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Business Times
27-05-2025
- Business
- Business Times
Jardine-linked Thaco joins race for Vietnam's US$67 billion bullet train project
[HO CHI MINH CITY] The battle to build Vietnam's largest bullet train project is heating up as Truong Hai Group (Thaco) – a sprawling Vietnamese industrial conglomerate backed by Singapore-listed Jardine Cycle & Carriage – throws its hat into the ring for the US$67 billion North-South High-Speed Railway. Thaco's proposal would pit it against another heavyweight contender, VinSpeed – part of the Vingroup empire – which is also vying to build the mammoth, decade-long transnational railway project connecting Hanoi and Ho Chi Minh City. Thaco, founded by auto tycoon Tran Ba Duong, is 26.6 per cent owned by Jardine Cycle & Carriage, a subsidiary of Hong Kong-based Jardine Matheson. In Vietnam, Jardine has steadily expanded its footprint not only through its stake in Thaco, but also via investments in the dairy producer Vinamilk and the infrastructure and utilities firm REE Corp. According to Thaco's proposal dated May 26 that was submitted to Prime Minister Pham Minh Chinh and reviewed by The Business Times, the conglomerate has proposed to invest around US$61.4 billion into the project, excluding expenses related to site clearance and resettlement that will be handled by the state. Like VinSpeed, the industrial heavyweight has proposed gaining priority access to the prime land surrounding station sites for transit-oriented development (TOD) – a move that could unlock significant upside from rising land values and commercial spillovers. Thaco is also seeking tax exemptions on imported equipment, materials, and machinery not available through local manufacturing. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The Jardine-backed firm has pledged to cover 20 per cent of the US$61.4 billion project – or US$12.3 billion – through its own capital and other mobilised sources, with plans to borrow the remainder for construction and operations. This mirrors the proposal by VinSpeed. In the letter signed by Duong, who is chairman of the group, Thaco proposed that the state own certain facilities and take responsibility for part of the management and operation. 'We are also committed to developing TOD models in an exemplary manner and at reasonable prices to meet the housing and living needs of the majority of Vietnamese people,' he wrote. Best known domestically for its automotive manufacturing, Thaco has an equity of 57.9 trillion dong (S$2.9 billion) as at the end of the first quarter of this year, with Duong and his family members holding 72 per cent of the stake. Shift from state to private capital The North-South High-Speed Railway project, approved by the country's parliament in November 2024 under public investment, involves constructing a 1,500 kilometre rail line spanning 20 cities and provinces. The government plans to start construction in 2026 and put it into operation from 2035. The proposals signal a potential shift from the current state-led investment model to one driven by private capital. This potential policy change, along with special mechanisms proposed for the project, is expected to be tabled for parliamentary review during the current legislative session, which runs until end-June. These proposals also align with the recent Resolution 68, in which the ruling Communist Party of Vietnam has explicitly encouraged private firms to participate in national-scale initiatives and projects, including the development of high-speed railways, metro lines, power and digital infrastructure, and green transportation. This is part of the South-east Asian nation's ambition to foster the rapid growth of home-grown, mid-to-large private enterprises into internationally competitive corporations. Thaco plans to raise 80 per cent of the project's funding through domestic and foreign credit institutions, and is seeking a government guarantee, a risk-sharing mechanism to boost lender confidence, and full-interest subsidies over a 30-year loan period. In comparison, VinSpeed had earlier proposed zero-interest loans from the state over 35 years to finance a similar share of the investment. Thaco estimates it will take seven years to develop three sections of the railway in two phases. In comparison, VinSpeed pledged to bring the entire line into operation within five years. Headquartered in Ho Chi Minh City, Thaco operates one of Vietnam's largest industrial parks within the Chu Lai Open Economic Zone in the central province of Quang Nam. The 1,200-hectare park hosts seven of Thaco's auto plants producing and assembling a range of vehicles, from passenger cars to buses and trucks, for brands such as Kia, Mazda, Peugeot, Mitsubishi Fuso, and Thaco Bus. The conglomerate also plans to begin construction of its industrial park specialising in mechanical and supporting industries in Vietnam's southern manufacturing hub of Binh Duong in September, and another in the northern province of Bac Ninh next year. Potential challenges ahead VinSpeed's proposal submitted on May 6 secured initial support from the government, with relevant agencies assigned to review and provide feedback before it is finalised and submitted to the parliament. In its feedback on VinSpeed's proposal, the State Bank of Vietnam (SBV) noted that Vingroup had a debt-to-equity ratio of 4.23 at Mar 31, suggesting that the group relies heavily on debt financing, according to a document dated May 19 seen by BT. The 20 per cent of the investment arranged by VinSpeed for the bullet train project already amounts to double Vingroup's equity of 157.5 trillion dong. By end-March, the conglomerate and 101 related firms in its ecosystem had a total domestic outstanding loan of 117.1 trillion dong. Meanwhile, the outstanding foreign debt of Vingroup and its subsidiaries, including electric car maker VinFast, hospitality firm Vinpearl, and residential real estate developer Vinhomes, stood at some US$2.41 billion. 'The North-South High-Speed Railway project is a particularly important project with complex technology and a large total investment, exceeding the appraisal capacity of credit institutions,' SBV noted. Therefore, the central bank proposes a special mechanism related to a government guarantee for the domestic loan proposed by the firm to ensure the safety of banking operations. 'In the event that Vinspeed borrows a large amount of foreign capital within a short period, it could affect the limits on self-managed and self-repaid foreign loans, as well as the overall national foreign debt safety ratio,' it warned.
