indonesian Railways.

Seeing the potential, domestic private investors are looking to get involved. Specifically, Hoa Phat Steel and THACO are preparing to join the North-South high-speed railway by producing both rails and carriages.

Hoa Phat is prioritising the completion and operation of the Hoa Phat Dung Quat 2 iron and steel complex to ensure stability and will continue to invest in developing high-quality steel products in Dung Quat Economic Zone, aiming to be self-sufficient to supply key projects, of which priority has been given to the North-South high-speed railway.

Meanwhile, THACO has invested heavily, developing an advanced electrical equipment factory, a modern auto glass factory, and a precision mechanical factory to meet domestic and export demand, as well as plans to build high-speed rail carriages.

Funding policy takes shape for new railway Vietnam’s construction of a modern railway in the north will not affect the country’s public debt safety, but will offer special incentives.

Start date set for Binh Duong-Ho Chi Minh City metro construction Binh Duong province's first metro line, connecting Binh Duong New City to Ho Chi Minh City's Suoi Tien, is expected to start construction in 2027 and be completed in 2031.

Slew of improvements in proposed railway rules Amendments to the Law on Railway are necessary to institutionalise the Party’s policy, create breakthroughs for development, and solve existing limitations in implementation.