vietnam plans to build high-speed rail with its own funds? experts say it’s “unrealistic”
2024-10-05
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reference news network reported on october 5according to a reuters report in hanoi on october 3, vietnam plans to finance a us$67 billion high-speed railway entirely on its own, indicating that the country is unwilling to accept foreign loans. however, some experts believe this goal may not be realistic.
vietnam's ministry of transport said the railway from the capital hanoi to the southern commercial center ho chi minh city will be the country's largest infrastructure project ever, with the national budget estimated to invest an average of about us$5.6 billion per year for 12 years.
according to state media, vice minister of transport nguyen minh hui said that "in the spirit of independence, the politburo decided not to rely on foreign countries" to fund the planned 1,541-kilometer railway.
the railway, with a train speed of 350 kilometers per hour, is expected to be completed in 2035. funding will come from state revenue and, if necessary, from treasury bond issuance. the report quoted the deputy minister as saying that foreign preferential loans would only be considered if insufficient funds were proven.
vietnam’s ministry of transport and finance did not immediately respond to reporters’ requests for comment on the 3rd.
according to reports, vietnam’s national debt level is relatively low, equivalent to only 37% of its gross domestic product (gdp) last year. the country has tended to invest less than planned, with an investment shortfall of $19 billion from 2021 to 2023, accounting for a quarter of forecast public investment spending, according to the treasury.
the country has been reluctant to use foreign aid in recent years, giving up billions of dollars in development aid amid administrative delays, a widespread anti-corruption campaign and fears of falling into a debt trap.
nguyen minh hui said investments in railway projects were designed in a manner aimed at avoiding debt traps.
however, infrastructure financing experts say it may be difficult for vietnam to build such a huge project on its own.
the $5.6 billion in annual public spending on the rail project will be equivalent to 1.3% of the country's gdp in 2023, or about one-fifth of this year's total budget spending.
“theoretically it’s possible, but it’s not very realistic,” said a foreign infrastructure expert in vietnam, referring to the plan to use only public funds.
another infrastructure expert said the costs would be "enormous", casting doubt on its feasibility without foreign support. (compiled/feng xue)
