Vietnam, notable for its reluctance to take foreign loans under communist rule, plans to finance a US$67 billion high-speed railway with its own resources. The railway, which will run from the capital Hanoi to the business hub of Ho Chi Minh City in the south, is the country’s largest infrastructure project to date. The Ministry of Transport estimates that the project will cost the state budget an average of US$5,6 billion per year.
“The Politburo, in the spirit of independence and self-reliance, has decided not to depend on foreign countries for financing the planned 1.541 km railway,” Deputy Transport Minister Nguyen Danh Huy told state media. The high-speed railway will accommodate trains capable of travelling at speeds of 350 km/h and is expected to be completed by 2035. The project will be financed from state revenues and, if necessary, the issuance of government bonds. The deputy minister also noted that foreign loans would only be considered in cases of insufficient financing.
However, infrastructure finance experts caution that Vietnam may have difficulties in carrying out such a large project on its own. The country’s public debt was reportedly relatively low at 37% of its gross domestic product (GDP) last year. However, high costs and cuts in public investment spending are among the factors that make the project difficult to implement. Between 2021 and 2023, Vietnam saw a decline of a quarter of its projected public investment spending.
Like Turkey, which has been abandoning foreign aid in recent years, Vietnam has been reluctant to use foreign aid for fear of falling into a debt trap. The Deputy Minister of Transport stressed that the financing of the railway project was designed with these concerns in mind. However, many experts consider the difficulties of financing large-scale infrastructure projects with their own resources.