Nikkei Asia
19-05-2025
- Business
- Nikkei Asia
Vingroup proposes new unit to build, run Vietnam's $61bn bullet train
HANOI -- The owner of Vietnamese conglomerate Vingroup has bid to build and operate a government-proposed 1,541-kilometer high-speed railway connecting Hanoi and Ho Chi Minh City that is expected to cost around 1,562 trillion dong ($61 billion). Vingroup founder Pham Nhat Vuong, the country's first billionaire, submitted his plan to the government on May 6, the same day Vuong established VinSpeed, a new company he and his family members own alongside Vingroup.
Business Times
15-05-2025
- Business
- Business Times
Vingroup-backed VinSpeed wins initial backing for US$61.3 billion express rail project
[HANOI] Vingroup-backed VinSpeed has secured preliminary support from the Vietnamese government for its intention to invest in the North-South high-speed railway project, with a total investment of US$61.3 billion. Government agencies have been asked to collaborate with VinSpeed to assess and finalise the investment proposal, which is a shift from the current public investment model to a private direct investment one, according to a notice dated May 15 issued by the government office and reviewed by The Business Times. The parliament last November approved public investment for the US$67 billion national express railway connecting Vietnam's two metropolises, Hanoi and Ho Chi Minh City. According to a plan issued on Apr 23, Vietnam aims to begin construction of the railway in 2026 and put it into operation from 2035. The bullet train will travel about 1,500 km across 20 cities and provinces at 350 kmh. Meanwhile, under the latest proposal, VinSpeed seeks to receive approval to start implementing the project in December this year. It pledges to bring the railway into operation after five years upon receiving the cleared sites handed over by the state. The proposed total investment of US$61.3 billion excludes expenses related to site clearance and resettlement, which will be handled by the state. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Family firm of Vietnam's richest man VinSpeed was founded by Vingroup chairman Pham Nhat Vuong and his family members in May, with a charter capital of six trillion dong (S$300.6 million). Vietnam's largest private conglomerate Vingroup is also a shareholder that owns a 10 per cent stake in the railway development firm. According to the proposal dated May 6 and seen by BT, VinSpeed has committed to contributing 20 per cent of the total investment into the rail project, equivalent to US$12.3 billion, using its own resources and capital mobilised from other sources. The firm seeks to finance the remaining amount through zero-interest loans provided by the state Budget, with a 35-year term and repayment deferred until the due date. VinSpeed has also proposed being designated as the investor for several urban and real estate projects on land surrounding the railway stations to generate additional income, along with tax exemptions on the import of equipment, materials and machinery for the rail construction, operation, and maintenance. Other suggested incentives include setting train fares at 60 to 75 percent of the ceiling airfare and allowing a 99-year investment term for the project. Those special mechanisms and policies outlined in VinSpeed's proposal will be reviewed by competent authorities and reported to the Standing Board of the Government's Party Committee by May 22. It will subsequently be submitted for parliament's assessment during the ongoing ninth meeting session, which will run until the end of June. Stronger participation of private sector The government views this move as aligned with the Communist Party of Vietnam's landmark resolution on May 4 about private sector development. Locally referred to as the 'Resolution 68', the ruling Communist Party has explicitly encouraged private firms to participate in national-scale initiatives and projects, including the development of high-speed rails, metro lines, power and digital infrastructure, green transportation and defence sectors. This is part of the South-east Asian nation's ambition to foster the rapid growth of home-grown, mid-to-large private enterprises into internationally recognised corporations. 