Vietnam’s National Assembly has approved the construction of a transformative high-speed railway connecting Hanoi, the northern capital, to Ho Chi Minh City, the southern economic hub.
The US$67 billion project, one of the country’s most ambitious infrastructure initiatives, was approved on November 30 and is expected to transform travel and commerce along the 1,541-kilometer (957-mile) route.
The railway will accommodate trains traveling at speeds of up to 350 kilometers per hour (217 mph), slashing the journey time from the current 30 hours to just five hours.
Construction is slated to begin in 2027, and operations are expected to commence by 2035. The railway will traverse 20 provinces and cities, with 23 passenger stations and five freight stations along the route.
According to state media reports, the railway will serve passenger transport, carry freight, and support defense operations.
Deputy Minister of Transport Nguyen Danh Huy said that the project addresses growing transportation demands along the north-south corridor. Several studies have highlighted the need for faster and more efficient travel options, and this railway line is seen as a vital response to these needs.
“This project is pivotal for restructuring transport shares and serves as a cornerstone for Vietnam’s leap into a new era of growth,” he said.
Vietnam plans to prioritize domestic funding for the project, although it may seek foreign loans if conditions are favorable and non-restrictive.
However, the construction will come with key challenges, including the relocation of 120,000 residents and the removal of parts of protected forests and rice fields.
Vietnam Revisits Bullet Train Ambitions After Years Of Financial Hurdles
The country has long struggled with low-density expressways, which makes road transport expensive and inefficient. As Vietnam positions itself as an attractive alternative to China for foreign businesses, improving infrastructure has become a priority.
While the country’s low-quality transport network has restricted its investment potential, the new railway project aims to address this issue.
Dan Martin, International Business Advisor at Dezan Shira & Associates, praised the railway as a game-changer for Vietnam’s economy.
“This project will supercharge the Vietnamese economy by making it easier for crucial components to reach manufacturing hubs and expediting the delivery of finished goods,” he said. “It will boost production, reduce lead times, and solidify Vietnam’s role in global supply chains.”
Vietnam’s long-standing ambition to develop a high-speed rail system that connects its major cities has encountered numerous financial and political challenges over the years.
The dream, which has been in the works for nearly two decades, has faced numerous setbacks, most notably concerns about the project’s high cost and economic feasibility.
In 2010, the Vietnamese National Assembly famously rejected the proposal for a high-speed rail network, which was estimated to cost around US$56 billion at the time.
The decision was primarily based on the belief that such a project would be economically unsustainable, as many Vietnamese citizens would be unable to afford the high fares that would likely accompany the service.
The project’s critics, such as economist Pham Chi Lan, argued that the funds would be better spent addressing pressing needs in agriculture, education, and basic transportation infrastructure, which could serve the majority of Vietnam’s rural population.
Pham Chi Lan, speaking to The Associated Press in 2010, asserted, “This project is too risky and too luxurious for Vietnam where we have many other things to do with agriculture, education, electricity, and other transport projects.”
Beyond the financial hurdles, many experts questioned Vietnam’s ability to undertake such a monumental infrastructure project.
In contrast to China, which has successfully built tens of thousands of kilometers of high-speed rail since the early 2000s, Vietnam lacks the industrial capacity, technological know-how, and surplus capital that made China’s rail development economically viable.
However, Martin said the project’s potential impact had shifted significantly, noting the “growing momentum” behind high-speed rail projects across Southeast Asia. Laos and Indonesia have both completed rail lines in recent years.
“For Vietnam… it’s about becoming an even stronger player in a region that’s rapidly embracing high-speed rail,” he said.
China And Japan To Compete In Vietnam’s High-Speed Rail Project
With the government’s approval of the project, rivalry between Japan and China for involvement in the project is expected to intensify.
Southeast Asia has long been a battleground for influence between China and Japan, particularly in the high-speed railway sector, where both countries have been vying for market share.
After the latest development, Chinese experts have shown optimism about their potential involvement in the project. China’s proficiency in high-speed rail construction and its cost advantage position its companies as competitive bidders.
An industry insider from a Chinese company operating in Vietnam told the Global Times that, although the project is still in the planning phase, with many details yet to be defined, Chinese companies may have a crucial role to play.
“We have been following this proposed project for a long time. Though at this stage, without a pre-feasibility study, more details on how to carry out the project, including how to secure funding for it, which specific standards and technology route to adopt, are still scant,” the insider said.
“I think Chinese companies stand a chance of participating in the project, though we will have to wait and see what comes out down the road. The Vietnamese side will try to strike a balance here. If Chinese companies eventually take part as partial contractors, telecommunication, signaling, and electrical systems are expected be the top areas of cooperation,” the person said.
Indeed, China is already a crucial trading partner for Vietnam and an important supplier to its manufacturing sector. The two countries share a network of highways and railway lines, although the Vietnamese infrastructure requires modernization.
However, relations between the two nations remain complex due to ongoing territorial disputes in the South China Sea and Vietnam’s increasing military and strategic ties with the United States and Japan.
Meanwhile, Japan is also eyeing a potential role in Vietnam’s high-speed rail ambitions. Japan has been Vietnam’s largest donor of Official Development Assistance (ODA), contributing approximately US$17 billion from 1992 to 2021. This accounts for about 30% of the total international aid to the country.
Vietnam has also previously sought Japan’s assistance in constructing a north-south high-speed railway, and Japan has shown a strong willingness to support the project.
In March 2024, Japan’s then-Finance Minister Shunichi Suzuki reaffirmed Tokyo’s commitment to financing Vietnam’s railway plans and other critical infrastructure projects.
In June, during a meeting with the Ministry of Transport (MoT) leadership in Hanoi, Japanese Ambassador to Vietnam Ito Naoki again emphasized Japan’s strong interest in Vietnam’s North-South express railway project.
That said, it is yet to be determined whether Vietnam will choose Japan or China. The decision will have major implications for Vietnam’s infrastructure development and wider geopolitical strategy in the region.
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