Project

Funding policy takes shape for new railway

Published

2 weeks ago

February 25, 2025

Vietnam’s construction of a modern railway in the north will not affect the country’s public debt safety, but will offer special incentives.

The National Assembly (NA) last week adopted a resolution on the investment policy for a railway from Lao Cai to Haiphong, which would pass through Hanoi, worth an initial sum of $8.37 billion.

According to a governmental report, capital from this initiative will come from the state budget, with the Ministry of Transport’s (MoT) medium-term public investment in 2021-2025 at $5.12 million.

The cost will be $6.23 billion for 2026-2030, and $1.56 billion for 2031-2035.

This $8.37 billion investment will include more than $1.33 billion for site clearance and resettlement; $4.4 billion for construction; $478 million for equipment and means; $585 million for management, consultancy, and other costs; and over $1.23 billion for provision. The investment capital will be nearly $16 million per kilometre.

The NA currently considers and decides on the investment policy based on the ability to balance capital, assess the impact on the state budget deficit and ensure public debt safety. Since this is a special priority initiative, the government will consider submitting it to the NA for decision in the medium-term public investment plan and the five-year financial to ensure macroeconomic balance and national public debt safety.

In addition, the government has also proposed to supplement a number of specific policies to the NA, including the proposal to decide on the use of government bond capital, official development assistance (ODA), foreign preferential loans, and other legal domestic capital sources.

Funding policy takes shape for new railway

The railway to transform the north will likely cost over $8 billion, Photo: E-portal of the Ministry of Transport

According to the MoT, the railway will not have a big impact on public debt safety.

At present, the country’s public debt is gradually decreasing, from 61.4 per cent of GDP to 55.9 per cent of GDP in 2020 and to 37 per cent of GDP in 2024, ensuring the safety of such debt within the cap of 60 per cent allowed by the NA.

With GDP of $476.3 billion in 2024, the public debt cap must not exceed 55 per cent of GDP as a warning level stipulated by the NA, and it is likely that the government will be able to mobilise $77.4 billion for public debt. It is forecasted that by 2027, GDP will continue increasing, so the public debt ratio will decrease.

In addition, the total public investment for new expressway projects starting construction in 2021-2025 and put into operation from 2026, was about $18 billion.

“If this capital is reserved for investing in high-speed North-South railway and the Lao Cai-Haiphong railway, it will meet demand, not to mention expand GDP growth,” the MoT stated.

When it comes to special incentives and mechanisms for the Lao Cai to Haiphong railway, the government is allowed to issue government bonds to supplement the annual budget and public investment plan for the venture if the annual state budget estimate fails to meet the disbursement plan.

The government is also permitted to use ODA capital and foreign concessional loans to carry out the project without having to prepare a proposal. Regulations of the foreign sponsor are to be applied where Vietnamese law does not have such regulations or has regulations which are different from those of the foreign sponsor.

In addition, the government can use increased revenue and savings of the annual central budget (if any) and other legal sources of capital for the railway if the annual state budget does not meet the disbursement progress. The use of increased revenue and savings of expenditure shall not be subject to the order of priority as prescribed by the state budget law.

Furthermore, the venture can be invested with capital from legal domestic sources if the loan agreement negotiation with foreign partners is unsuccessful or the loan size is not as expected.

According to the governmental report, regarding technological development for the railway, organisations and individuals participating in scientific and technological activities serving railway development are entitled to decide on limited bidding, contractor appointment, and select contractors providing services and goods.

Participating enterprises are also entitled to incentives as high-tech enterprises during the project. They are also to be exempted from corporate income tax and personal income tax.

The state-funded electrified project, managed by the MoT, will span over 400km with one main line of 388km and two branch lines of 15km, and serving both passenger and freight transport.

The prime minister will approve the investment of the railway in Q3 this year when site clearance begins. All activities related to technical design and selection of contractors for implementing a construction and installation package to commence construction will be completed in 2025-2026.

Construction of the entire railway must be completed in 2030. The track will begin at a rail connection point on the border between Lao Cai Station and North Hekou Station of China, and end at Lach Huyen Port of Haiphong.

Tran Hong Minh, minister of Transport

The railway’s total investment is based on the norms and unit prices in the preliminary design. The total cost is $8.37 billion, including costs for construction, equipment, site clearance and other costs.

Some may say that the investment cost is higher than in other countries in the world. But if the site clearance costs and other costs are excluded, the investment capital will be $15.97 million per kilometre.

Let’s take examples from some neighbouring countries. China has a railway from Yuxi to Mohan, with construction not including site clearance and other costs. Their total investment is $7.3 billion for 498km, equivalent to $17.95 million for one km.

In Laos, the railway line from Vientiane to Boten, 418km long, has a total investment of $5.96 billion, meaning $16.77 million for one km.

Thus, the Lao Cai to Haiphong railway’s total investment is a little lower, which is relatively reasonable compared to the region and domestic unit prices.

Many in the National Assembly may be concerned about capital sources, and ensuring public debt safety. I would like to report that, capital sources for this venture will come from domestic capital, foreign loans, and other legal capital sources.

Under the Ministry of Finance’s calculation based on the current GDP, if the project is implemented, the public debt cap will increase from 1.4 to 1.5 per cent of GDP. So, if the economy grows by double digits in 2026-2031, this public debt cap will decrease.