'This opens new doors that were previously reserved for state-owned enterprises, potentially creating the next generation of national champions,' Dang The Duc and Pham Hoang Vu at Vietnam-based law firm Indochine Counsel wrote in a recent note. Ensure capital safety Prior to the establishment of VinSpeed, Vingroup also proposed to invest in a US$4 billion metro line connecting Ho Chi Minh City's District 7 and Can Gio coastal urban area. In March, the Vietnamese conglomerate submitted a proposal to develop major power projects including liquefied natural gas, solar and wind plants. The projects are worth between US$25 billion and US$30 billion by 2030, with a generation capacity of 25.5 gigawatts (GW) for a start, and an additional 27 GW in the following five years. At the annual general meeting of Vingroup shareholders in Hanoi last month, chairman Vuong affirmed that the conglomerate would ensure capital safety in its venture into the electricity sector. The group plans to finance those power plants with 15 per cent from its own capital, 35 per cent from bank loans and 50 per cent through engineering, procurement and construction (EPC) contracts. In these EPC agreements, the contractor typically handles upfront costs and risks, while the investor pays as milestones are met to ensure efficient cash flow management. By the end of the first quarter of 2025, Vingroup's equity was 157.4 trillion dong. Meanwhile, its debt stood at 251.5 trillion dong, making up 61.5 per cent of the total debt and equity. 'This means that (Vingroup) is leveraging debt more than equity, but still at a safe level,' said Steven Woo, research manager at Ho Chi Minh City-based brokerage firm VNDirect Securities. Woo also believed that those newly announced ventures would not affect the group's financial health. In a May 15 interview with local newspaper Thanh Nien, Dao Thuy Van, deputy chief executive of VinSpeed, emphasised that the company operates independently of Vingroup and would not place financial burdens on the conglomerate's shareholders. 'Instead, companies within Vingroup's ecosystem are expected to benefit from the transit-oriented developments along the high-speed rail route,' she added.
Asia Times
15-05-2025
- Business
- Asia Times
Vingroup tests the line of Vietnam's new capitalism
On May 11, 2025, Vietnamese media widely reported that Vingroup, one of the nation's most powerful private conglomerates, offered to take full control of the North–South high-speed railway project. However, less than 24 hours later, the headlines suddenly vanished as articles disappeared online, links went dead and state-controlled media fell silent. The cause behind the censorship: the full proposal had leaked online, revealing terms that shocked the public and ignited a backlash. Pham Nhat Vuong, Vingroup's founder and Vietnam's first dollar billionaire, signed the May 6, 2025, document, which reports showed was addressed directly to Prime Minister Pham Minh Chinh and Deputy Prime Minister Tran Hong Ha. In it, VinSpeed, a newly formed Vingroup subsidiary, asked to be the sole investor and operator of the $61 billion railway project. The state was requested to pay for 80% of the figure —around $49 billion—via a zero-interest loan over 35 years, while VinSpeed would provide the remaining 20%. Land clearance costs were not included in the proposal, sparking speculation that they would be paid by the state. The company also asked to be designated the investor for urban development and real estate projects along the railway route, especially around stations, in order to mobilize extra funds. In addition, it requested the right to use the state loan as interim operating capital for its broader business activities. Finally, it proposed to set a floor for ticket prices at 60–75% of prevailing airfare price ceilings. It wasn't the proposal's ambition, but rather its terms, that set off the public uproar expressed mainly online. Many questioned in chat forums why a private company should request tens of billions of dollars worth of interest-free public loans, gain control of adjacent real estate and set price floors with little transparency and no competition. By May 12, most news coverage of the proposal had vanished. Two days later, on May 14, state media reintroduced the story—this time framed as a patriotic initiative aligned with the ruling Communist Party's goals. But by then, the original leak had already opened a much larger conversation about private capital, political power and the future direction of Vietnam's economy under new leadership. The VinSpeed leak and the media fallout became a live experiment in how power, capital and policy are bargained over in communist-ruled Vietnam. Three general interpretations have emerged. One sees the incident as evidence that Vingroup—long regarded as the most politically connected private conglomerate in Vietnam—may have lost some of its unspoken Party protection. Yet despite VinFast's challenges and rising debt, the group continues to receive selective state support. Political backing for VinFast's overseas push and, most recently, government approval to study a metro line to Can Gio, suggest formidable influence with the Party. A second view sees the proposal as calculated overreach. According to this reading, Vingroup submitted a knowingly unviable bid to appear patriotic without assuming risk. Given its strained finances, the group may have preferred to bow out without seeming obstructive. But the 14 May state media campaign undermines this view. Far from backing away, VinSpeed reasserted its