Metro development costs dearly in Vietnam

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Metro development costs dearly in Vietnam

 Investment costs of metro development projects in Vietnam are higher than in many countries in the world as the nation imports almost everything from cars to locomotives and technologies. Vietnam also has to hire foreign specialists for metro development, Nguyen Ngoc Dong, deputy minister of Transport, told a meeting between the HCMC government and the National Assembly’s Committee for Science, Technology and Environment on urban railway planning last week.

Dong said it takes Vietnam many years to study and develop metro projects as the country lacks experience in building this kind of railroad. On top of that, imports of locomotives, carriages and machines as well as employment of foreign experts are among the main reasons for cost overruns.

Metro Line No.1 in HCMC is a case in point. This track connecting Ben Thanh Market in downtown HCMC and Suoi Tien Theme Park in District 9 was originally projected to cost nearly US$1.1 billion but now the actual amount is US$2.07 billion.

Hoang Nhu Cuong, deputy director of the HCMC Management Authority for Urban Railways, said metro projects are now facing a host of difficulties. The investment procedures and regulations of lenders and the Vietnamese Government are different in terms of cost estimates and salaries for specialists.

The absence of detailed regulations and criteria on construction investment management, urban railway construction and operation has also hindered the construction progress of metro projects in the country.

Dong said the Ministry of Transport is currently drafting amendments to the Law on Railway to address the existing shortcomings.

HCMC vice chairman Tat Thanh Cang said an overall assessment is needed for the use of ODA loans to make adjustments to harmonize the demand of finance providers and the interests of the nation.

According to Cang, metro projects require huge capital but fare revenue is forecast to be modest, making it hard to recoup investment capital in a short period of time. This is a difficult issue for the HCMC government to solve.

According to a revised zoning plan, HCMC will have eight metro lines with a total length of 172.6 kilometers, or 78.2 kilometers longer than the plan approved in 2009. Currently, Metro Line No.1 is currently under construction while relevant agencies are preparing for auctions for Metro Line No.2.

Funding for part of Metro Line No. 5 has been secured. The city is now seeking investments for the remaining lines.
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