Information published on 20 June 2017 in the UIC electronic newsletter "UIC eNews" Nr 553.

Vietnam Railways: Challenges, Opportunities and Development

  • Asia Pacific
  • Cooperation

Vietnam is a country with a relatively complete and early railway system in the Southeast Asia region. Experiencing ups and downs over a hundred years of history, with the breakthrough of other modes of transport, the railway network is still stuck in place, not only no further extension but also being dismantled. The quality of infrastructure, rolling stock, signalling and telecom systems are too backward, not maintained due to the fact that the annual funding for maintenance allocated by the Government can only satisfy about 30% of the total demand. For this reason, the choice of other means of transportation rather than railways is completely understandable. The railway sector has step by step lost its role in the economy with the market share reduced from 30% to 1%.

This paradox has been resulted from limited and unbalanced state investment in railway infrastructure, about 3% compared to 90% for the roadway sector, while it requires a huge investment funding. In addition, railways is a difficult sector to attract social investment since its main functions are to facilitate socio-economic development and people’s movement while the investors mostly pay attention to pay-back ability and their profits.

Despite many difficulties and challenges, the opportunities for railway development are not modest. This is proved by the development of railways in developing and developed countries, in which China is a typical example. In just 10 years, China has mastered most of the railway technology. The impressive investment has made China become the leading country in the world in terms of high speed railway network length.

The natural and geographical conditions of Vietnam are very suitable for the development of the railway network. The investment in the North-South medium high speed railway line as the backbone of the North-South transport system, will make the full use of geographical advantages and improve the connectivity among transport means to maximise the capacity of the transport system in Vietnam.

On 16 June 2017, the National Assembly of the Socialist Republic of Vietnam officially approved the Revised Railway Laws which supplements many preferential and breakthrough mechanisms and policies. This is the opportunity for Vietnam Railways to open a new page, the period of construction and development so that the railway sector can play its rightful role as the backbone of transport sector, contributing to the reduction of logistics expenses and enhancement of national competitiveness. At the same time, the Vietnamese Government is also planning to allocate a medium-term capital package of USD 350-450 million to Vietnam Railways in order to improve and upgrade the existing infrastructure network to increase railway interval capacity.

The main objectives of Vietnam Railways in the coming period are: to double the interval capacity of the existing network by 2021, to make full use of the railway infrastructure, to ensure safe and effective train operation as well as to submit to the National Assembly for approval the Investment Report of the North - South (Hanoi – Ho Chi Minh city) medium high speed railway line, which is electrified, double-track, 1,435-mm gauge with the commercial speed from 160 to 200 km/h. The approval of the National Assembly will be a critical condition for the railway sector to pay special attention to study the connectivity to other transport means, sea ports and mines, etc.

To fulfill the above objectives, Vietnam Railway missions are: to apply the State Budget to rehalibitate, upgrade weak bridges and tunnels; lengthen the station track, build new stations, synchronize axle load on the entire route, modernise signalling and telecom systems to improve the operation capacity to 25 train pairs per day and facilitate 25 coaches per train; to invest in about 100 new locomotives, 15-20 passenger trains, 500 container wagons; to build up a comprehensive training system for human resource development; to select strategic shareholders for two train-manufacturing joint-stock companies; to construct 05 to 10 ICD by socialised investment. In addition, the approval of the Revised Railway Laws will create favourable conditions so that the investors can invest in railways stations to be commercial complexes.

There are a lot of opportunities for railway development in Vietnam. The financial resources can be finite, but the resource of policy mechanism is unlimited. Vietnam Railways strongly believe that with the full support from the Government and our all-our efforts from now on, success will come soon.

Vu Anh Minh
Chairman of the Board
Vietnam Railways