Vietnam parliament approves $8 billion railway with loan from China
The Vietnam National Assembly on Wednesday gave a near-unanimous approval to a railway bill that allows the country to utilize Chinese loans for the construction of a new $8.3 billion link aimed at improving transport connections between the two neighboring countries.
The country's rubber-stamp parliament gave the go-ahead to the project, with 455 of the 459 members voting for the project.
The approval marks a significant step forward in Vietnam's infrastructure modernization efforts, as the country seeks to boost connectivity and economic growth, local media reported.
The 427-kilometer railway project will run from the Vietnam-China border gate at Lao Cai-Hekou, through the capital of Hanoi and port city of Haiphong, to Ha Long City, the official Vietnam News Agency reported.
It is one of two railway lines to China that Vietnam plans as part of its "Two Corridors, One Belt" initiative, which connects to Beijing's Belt and Road global infrastructure program.
Phase 1 of the project will build a single-track standard gauge rail with a designed speed of 160 kph. Phase 2 will upgrade it to a double-track line able to support a speed of 200 kph.
The government has proposed paying for the project with money from the state budget, domestic capital sources and loans, including from the Chinese government.
The Vietnam News Agency reported that the railway will be financed through a concessional loan provided by the Chinese government. Funding will also be sourced from the Export-Import Bank of China (China Eximbank), the news agency said.
Neither Vietnam nor China disclosed the amount of the loan.
"Investing in a new railway line ensures meeting transportation needs, restructuring the transportation market shares, reducing logistics costs and ensuring sustainable development," Le Quang Tung, general secretary of Vietnam's 15th legislature, told Vietnam Television (VTV).
Minister of Construction Nguyen Hong Minh, formerly the transport minister, highlighted the necessity of the project during a parliamentary session last week. He emphasized that Vietnam's current railway system is outdated and insufficient for the nation's needs.
The government hopes the new railway will stimulate economic development by improving transportation efficiency between major cities and regions.
Tran Thanh Canh, a poet and resident in Hanoi, told VOA by phone that he welcomed the Vietnamese National Assembly's approval of the railway project.
"This project should have been done a long time ago, to connect the western part of China via the shortest route to the sea at Hai Phong port. It brings many economic benefits to both Vietnam and China," he said. "This is a very necessary project and suitable for the economic development of both countries."
The plan to build these major railway lines is part of Beijing's ambitious Belt and Road Initiative and was agreed upon during meetings between Vietnamese General Secretary To Lam and Chinese President Xi Jinping in Beijing in late August 2024, as well as between Vietnamese Prime Minister Pham Minh Chinh and Chinese Prime Minister Li Cuong in Hanoi in mid-October 2024.
"The project comes with both advantages and disadvantages for Vietnam as the borrower, but the disadvantages are predominant," Nguyen Minh Le, a longtime expert in China-Vietnam relations in California, told VOA by phone.
Nguyen said Xi has recently narrowed down the scope of the BRI and just focused on neighboring countries like Vietnam.
"Vietnam has actively become engaged in China's BRI projects and receiving funding. It should stay cautious about sovereignty and autonomy because of Chinese debt-trap diplomacy," Nguyen added.
The new rail line will run through some of Vietnam's key manufacturing hubs, home to Samsung, Foxconn, Pegatron and other global giants, many of whom rely on a regular flow of components from China, Agence France-Presse reported.
"Railway infrastructure projects are hugely expensive, incur numerous land rights and environmental issues and nearly always run over budget and deadline. Even if these projects are approved, it will be many years before passengers jump on board," Gary Bowerman, director of Check-in Asia, a travel and hospitality research company, told VOA by email.
China's Foreign Ministry spokesperson Guo Jiakun on Wednesday said that since last year, China and Vietnam have exchanged views on multiple occasions on enhancing railway connectivity between the two countries.
"The two sides agreed to accelerate the feasibility study of the Lao Cai-Hanoi-Hai Phong standard-gauge railway, speed up the plan compilation of the Dong Dang-Hanoi standard-gauge railway and the Mong Cai-Ha Long-Hai Phong standard-gauge railway, and advance the work of building a standard-gauge railway connection point between Hekou and Lao Cai," Guo said during a news conference in Beijing.
Vietnam's Ministry of Transport has indicated that more details on the bidding process and project timeline will be released in the coming months.
The project is expected to take approximately six years to complete following its approval and the finalization of the loan agreement, according to the Vietnam Railway Authority.
Some information for this report came from Agence France-Presse.
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