Minister of Transport Nguyễn Văn Thắng presents the project at the National Assembly Standing Committee's meeting. — VNA/VNS Photo

The project, which was initially shelved in 2010 due to funding constraints, was discussed during a recent National Assembly Standing Committee's meeting.

Presenting the project, Minister of Transport Nguyễn Văn Thắng noted that the original cost estimate was US$55.8 billion, equal to 38 per cent of Việt Nam’s 2010 GDP, when national debt levels reached 56.6 per cent.

At the time, these economic factors made it unfeasible for the country to move forward with the project.

Fast-forward to 2023 and Việt Nam’s economic scale has grown to $430 billion, almost three times the size of 2010, while public debt has dropped to approximately 37 per cent of GDP.

With a stronger economic foundation, Việt Nam now has the resources needed to support this ambitious project.

The high-speed rail line would run from Ngọc Hồi Station in Hà Nội to Thủ Thiêm Station in HCM City, covering a distance of around 1,541km and passing through 20 provinces and cities.

Designed for speeds of up to 350 km/h, the line is expected to serve passenger and freight needs. It will require approximately 10,827ha of land, with an estimated 120,836 people needing to be relocated.

Total investment for the project, now estimated at around $67.34 billion, will be fully funded by public investment.

Chairman of the National Assembly’s Economic Committee Vũ Hồng Thanh reported that the project aligns with Việt Nam’s national priorities.

However, he pointed out that some lawmakers are concerned about the funding, which is projected to require 114 per cent of the central Government’s total medium-term public investment budget for 2021-25.

He stressed the need for fiscal solutions, including increasing State revenue, cutting regular expenses and possibly accepting a temporary budget deficit to secure the necessary capital.

“The project’s funding must be evaluated carefully to avoid risks related to borrowing in the future,” he warned.

Other concerns were raised regarding the route and station locations, which some argue are situated too far from city centres to maximise transportation efficiency. Additionally, the State Appraisal Council has questioned the project’s projected revenue and growth forecasts, urging more realistic assessments.

With potential impacts on short-haul flights, the high-speed rail project could reshape the country’s transport infrastructure, affecting future airport investments. It also covers plans to upgrade Việt Nam’s existing rail line for freight and short-distance passengers, but specific timelines for these improvements are not yet specified.

National Assembly Vice Chairman Nguyễn Đức Hải called the project 'unprecedented in scale' and noted its broad socio-economic and financial implications.

Given that much of the funding will likely come from loans, Hải urged the Government to refine the project design for cost efficiency and to carefully analyse its potential impacts, particularly regarding land use and station locations.

As discussions continue, the Government has been advised to conduct comprehensive feasibility studies to mitigate risks, especially those related to funding shortfalls, budget imbalance and over-reliance on foreign loans.

Hải emphasised the need for thorough financial assessments to ensure the project’s almost completion by its target year of 2035. — VNS