Funding for the modern railway could be approved in the autumn

Last week, the National Assembly (NA) discussed the construction of a railway connecting Lao Cai, Hanoi, and Haiphong. The legislature is scheduled to adopt its investment policy, worth an initial estimated sum of over $8 billion, early next week.

The funding will include more than $1.3 billion for site clearance and resettlement, $4.4 billion for construction, $478 million for equipment, over $1.23 billion for provisions, and $585 million for management, consultancy, and other costs.

The state-funded project, managed by the Ministry of Transport (MoT), will span 403 kilometres with one main line of 388km and two branch lines of 15km, and serve both passenger and freight transport.

The prime minister may approve funding in Q3 when site clearance will also begin. All activities related to technical design and selection of contractors for implementing a construction and installation package to commence construction will have to be completed by the end of 2026.

Construction of the entire electrified scheme must be completed in 2030, according to a document on the issue submitted to the NA over a week ago.

The initiative will begin at a rail connection point on the border between the new Lao Cai Station and the North Hekou Station of China, and end at Lach Huyen Port in Haiphong city. The railway will travel through nine localities, including the capital of Hanoi.

The entire undertaking will use nearly 2,580 hectares of land, including over 1,000ha of arable land, 875ha of forest land, and 688ha of other types of land. More than 19,000 people will have to resettle.

According to the nation’s railway master plan, Vietnam is to develop along 13 economic corridors, of which the Lao Cai-Hanoi-Haiphong corridor has the second-largest demand for passenger and cargo transport in the country, after the North-South corridor in the east.

The Lao Cai-Haiphong economic corridor also is part of a strategic economic initiative between Vietnam and China, and is also part of the Belt and Road initiative within a comprehensive agreement on economic cooperation between ASEAN and China, which established the ASEAN-China Free Trade Area over 20 years ago.

“In recent times, leaders [of Vietnam and China] have paid great attention to promoting the implementation of this project, as shown in the declarations, agreements, and MoUs between the two sides,” stated the government report. “Therefore, implementation is an important political task, both urgently and strategically, requiring great determination to soon start construction and complete it for operation.”

The MoT said that in the economic corridors with large transport demand, railway transport plays an important role due to its advantages in transporting large volumes and low costs.

“The new railway is strategic and will connect urban centres and large industrial parks in the northern midlands and mountainous region, as well as the Red River Delta. It is also the shortest railway route for transporting goods from the southwest region of China to international seaports,” the MoT said.

It is estimated that by 2050, total transportation volume in the corridor will be about 397 million tonnes of goods and 334.2 million passengers. Of which, railway transportation will be responsible for 25.6 million tonnes of goods, and 18.6 million passengers.

Meanwhile, according to the government report, the existing 1,000mm gauge railway has a small curve radius and a large slope, with an average operating speed of 50km per hour. This cannot help connect to intermodal transport, and has low competitiveness, only meeting about 4.1 million tonnes of goods and 3.8 million passengers, and serving short-distance tourists, some goods, and industrial raw materials.

“Therefore, it is necessary to invest in a new railway to meet the increasing transportation demand on this economic corridor, contributing to restructuring the transportation market share, reducing logistics costs, and ensuring sustainable development,” the report stressed.

During the construction, it is estimated that the undertaking will create a construction market worth about $4.4 billion and generate around 90,000 jobs, in addition to about 2,500 jobs during the operation process.

The MoT also estimated that if the whole national railway system is taken into account, urban railways will create a construction market of about $98.2 billion and millions of jobs. Simultaneously, according to the railway network planning, nearly 2,000km of railway will need to be built in order to create a stable, long-term market to continue implementing developments in the next phase.

“If it is transferred appropriate technology, Vietnam has the ability to develop the railway industry,” the MoT said. “Vietnam will also be able to be self-sufficient in operations such as maintenance and production of some replacement components. Therefore, together with the high-speed railway project on the North-South axis, this is a premise for developing the railway industry and supporting industries.”