The National Assembly (NA) approved the project for investment last November with a preliminary cost of around VND1.7 quadrillion (US$67 billion), roughly 14% of Vietnam’s 2024 GDP.
VinSpeed, a newly established firm under Vuong’s Vingroup—Vietnam’s largest private conglomerate, recently submitted a proposal to build the railway at a cost of VND1.56 quadrillion (US$61.35 billion), excluding costs for site clearance.
It plans to begin construction this December and have the entire line operational by December 2030.
| Mechanisms previously approved by NA | VinSpeed’s proposed mechanisms | |
| Investment model | Public investment or public-private partnership (PPP), with the state as the investor | Direct private investment, with VinSpeed as the investor |
| Capital mobilization | The state mobilizes funds through the issuance of government bonds, ODA, and foreign loans | VinSpeed will provide 20% of the capital and borrow the remaining 80% from the state as a zero-interest loan with a 35-year term |
| Land usage | Develop and utilize the value added to land surrounding train stations | Utilize land surrounding train stations for urban development and real estate projects |
| Operating period | Up to 70 years | 99 years |
| Project completion | 10 years | 5 years |
Change from public investment to direct private investment
The North-South high-speed railway project was approved to be a public investment project, with the state as the investor.
VinSpeed, however, proposed a direct private investment model instead, which would make it the investor and allow it to manage, operate and commercialize the project.
Experts support the idea of letting the private sector play a leading role in large-scale infrastructure projects.
Le Duy Binh, CEO of consultancy Economica Vietnam, said this helps mobilize private capital and ensure that funding needs are met without affecting the state budget or government debt.
Instead of using its budget on infrastructure construction, the government could redirect those funds toward other strategic projects in priority sectors like healthcare, education, the environment, and national defense.
Bui Xuan Phong, former chairman of the Vietnam Railway Transport and Economics Association, said major projects can benefit from private enterprises’ dynamic, decisive and strict management practices.
VinSpeed said it plans to complete the railway in five years, half the originally projected construction time.
However, experts also caution that any unique mechanisms or preferential incentives must be transparent and balanced to avoid giving excessive benefits to a few companies.
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China-backed high-speed railway connecting Jakarta and Bandung called “Whoosh” is parked at Halim station in Jakarta, Indonesia, Oct. 2, 2023. Photo by Reuters/Willy Kurniawan |
Vietnam has had infrastructure projects funded through direct private investment before, such as Van Don International Airport in northern Quang Ninh Province, but none have matched the scale of the proposed North-South high-speed railway.
La Ngoc Khue, former Deputy Minister of Transport, noted that a private firm investing in such a massive and strategically significant project is unprecedented, and there is no established international model to follow.
“We should not diverge from models that have been tested in practice,” Khue said.
Since VinSpeed has proposed a 99-year operating period for the project, it could follow a Build-Operate-Transfer (BOT) model instead, he added.
Nguyen Van Phuc, former vice chairman of the National Assembly’s Economic Committee, noted that VinSpeed can also join the project as an investor under the public-private partnership (PPP) format or as the general contractor.
These options allow the firm to be involved in managing, operating, and commercializing the high-speed railway line, alongside the state or other firms.
Borrowing $49 billion with zero interest from the state
VinSpeed was established in early May with a charter capital of VND6 trillion, less than 1% of the project’s estimated cost.
It seeks to take out a zero-interest loan from the state for 80% of the total investment, or VND1.25 quadrillion ($49.1 billion), to be paid over a 35-year period from the disbursement date.
The remaining 20%, or around VND312.33 trillion ($12.27 billion), would be mobilized by the company.
Speaking to VnExpress, Dao Thuy Van, VinSpeed’s deputy CEO, said Vingroup considers the railway a decades-long project to contribute to the nation.
She explained that under this financing model, the state would only be providing a loan, not paying for the entire investment.
VinSpeed would “shoulder 20% of the total investment and fully bear the cost of interest on that portion,” Van said.
It also plans to repay the loan over 35 years, whereas experts estimate that the state-led version would take 70 years to break even.
Van added that based on the firm’s research, 98% of high-speed rail lines globally operate at a loss, with only 2% generating profit. Those projects also require tens of billions of dollars to maintain and upgrade every 30 or so years.
“If the project is handed to VinSpeed, the state budget will not have to bear those burdens,” she said.
Truong Thanh Duc, a lawyer and the CEO of ANVI Law Firm, noted that the loan is meant to develop an infrastructure project that the state would otherwise have to fully pay for.
But he said the request to borrow 80% of the capital from the state at 0% interest is “a very special demand that requires careful consideration” to avoid setting a bad precedent.
He suggested that the government impose strict conditions, such as capping profit, establishing clear risk–benefit sharing mechanisms, requiring partial repayment of the loan if revenues exceed projections, or publicly disclosing the entire project implementation process.
He added that the special nature of the project should be taken into consideration.
“This is not simply a transport project, but a driver for comprehensive socio-economic development. The state can consider the spillover benefits [from the project] as an indirect contribution,” he explained.
Using land surrounding train stations for urban development
Another proposal by VinSpeed that has garnered attention is the usage of land surrounding high-speed train stations to develop urban areas based on the Transit-Oriented Development (TOD) model, which positions public transportation as the focal point to drive urban growth.
VinSpeed affirmed that if the goal were merely to acquire land, it would not “venture into a project that is sure to incur losses.”
It explained that the locations of the stations are mostly in suburban areas, far from provincial or city centers, and are not prime land.
These are even farmland with low value, according to Van.
ANVI’s Duc believes that if the TOD model is properly implemented, the land and real estate surrounding train stations can generate a steady stream of revenue, which benefits both the state and the investor.
However, he noted that if the model is not well managed, it could become distorted and prioritize real estate development over transportation.
Hence, the state must ensure transparent planning, strict standards, and independent oversight.
Duc suggested that the state set stringent requirements related to financial planning, accountability, and risk management.
It could also establish an independent appraisal council comprising experts, ministry officials, and professional organizations to evaluate technical solutions, finances, environmental impacts, and investors’ capability.
VinSpeed’s proposal is currently being reviewed by relevant ministries and agencies.
The Ministry of Construction will compile the feedback on said proposal, submit a report to higher authorities and present it to the National Assembly before May 20.
