3-10-2024 (HANOI) In a bold move that underscores Vietnam’s growing economic confidence and desire for autonomy, the Southeast Asian nation has unveiled plans to independently finance a colossal $67 billion high-speed railway project. This ambitious undertaking, set to connect the capital Hanoi with the southern economic powerhouse of Ho Chi Minh City, represents a significant departure from traditional infrastructure funding models in developing countries.
Deputy Transport Minister Nguyen Danh Huy, speaking to state media, emphasised the project’s alignment with Vietnam’s ethos of self-reliance. “With the spirit of independence and self-reliance, the Politburo has decided not to depend on foreign countries,” he stated, outlining the government’s intention to fund the 1,541-kilometre railway primarily through state revenues and, if necessary, government bonds.
The proposed railway, which aims to have trains operating at speeds of up to 350 kilometres per hour, is slated for completion by 2035. It stands as the most ambitious infrastructure project in Vietnam’s history, with annual costs projected at approximately $5.6 billion over a 12-year period.
This financial strategy marks a notable shift in Vietnam’s approach to large-scale development projects. The country has historically been cautious about accepting foreign loans, often forfeiting billions in development aid due to administrative hurdles and concerns over potential debt traps. With a relatively low public debt of 37% of GDP as of last year, Vietnam appears confident in its ability to shoulder this massive financial burden independently.
However, the feasibility of this self-funded approach has raised eyebrows among infrastructure experts. The annual expenditure of $5.6 billion would represent about 1.3% of Vietnam’s 2023 GDP and account for roughly a fifth of the country’s projected budget spending for the year. One Vietnam-based foreign infrastructure expert, speaking on condition of anonymity, described the plan as “theoretically feasible, but not so realistic.”
The scale of the project is particularly striking when compared to Vietnam’s historical infrastructure spending patterns. Over the past two decades, the country has allocated approximately 20% of its state budget to infrastructure, primarily focusing on rural road development, according to World Bank data.
Dr Nguyen Hung, a logistics specialist at RMIT University Vietnam, views the decision as a strategic move to balance political considerations with economic aspirations. “The decision to take the self-funding approach seeks a balanced approach in the political arena, consolidating the importance of central governance, independence and freedom,” he noted. However, Dr Hung also anticipates that Vietnam may eventually seek international partnerships for loans, funding, and technology transfer, potentially looking to countries such as China, Japan, or Germany.
The project’s announcement comes against the backdrop of Vietnam’s recent economic successes and its growing prominence on the global stage. As the country continues to position itself as a key player in Southeast Asian economics and geopolitics, this railway project serves as both a symbol of national pride and a test of Vietnam’s developmental capabilities.
Critics argue that while the ambition is commendable, the exclusive reliance on domestic funding could strain national resources and potentially slow down other crucial development initiatives. There are also questions about Vietnam’s capacity to manage such a technologically advanced project without significant foreign expertise.
