Economic Sector

Last updated: Wednesday, May 15, 2019


Transport Sector in 2018: Hotspots of Concerns

Posted: Friday, February 09, 2018

The transport sector of Vietnam made significant changes in 2017 when it completed many big projects such as Tan Vu - Lach Huyen sea-crossing bridge, Ca Pass tunnel and blueprint North - South Expressway recently approved for construction by the National Assembly. However, in the past year, the Ministry of Transport also faced a plenty of challenges and public frustrations at BOT stations throughout the country and many important projects delayed such as elevated railway (Hanoi) and Ben Thanh - Suoi Tien metro tunnel (Ho Chi Minh City).

Vietnam Business Forum would like to excerpt some hotspots of the transport sector that draw public attention in 2018.

BOT hotspots
The policy on BOT (build - operate - transfer) transport infrastructure construction in the context of limited State budget is definitely right. Nevertheless, a lot of wrongdoings in execution and operation of BOT projects were unearthed. Notably, many wrongly placed BOT traffic toll stations resulted in negatively fierce public reactions, for example, BOT Cai Lay, BOT Bien Hoa and BOT National Highway 5. These shortcomings are expected to be addressed by the newly appointed Transport Minister in 2018.

Overloaded airway
Airport overcrowding is not a new issue as it has existed for years. In 2017, propelled by economic development, air travel demand increased, giving rise to overloading in many airports, especially Tan Son Nhat Airport. And, this deleteriously impacted the investment environment in Vietnam.

In 2015, the project on construction of Long Thanh International Airport to reduce the load for Tan Son Nhat Airport was approved. Accordingly, by 2025, the first phase of the project will be put into operation. However, by the end of 2017, the ground clearance still confronted numerous difficulties because of insufficient capital. If this is not addressed soon enough, meeting the schedule will be a big question.

Elevated railways belated
The 13-km Cat Linh - Ha Dong elevated railway project was started in 2011 and scheduled for completion in 2016 with an expected budget of US$552.86 million, including a US$419 million loan from China and the rest from Vietnam. In 2016, the total investment capital rose to US$868.04 million, with US$669.62 million borrowed from China and US$198.42 million from Vietnam’s counterpart fund. After three undercapitalised adjustments, the new plan set the trial run on September 2, 2018 at the latest.

In Ho Chi Minh City, Ben Thanh - Suoi Tien Metro No. 1 Project is facing with fund shortage. Japanese repeatedly threatened to terminate construction because of capital shortage. As a result, it will be very hard to bring the route into operation from 2020 as expected.

Is North - South Highway behind time?
This is considered a strategic project, a key project of the nation. It will change the appearance of transport infrastructure in Vietnam. With such importance, Vietnam just completed 171 km out of a total of 1,300 km as planned by the end of 2017. According to experts, with the current deployment rate, Vietnam can only complete the total of 400 km by 2020.

A lot of reasons has been blamed to this slowness, with the most serious being capital deficit. Many people raised doubts over the capital source to realise the dream of 4-lane modern highway that links the two largest economic centres in the country - Hanoi and Ho Chi Minh City?

This is probably a big question that the newly appointed Transport Minister must find out solutions in 2018. The most likely solution in this period, according to many economists, is calling BOT investors. However, this depends on how the new minister will solve the current hot issue: Public-protested BOT traffic toll stations. If his solution creates trust and peace of mind for investors, they will fund this project. At that time, the slogan of “socialising the transport sector” will become a reality.

What does the new minister say?
Before hot issues of the transport sector, especially BOT toll booths, Transport Minister Nguyen Van The expressed his determinations that the Ministry of Transport must bear responsibility to the people for letting this reality happen, adding that it will let unsolved BOT issues prolong and will tackle them right in 2018. To clarify toll collections, this work must be automated. If it cannot be done in 2018, the ministry will be responsible to the public.

Mr The said, the Standing Committee of the National Assembly issued a new resolution to this effect in October 2017. Accordingly, no BOT projects will be carried out on the old roads, aiming to limit unfortunate incidents as some BOTs are facing. He affirmed that he will do his best to make BOT stations operate stably and attract more investors in the coming time.

Regarding serious traffic degradation throughout the country in the midst of slow and poor repair and maintenance, Minister The directed that “In 2018, trunk roads will be checked first and repaired immediately in case of degradation. We would rather spend a much smaller amount of money repairing/upgrading an existing road for more people than spend a huge amount building a new one where fewer people will benefit from.”

Luong Tuan

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