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Voice of America
22-02-2025
- Business
- Voice of America
Vietnam's railway drive raises risk of mismanagement, debt traps, analysts say
Analysts are pointing to management and funding issues for Vietnam's planned north-south, high-speed rail initiative and express concerns over potential 'debt traps' and growing Chinese influence as Beijing funds a railway connecting the two countries. The comments come as Vietnam is expanding its infrastructure by building railways using Chinese and Vietnamese funding, projects that could help the country's outlook in the long term. As part of the effort, Vietnam's National Assembly on Feb. 19 gave near-unanimous approval to legislation allowing the country to use Chinese loans for a new $8.3 billion rail link from the port city of Haiphong to China. Nguyen Hong Minh, then the transport minister, announced Vietnam's plans to use the Chinese loans for the 391-kilometer passenger and freight line from Lao Cai on the Chinese border and passing through Hanoi. "Vietnam's current railway system is outdated, and the country needs a new system to support its economic development," Minh, now the construction minister, said, adding that construction is expected to begin this year and be completed by 2030. The National Assembly vote followed its November approval of construction of a high-speed railway connecting Hanoi to the country's southern economic hub, Ho Chi Minh City. That project is Vietnam's most ambitious infrastructure initiative to date and is projected to cost Vietnam $67 billion. Authorities said construction should begin in 2027 and be completed by 2035. Ha Hoang Hop, chair of the Hanoi-based Think Tank Viet Know, told VOA on Feb. 17 that while both projects could modernize the country's transport network and improve its economy, 'public sentiment is cautious.' 'There have been several publicly funded railway and infrastructure projects in Vietnam that have led to public frustration due to delays, cost overruns and poor-quality outcomes,' Hop said. 'Public skepticism is also fueled by fears of debt traps associated with Chinese loans,' he said. Hop cited fear the construction of the high-speed rail project could be dogged by the country's 'historical issues with project management and corruption.' 'There is indeed concern that the north-south, high-speed rail could face similar challenges given the scale and complexity of the project,' Hop said. Mismanagement and corruption Albert Tan, associate professor at the Asian Institute of Management in Manila, told VOA on Feb. 18 that while Vietnam's railway modernization will improve the country's supply chain efficiency, the major problem is corruption. 'The corruption level in Vietnam is so high that when you have that amount of money that the Chinese are pumping in, I'm sure there will always be leakages,' he said. Tan said railway funds ending up in 'someone's pocket' have caused delays and cost overruns for Vietnam's two city Metro lines. In 2021, the Chinese-funded Cat Linh-Ha Dong Metro line began running in Hanoi, five years behind its originally planned opening. The first line of the Ho Chi Minh City Metro, primarily funded by Japan, opened in December 2024, six years behind schedule. Costs ballooned for both Metro lines while under construction and delayed payments to contractors slowed the process. 'Somehow the money doesn't go back to the contractor. Money goes somewhere to other stakeholders,' Tan said. For the north-south, high-speed rail, Hop said the country is planning to rely on domestic funding with capital likely to come in the form of 'government bonds, public investment and possibly some low-interest loans.' 'A $67 billion project will still be a significant challenge requiring careful financial management,' Hop said. Chinese influence Hanoi's decision to pursue domestic funding for its high-speed rail shows the country's drive to 'maintain strategic autonomy,' Hop said. As it looks to Chinese loans for another rail project, though, 'there remains a significant portion of the populace wary of increasing economic dependency on China,' he added. Tran Anh Quan, a Vietnamese social activist currently living in exile, told VOA on Feb. 18 he fears the Chinese-funded railway will leave Hanoi indebted to Beijing and could be a weak point if conflict were to break out between the countries. 'This is definitely a debt trap,' he said. 'Expanding the railway to China would be very dangerous if China attacked Vietnam.' Tan also shared concerns over the "one-way" flow of money. He said the Chinese loans are likely to be paid to Chinese firms that will 'retain control over construction and maintenance, with little technology transfer to local engineers.' Joshua Kurlantzick, senior fellow for Southeast Asia and South Asia at the Council on Foreign Relations, told VOA that Chinese influence in the region is already 'massive.' He said Chinese funding for the Vietnamese railway is in line with Beijing's goal to expand its influence in Southeast Asia. The railway 'fits right into China's efforts to link the Mekong region, and to connect them to China,' he wrote in an email. Kurlantzick said that in Vietnam's delicate balancing act between Washington and Beijing, China is taking the upper hand as he sees U.S. influence waning with the withdrawal of funding to Vietnam through USAID and weakening public diplomacy more broadly. 'China is by far the dominant economic power in Southeast Asia already, increasingly the dominant security power, and now, with the U.S. giving up its soft power in the region, China will increasingly bolster its soft power in the region, too, making it even more dominant,' Kurlantzick said. Minh Son To, a research assistant focused on Vietnamese and Chinese politics at Singapore's Nanyang Technological University, told VOA February 20 Hanoi has looked to Laos with concern after a China-funded high-speed rail threw the country into an 'existential debt crisis.' Still, he said many are eager to see Vietnam develop. 'Any 'China' label is bound to evoke some concern, though I wouldn't overstate that,' he told VOA. 'Vietnamese know that they need development and infrastructure, regardless of where it comes from.'