interest—publicly, proudly and in full alignment with Party messaging. Whatever missteps may have occurred, the group is now visibly committed to the pitch. A third, and arguably more grounded, view sees the proposal as a real bid from a powerful actor who misjudged the moment. The North–South high-speed railway is not just another infrastructure project. It's a flagship national undertaking: politically symbolic, technically daunting and economically massive. Vingroup's bid to take full control as sole investor came off, to many, as strategic overreach. From this perspective, the leak—and the resulting public storm—was likely encouraged or amplified by other political or business factions that viewed Vingroup's bid as a threat to their own interests. The combination of elite competition and public blowback likely played a role in the state's decision to halt news coverage of the proposal. The quick restoration of media reporting on 14 May, now with carefully worded patriotic framing, suggests not a rebuke but a recalibration. There is also a subtler possibility. What if it wasn't just the Party leadership, but people close to Vingroup's Vuong, who moved to limit state media coverage after the leak? With public anger mounting and elite resistance in the air, the effort to scrub state media may have been as much about damage control as it was about censure. Faced with sudden public blowback and intra-elite friction, people close to Vuong may have worked behind the scenes to buy time, recraft the narrative and reintroduce the proposal under safer political cover. The VinSpeed incident delivered a clear, new signal from the Party's apex. On May 11—the same day the Vingroup headlines broke—Communist Party General Secretary To Lam published a major economic article titled 'A New Driving Force for Economic Development.' Since becoming Party chief in July 2024, To Lam has consistently cast the private sector as central to Vietnam's economic future. In his various articles, To Lam notes that Vietnam's economic growth depends on a stronger private sector. He has said he wants private businesses to contribute 70% of GDP by 2030. This shift in thinking is backed by policy. In May 2025, the Politburo issued Resolution 68—the Party's strongest statement of support for private enterprise in decades. The resolution calls for institutional reforms, stronger legal protections for property rights, easier access to capital, and 'rapidly developing large enterprises, medium-sized enterprises, and regional and global private economic groups.' Although it borrows from China's playbook, the language is fresh and telling, suggesting a move toward fostering strong homegrown conglomerates as state-supported champions in a socialist-oriented market economy. Just days after Resolution 68's release, the leaked VinSpeed proposal blew up. The clash exposed a deeper contradiction between the new ideology of pro-private reform and the political cost of perceived privilege. Resolution 68 promises playing field fairness, competitive access, legal safeguards, transparency and civil, not criminal, remedies. In To Lam's own words in his article, 'administrative thinking must shift from control to collaboration—treating enterprises as partners to support, not police.' But what happens when those 'partners' ask for more than the public will tolerate? The VinSpeed episode may soon be forgotten, but the inconsistency it revealed will not. In a system that purports to mix socialism and private enterprise, public legitimacy still counts for something. Even in Vietnam or China, the public can push back—not through courts or ballots, but through backlash and mockery. Resolution 68 offers a legal shield for private entrepreneurs. But unless it visibly puts cronyism in check, it risks functioning as a shield only for the rich and powerful. What the VinSpeed case shows is that even overreach can be rehabilitated if the actor adapts. The real danger isn't that elites try to extract more than their fair share – it's that, with the right messaging and timing, they may succeed. A leaked memo one day becomes patriotic policy the next. And what happens when the next company doesn't ask for a zero-interest loan on paper, but quietly receives one through backdoor clauses, land swaps or zoning tweaks dressed up as legal form? In that scenario, Vietnam may still grow. But it will be a model driven by selective access, not shared rules. The test for the Party is no longer whether it can deliver growth and prosperity, but rather if it can draw a line that even its preferred firms cannot cross. Without it, Vietnam's reform will be an unstable bargain delivering prosperity for a few, limited improvements for some and an ultimately bad deal for the many. Leo Tran writes about international affairs, trade, and global strategy. His work has appeared in the Chicago Tribune, The Diplomat, and Kyiv Post. He also publishes at Vietnam Decoded.
