Brian Jeffrey
After nearly two decades of study, the North-South high-speed rail project has once again been proposed to the National Assembly for approval during the 8th session of the 15th legislature.
The project received support from the Central Committee of the 13th Party Congress, the Politburo, and the Government, all advocating for the mobilization of resources to bring it to fruition.
As transport needs grow, with an economic forecast of $430 billion by 2030—almost three times that of 2010—and a public debt ratio of around 37% of GDP, authorities believe it’s an ideal moment to proceed with construction.
Scheduled for a 2027 start and an anticipated completion by 2035, the rail line will stretch 1,541 kilometers, enabling travel from Hanoi to Ho Chi Minh City in just 5.5 hours—a drastic reduction compared to conventional train times.
In 2007, the government included the North-South high-speed rail in a critical list of transport infrastructure. Vietnam Railways (VNR) led the initiative, while a feasibility study was carried out by the Vietnam-Japan Consulting Consortium (VJC) between 2008 and 2009.
In May 2010, the project was introduced to the National Assembly, proposing a 1,570-kilometer dual-track railway capable of 350 km/h speeds, with an estimated cost of $55.8 billion, divided into two phases:
1. Hanoi-Vinh and Nha Trang-Ho Chi Minh City (2012–2020).
2. Full line completion by 2035.
Back then, worries about speed, operational feasibility, and funding were prominent. With Vietnam’s economy just emerging from poverty and public debt high at 56.6% of GDP, the project’s financial burden—nearly half of GDP—seemed overwhelming.
This resulted in only 185 out of 439 attending National Assembly members voting in favor, leading to the project’s rejection and subsequent delays.
Now, fourteen years later, the North-South high-speed rail project is back on the table, with officials believing it’s the “right time” to advance.
On November 13, 2024, Minister of Transport Nguyen Van Thang formally introduced the proposal at the National Assembly for investment approval.
The rail line would extend from Ngoc Hoi Station in Hanoi to Thu Thiem Station in Ho Chi Minh City, crossing through 20 provinces and cities. The cost for this project is estimated at over $67 billion, funded through state budget allocations and medium-term public investment plans.
The construction is expected to be finalized by 2035, with funding spread over 12 years, averaging $5.6 billion annually.
Pham Thuy Chinh, Deputy Chair of the National Assembly’s Finance and Budget Committee, expressed regret among many lawmakers from the 12th legislature for not supporting the project back in 2010, when its cost was projected at $56 billion.
“Now the cost has escalated to $67 billion, and we’ve missed crucial opportunities to advance our railway system. Delaying further is not feasible,” she stated.
Deputy Minister of Transport Nguyen Danh Huy emphasized that the project addresses urgent transportation requirements. Studies over the past 18 years have indicated that the North-South corridor has the highest demand for both passenger and freight transport.
“This project is essential for reforming transportation services and is a key factor for Vietnam’s progression into a new growth phase,” noted Deputy Minister Huy.
Minister of Transport Nguyen Van Thang pointed out that with Vietnam’s current economic size ($430 billion in 2023) and public debt at 37% of GDP, the financial groundwork for the project appears solid.
Even though this represents Vietnam’s largest public investment ever, the proposed funding strategy is deemed feasible.
Proposed funding sources:
1. State Budget: The central government will primarily fund it, with additional contributions from local budgets.
2. Government Bonds: Issuing long-term bonds at advantageous rates dependent on market conditions.
3. Public-Private Partnerships: Engaging local investors for resource gathering.
4. Foreign Loans: Seeking preferential loans with minimal conditions.
Prof. Dr. Hoang Van Cuong, a member of the National Assembly Finance and Budget Committee, underlined the importance of ensuring consistent funding.
“We should explore increasing public debt, issuing government bonds both domestically and internationally to secure project resources,” Cuong recommended.
Minister Thang confirmed that domestic financing would take precedence. If foreign loans are necessary, they must be affordable and free of restrictive conditions to maintain technological and operational independence.
