Vietnam's high-speed railway to come with hefty price tag
May 21, 2010, 12:14 GMT
Hanoi - Vietnam's proposal to build a 56-billion-dollar high-speed railway from Hanoi to Ho Chi Minh City may be more than the country can afford, economists and National Assembly deputies said Friday.
The government submitted its plan for the railway, to be built with Japanese technical assistance, to the National Assembly on Thursday.
The railway would stretch 1,570 kilometres and cut the travel time between Hanoi and Ho Chi Minh City from at least 36 hours today to under 10 hours.
Foreign development assistance and loans from the World Bank would be needed to finance the project. Critics say the debt would be too large to recoup at realistic ticket prices in a low- to middle-income country like Vietnam.
'We don't have passengers for this railroad,' said senior economist Le Dang Doanh, a former adviser to the prime minister who calls for the project to be broken into smaller stages. 'If we sell the tickets at a high price, people will choose other means of transport, like buses. The project is not calculated carefully.'
Speaking to reporters at the National Assembly on Thursday, transportation minister Ho Nghia Dung admitted the project, which would cost over half of Vietnam's current annual gross domestic product (GDP) of 90 billion dollars, was not efficient in economic terms.
But he did argue for its 'social effectiveness' and capacity to boost exchanges between the country's north and south.
Many National Assembly deputies were sceptical of the project. In the assembly's meetings Thursday, Danh Vu Minh, chairman of the assembly's Technology and Environment Committee, noted that with the national debt currently at over 42 per cent of GDP, further indebtedness was risky.
Cao Si Kiem, former governor of the country's State Bank, said the government had not clarified the project's transport benefits or explained how it would raise the needed funds.
Another deputy, former minister of transportation Dao Dinh Binh, said the government should prioritise highways due to the lack of current demand for high-speed rail.
International analysts generally emphasise the poor state of Vietnam's road network, the shortage of rail freight and lack of port capacity as the country's top transportation priorities.