Voice of America
20-02-2025
- Business
- Voice of America
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.
MTV Lebanon
13-02-2025
- Business
- MTV Lebanon
Vietnam to use Chinese loans for railway linking both countries
Vietnam plans to take loans from the Chinese government to partly fund a $8.3 billion project to build a new railway linking the two countries, the transport minister said on Thursday. Vietnam has been seeking to upgrade its aging railway systems, and has approached China for funding and technology. "Vietnam's current railway system is outdated, and the country needs a new system to support its economic development," transport minister Nguyen Hong Minh told parliament. The 391 km (243 mile) railway will run from the border city of Lao Cai through capital city Hanoi to Haiphong that houses the largest seaport in northern Vietnam, Minh said. The railway will have a gauge of 1,435 millimetres and will allow trains to operate at a speed of up to 160 kph (99 mph). It is designed to transport passengers and cargo. Construction of the railway is expected to start this year and be completed by 2030, he said. Parliament is scheduled to vote on the railway project next week during its ongoing meeting in Hanoi. In November, lawmakers also approved a resolution supporting a $67 billion, 1,541 km (958-mile) high-speed rail that would link Hanoi with business hub Ho Chi Minh City, targeting the start of operations in 2035.
Yahoo
13-02-2025
- Business
- Yahoo
Vietnam to use Chinese loans for $8.3 billion railway linking both countries
HANOI (Reuters) - Vietnam plans to take loans from the Chinese government to partly fund a $8.3 billion project to build a new railway linking the two countries, the transport minister said on Thursday. Vietnam has been seeking to upgrade its aging railway systems, and has approached China for funding and technology. "Vietnam's current railway system is outdated, and the country needs a new system to support its economic development," transport minister Nguyen Hong Minh told parliament. See for yourself — The Yodel is the go-to source for daily news, entertainment and feel-good stories. By signing up, you agree to our Terms and Privacy Policy. The 391 km (243 mile) railway will run from the border city of Lao Cai through capital city Hanoi to Haiphong that houses the largest seaport in northern Vietnam, Minh said. The railway will have a gauge of 1,435 millimetres and will allow trains to operate at a speed of up to 160 kph (99 mph). It is designed to transport passengers and cargo. Construction of the railway is expected to start this year and be completed by 2030, he said. Parliament is scheduled to vote on the railway project next week during its ongoing meeting in Hanoi. In November, lawmakers also approved a resolution supporting a $67 billion, 1,541 km (958-mile) high-speed rail that would link Hanoi with business hub Ho Chi Minh City, targeting the start of operations in 2035.
Yahoo
13-02-2025
- Business
- Yahoo
Vietnam to use Chinese loans for $8.3 billion railway linking both countries
HANOI (Reuters) - Vietnam plans to take loans from the Chinese government to partly fund a $8.3 billion project to build a new railway linking the two countries, the transport minister said on Thursday. Vietnam has been seeking to upgrade its aging railway systems, and has approached China for funding and technology. "Vietnam's current railway system is outdated, and the country needs a new system to support its economic development," transport minister Nguyen Hong Minh told parliament. The 391 km (243 mile) railway will run from the border city of Lao Cai through capital city Hanoi to Haiphong that houses the largest seaport in northern Vietnam, Minh said. The railway will have a gauge of 1,435 millimetres and will allow trains to operate at a speed of up to 160 kph (99 mph). It is designed to transport passengers and cargo. Construction of the railway is expected to start this year and be completed by 2030, he said. Parliament is scheduled to vote on the railway project next week during its ongoing meeting in Hanoi. In November, lawmakers also approved a resolution supporting a $67 billion, 1,541 km (958-mile) high-speed rail that would link Hanoi with business hub Ho Chi Minh City, targeting the start of operations in 2035.
