SOUTHEAST ASIA: VIETNAM REPORT
The development of urban railroads in Vietnam has been significantly delayed. The opening of the second line in the capital Hanoi is expected to be delayed to 2027, and the first line in the southern city of Ho Chi Minh City may not open until the end of 2023.
In addition to financial difficulties, there are cases where administrative authorities are not proactively resolving problems, leading to further delays.
In mid-September, Hanoi City abandoned the planned Hanoi Urban Railway Line 3 (Nhon Hanoi Station), which was planned to run through the center of the city, to open by the end of the year. The line is 12.5 kilometers long. Construction of the line began in 2010, and although it was originally planned to open in 2015, it is believed that the plan has already been changed about five times.
The total project cost was originally expected to be $1.2 billion, but due to repeated delays, it is now likely to exceed $1.5 billion. Hanoi City has cited delays in land acquisition, lack of competence of builders and consultants, differences between international contracts and Vietnamese law, and the outbreak of the new coronavirus as reasons for the delay in the opening of the line. However, it is an unusual situation for it to take nearly 20 years from the start of construction to the start of operation, despite the general development of urban railroads.
Even in Ho Chi Minh City, the largest city, the opening of the urban railroad supported by the Japan International Cooperation Agency (JICA) has been significantly delayed. Originally scheduled to open in 2018, the project has been repeatedly revised, and the current plan of opening the line in 2023 is becoming increasingly unlikely. The city has frequently had to provide payment support to consultants and operators, and the Japanese government is also concerned about the situation.
The main reason for the slow infrastructure development in Vietnam is the country’s laws and regulations. In Vietnam, the Criminal Code stipulates that “acts that cause damage to national property due to lack of responsibility” are criminal acts, and there is a risk of being charged with a crime. When procedural errors are discovered, such as in accidents, or when costs are higher than originally planned, those responsible can be held criminally liable for past crimes.
The Communist Party, which is ruled by a single party, is committed to eradicating corruption and is increasingly exposing those involved. In the case of infrastructure projects, a series of investigations may lead to the discovery of bribery, etc., of those involved. The operation of the criminal law is unclear, and the situation is becoming increasingly difficult for those in charge with authority to avoid making decisions.
Vietnam, with a population of approximately 100 million, is facing a major challenge in infrastructure development in line with its economic growth. However, for the same reason that the opening of urban railroads has been delayed, the construction of power plants, airports, and other facilities is also generally behind schedule.
Source: The Nikkei
PSR Analysis: With a growing population, chronic traffic congestion in urban areas has become a social problem in Vietnam. To solve this problem, it is necessary to improve public transportation systems such as railroads, but many such projects are financed by foreign ODA and technical cooperation. However, delays such as those reported this time are hampering growth, and if these infrastructure projects, which are being carried out with foreign cooperation, continue to be delayed, it could spur further declines in investment at a time when foreign investment has slowed due to COVID-19 and friction between the U.S. and China. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
