Brian Jeffrey
On November 13, the National Assembly convened to discuss the investment strategy for the North-South high-speed rail project.
Transport Minister Nguyen Van Thang emphasized that the initial purpose of the high-speed rail is passenger transport, with the potential for future adaptations to accommodate freight transport.
Future predictions indicate that by 2050, the North-South railway will need to handle approximately 18 million tons of goods annually, a volume that can be efficiently managed with the existing rail system. Other transportation options, such as coastal shipping and road transport, are also available. Across the world, countries with high-speed rail predominantly use maritime or road transport for goods.
The Minister referenced Japan, where the Shinkansen, which operates at speeds of 300 km/h, focuses solely on passengers, while a separate rail network is designated for cargo.
“In Japan, half a century ago, rail made up 30% of freight transport; it has now fallen to about 4-5%, with coastal shipping at 50% and road transport over 40%,” Minister Thang noted, pointing out similar trends expected in Vietnam’s transport sector.
He also highlighted that the need for freight transport via high-speed rail involves containerization, leading to increased handling costs. “For priority deliveries, road transport is preferable; for large, economical shipments, coastal shipping is the best option,” he remarked.
The Minister warned that countries usually prefer to avoid blending passenger and freight transport on high-speed lines due to safety concerns and decreased efficiency, suggesting caution against this approach for the new rail system.
For the North-South line, the anticipated travel duration from Hanoi to Ho Chi Minh City is around 5.5 hours. Minister Thang shared that there will be two types of trains: one traveling at 350 km/h, stopping at five major stations, and another at 280 km/h, making several more local stops.
In response to worries about possible delays and budget overruns, similar to urban metro endeavors, he reassured that the Ministry has thoroughly examined issues that caused past project delays, identifying three key factors.
The first challenge is the investment preparation phase, which is essential to prevent budget overruns.
“In earlier urban metro projects, there were gaps in understanding complex train components, often leading to only basic specifications being recorded. For this high-speed rail project, we will detail everything—from technical specifications to routes and technology,” he stressed.
The second challenge is land clearance, which can be lengthy and expensive. Minister Thang suggested that the National Assembly permit the handling of land clearance as a distinct project to streamline this process.
Lastly, he mentioned that prior dependence on Official Development Assistance (ODA) had limited contractor options, usually resulting in higher costs.
“For this project, the focus on contractor selection will center around quality and affordability without limitations due to foreign loans. In cases where borrowing is necessary, foreign loans will be capped at 30% of the total funding, roughly 46 trillion VND ($1.86 billion) annually, with favorable interest rates and few restrictions,” he stated.
The preferred funding strategy involves raising capital domestically via bond issuance.
Regarding technology transfer, the Ministry of Transport has actively involved major Vietnamese firms and key organizations from the Ministry of Defense, aiming to establish them as national partners for future technology transfer initiatives.
On the topic of essential technology, Minister Thang remarked, “There is currently no urgent need for core technology transfer, since no plans for additional high-speed rail lines are anticipated in the near future.”
