VietNamNet Bridge - The cost of transportation in Vietnam has become expensive while the number of accidents is high because the country has overemphasized road development. In the past 40 years, Vietnam did not have even 1m of railway for commercial purposes.

Those observations were made by experts at a seminar on funding for transport infrastructure, held by the Vietnam Economics Institute on Monday.

Experts said that Vietnam has made many mistakes in developing the transport system, increasing transport costs and the number of accidents in Vietnam.

Former Deputy Minister of Transport, La Ngoc Khue, said it was time to review Vietnam’s overall traffic planning.

Khue said Vietnam has over-emphasized road transportation, resulting in traffic congestion and  accidents. Railway transport has used less land and less fuel but in the last four decades, Vietnam did not build even one meter of railway for commercial use.

For water transport, many projects have been delayed for years, causing overloading on roads, Khue added.

"The transport infrastructure in Vietnam is poorly planned and unsynchronised," Khue said. "Roads prevail over waterways and railways, which goes against global trends."

With the transport system emphasizing roads, the cost for transport services in Vietnam amounts to $12 billion/year. "We are very sad to be defeated by Thailand in football, then in rice production, pig raising, and now transport costs," Khue said.

Dr. Le Dang Doanh, former director of the Central Institute for Economic Management, also worried that the cost of transport of Vietnam was too high.

“In other countries, they have buses, trams, subways around the airports but we have only taxis so the transport cost is high. If transport cost is high, Vietnamese enterprises cannot compete," he said.

The demand for investment in transport infrastructure between 2016 and 2020 had grown to VND1 quadrillion (US$45 billion), said Nguyen Danh Huy, director of the Public-Private Partnership Department at the Ministry of Transport.

The State budget is limited. It can provide about 28 percent. However, the Ministry of Planning and Investment's plan on public investment for 2016-2020 only puts the figure at about 7 percent of the demand or VND66 trillion ($2.93 billion). So attracting private investment at home and abroad would play an important role in transport infrastructure development, Huy said.

According to Huynh The Du, a lecturer in the Fulbright Economics Teaching Programme, investment in Vietnamese transport is double the average of many other countries over the past two decades. A lot of investments have been made in transport infrastructure but they haven't been used efficiently. It's expensive to build highways in Vietnam compared with other countries, and many highways are not used effectively.

Du said that Vietnam is building a subway system in Ho Chi Minh City, but it does not know exactly when the project will be finished, and the connections between metro routes because the technologies, provided by different donors, for routes, are different.

Citing examples of building subways by ODA capital and in the form of PPP (public private partnership) in Thailand and Indonesia, which have failed, Du said that the successful subway projects are those funded by the state budget.

He quoted several people as saying that building subways by ODA will push up the price.

Tran Dinh Thien, director of the Vietnam Institute of Economics, said there were shortcomings in transport infrastructure planning, so investment in the transport sector wouldn't produce the desired effects.

In order to boost investment efficiency and encourage private sector participation, Thien said that Vietnam needed a detailed plan for developing infrastructure. He also emphasised the importance of the development of railway infrastructure in the next decade.

"Railway infrastructure development will not only help reduce the overloading of road infrastructure, but also help enterprises cut costs for transport and storage," he said.

To make projects attractive to investors, Ho Minh Hoang, general director of Deo Ca Investment Joint-Stock Company, suggested the government create an institution that would detect the risks investors could face. "Identifying risks and delivering solutions will make built-operate-transfer and built-transfer projects more attractive," he said.

Nguyen Tuan Huynh, director general of Civil Engineering Construction Corporation No 4, said the transport ministry should divide projects into phases so the payback periods could not surpass 15 years, because transport infrastructure investment required very large-scale and long-term payback periods. To offset the risks, investors expected revenue guarantees from State management agencies, he said.

The Ministry of Transport estimated that Vietnam needs about $10 billion a year for road infrastructure. Tran Bac Ha, Chairman of the Bank for Investment and Development of Vietnam (BIDV), said it was necessary to develop a mechanism for the domestic and foreign financial investment fund, and State Capital and Investment Corporation to invest in infrastructure projects. He also spoke about the need to diversify sources for long-term transport infrastructure investment.

Deputy Minister of Transport Nguyen Hong Truong said the transport ministry would issue a reasonable solution to mobilise capital from the private sector to develop transport infrastructure in the coming time.

Compiled by Na Son