High-Speed Rail Project Expected to Boost Vietnam’s Annual GDP Growth by 1 Percentage Point

At the second meeting of the Steering Committee for construction and implementation of the high-speed railway investment project on the North-South axis and important national railway projects, Deputy Prime Minister Tran Hong Ha emphasized that an industrialized, modernized country needs to develop high-speed railways to reduce logistics costs and improve economic competitiveness.

Proposed speed of 350 km/h

According to a report by the Ministry of Transport, the high-speed railway with a design speed of 350 km/h can transport passengers and goods when needed. The existing railway lines will be shifted for freight transport.

The Ministry of Transport has coordinated with the General Statistics Office (under the Ministry of Planning and Investment) to assess the impact of the North-South High-speed Railway Project on the economy. The project was expected to contribute about 1 percentage point of the annual GDP growth in the 2025-2037 period.

The Ministry of Transport and related agencies have also reviewed, updated and completed the capital mobilization plan and assessed impacts of public debt, human resource development project and railway development orientations.

In addition to renovating and upgrading existing railways for effective operation, the Railway Project Management Board is also carrying out preparatory investment steps for projects of national importance like the Lao Cai-Hanoi-Hai Phong route on the East-West Economic Corridor, the Ngoc Hoi-Thach Loi route  that links north and south railway lines, the Ho Chi Minh City-Can Tho route that connects Ho Chi Minh City with Southwest provinces, the Thu Thiem-Long Thanh route that links Ho Chi Minh City with Long Thanh Airport, and Bien Hoa-Vung Tau route that links Southeast provinces with Ho Chi Minh City and the Cai Mep-Thi Vai Seaport.

Regarding difficulties and obstacles, Deputy Minister of Transport Nguyen Danh Huy said: As important national railway projects have large scales, have complicated technical standards and go through many localities, they need to be considered carefully and thoroughly. Investment preparation takes a long time and requires close coordination of ministries, branches and localities.

Railway projects bring great economic efficiency but low financial efficiency. Thus, the State Budget needs to play the leading role and prioritize allocating resources for investment.

The domestic railway industry has not yet been able to manufacture vehicles, equipment, components and spare parts for railways in general.

Human resources do not have access to advanced management and technical levels. We lack railway experts.

Increase market share of long-distance freight transport

According to Dr. La Ngoc Khue, former Deputy Minister of Transport, in addition to transporting passengers, the high-speed railway must increase its market share in long-distance freight transport to reduce logistics costs and "must definitely connect with international railway lines".

"Although inland waterway and sea transport have cost advantages, it takes a long time and loads/unloads many times. Hence, this is a huge opportunity for the railway industry to increase its market share of long-distance freight transport and helps improve economic competitiveness," he analyzed.

Agreeing with this opinion, Dr. Le Xuan Nghia believed that carbon tax will cause the cost of road, waterway and air transport to increase sharply in the future while this will be the advantage of long-distance rail transport.

Mr. Vuong Dinh Khanh, former Deputy General Director of Vietnam Railway Corporation, proposed carefully weighing up the plan of operating only freight trains on the entire existing railway system; and investing in the railway industry, especially in manufacturing locomotives and carriages in line with the roadmap of implementing high-speed railway projects.

Meanwhile, Dr. Nguyen Van Phuc, former Deputy Chairman of the National Assembly's Economic Committee, expressed, "Our technique and technology still depend on the world, so what we can do now is making the mechanism and policy for resource mobilization and devising disruptive actions".

Welcoming opinions from experts and scientists, Deputy Prime Minister Ha emphasized that an industrialized, modernized country needs to develop high-speed railways to reduce logistics costs and improve the economic competitiveness in the current green transformation trend.

The Ministry of Transport needs to receive, explain and clarify expert opinions raised at the meeting, complete investment plans for high-speed railways to ensure the consistence and unity of regulations and standards from design to infrastructure, facilities, information systems and operation.

"It is necessary to retain iconic central stations in large cities, and, at the same time, ensure safe corridors by combining them with elevated and underground routes," he noted.

Furthermore, Ha petitioned the Ministry of Transport to provide comprehensive elucidation on the intricacies of economic viability, cutting-edge technology, sophisticated methodologies, and global best practices pertaining to the seamless integration of passenger and freight transportation within high-speed railway systems worldwide. This includes detailed insights into capital mobilization strategies, investment sequencing, the establishment of an integrated organizational framework for cohesive management and operations, as well as strategies for the acquisition and dissemination of advanced techniques and technologies, all geared towards fostering the development and mastery of the domestic railway industry.

Source: Vietnam Business Forum