When it comes to specific and special policies for the venture, the project has an urgent schedule and a large scale. If implemented under current conditions, it will not meet the required schedule.

Hoang Van Cuong, national Assembly deputy Hanoi

This is an initiative with high potential for efficiency. The railway will combine both freight and passenger transport, so its usefulness will be very high and if, when completed, it will connect directly with the Chinese railway from Yuxi and Ha Khau. Thus, the connection of goods and passengers between Vietnam and China will be carried out continuously.

If goods are transported by the North-South railway, they have to be transited. But this railway boasts intermodality, so its usefulness will be huge. We will be able to transport goods from the west of China to Haiphong port, helping the port to become a more bustling international one.

However, we will also need to recalculate the transport method of the North-South railway. With the Lao Cai to Haiphong railway, goods will be transported from China to Vietnam under intermodality. But if goods are transported from the south of Vietnam to China, they have to stop to transfer to the train. This is something we should think about.

Sung A Lenh, national Assembly deputy Lao Cai province

The National Assembly Economic Committee has conducted direct surveys in localities where the railway line will pass through. Localities have made many proposals on specific and important mechanisms, which have been accepted by the drafting agencies and the survey team. However, to ensure progress according to the prime minister’s proposal, I propose that the NA and the government consider two areas.

First is about support on resettlement and living stability and production for the people. It is necessary to allow the people’s committees at the provincial level to proactively decide on support measures and support levels for each specific case based on the situation in the locality according to law.

Secondly, it is necessary to allow the provincial people’s committee to immediately carry out planning work related to the Lao Cai to Haiphong railway, according to the Law on Urban and Rural Planning before this law takes effect in July.

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Project

Real estate capital heading into suburban areas

Published

5 hours ago

March 12, 2025

Industrialzone.net

The shortage of affordable apartments in Ho Chi Minh City has led buyers with tight budgets to seek properties in neighbouring markets.

The real estate market in Ho Chi Minh City is facing a scarcity of land, while the cost of project development is continuing to rise. This has forced investors to carefully consider which product segments to focus on to ensure profits.

Real estate capital heading into suburban areas

Photo: baodautu.vn

Investors with land in strategic locations close to the city centre are prioritising the development of mid-range and high-end products to optimise financial outcomes.

As a result, buyers seeking affordable options are being forced to look elsewhere.

“The shortage of affordable apartments in Ho Chi Minh City has led buyers with limited finances to seek items in neighbourhoods like Binh Duong, Dong Nai, and Long An. In these areas, apartment prices hover at around $1,200-$1,600 per square metre, creating strong demand,” said Giang Huynh, head of research and S22M at Savills Ho Chi Minh City.

From another perspective, the average rental yield for apartments in Binh Duong is currently 4.7 per cent, well above the 3.7 per cent yield in Hanoi and 3.6 per cent in Ho Chi Minh City.

Dinh Minh Tuan, southern regional director of real estate trading platform Batdongsan.com.vn, shared that the high rental yield in Binh Duong is largely due to reasonably priced luxury apartments, with high rental prices and stable occupancy rates.

On average, a luxury apartment in Binh Duong can be rented for $400-$480 per month for a one-bedroom unit, and from $600-$800 for a two- to three-bedroom unit.

Meanwhile, in Ho Chi Minh City or Hanoi, apartments in the $1,800-$2,000 per square metre range can only be rented for around $280-$480 per month, depending on the number of bedrooms, not to mention the increasingly stiff competition in enticing tenants.

In response to the strong capital shift, real estate firms in Ho Chi Minh City’s suburban areas are accelerating legal procedures to launch new projects.

This trend reflects the investors’ agility and creates attractive opportunities for both homebuyers and investors in 2025.

Accordingly, Kim Oanh Group plans to launch a 27-hectare urban area in New Binh Duong City in the first quarter of 2025.

This will be the first project the company has collaborated on with Surbana Jurong, a partner from Singapore, under EDGE green standards.

The project features 1,656 townhouses and terraced houses, and 1,666 social apartments, priced from $28,000 per unit.

Major developer Phat Dat Real Estate Development Corporation plans to launch two major projects, Thuan An 1 and 2 in Binh Duong province, covering a total area of 4.46 ha.

The 1.8ha Thuan An 1 will provide 2,604 apartments and shophouses, while the 2.66ha Thuan An 2 will have 3,270 apartments and 16 townhouses. These projects are located on key roads.

Simultaneously, southern developer An Gia Group plans the launch of 3,000 apartments at The Gio Riverside and 76 shophouses in Di An city.

The three-hectare project, located on the provincial route DT16, offers nicely designed apartments with one to two bedrooms.

Regarding opportunities for homeownership, Phan Cong Chanh, an expert in real estate investment, noted that owning a home requires solid knowledge and time to raise financial resources.

For young people, buying a home immediately is a challenge due to limited finances.

Buyers can explore financial support packages and use leverage to shorten the time needed to purchase real estate. This needs to be accompanied by a reasonable plan to ensure long-term affordability.

“Overall, owning a home is not just a purchasing decision; it also requires a smart financial strategy. Whether choosing to buy immediately, rent, or invest in real estate in any segment, individuals must consider their financial conditions and personal plans carefully,” said Chanh.

Project

VinFast looks to long term with operational roadmap

Published

7 hours ago

March 12, 2025

Industrialzone.net

Carmaker VinFast aims to become a powerhouse in the electric vehicle market as it grapples with tougher competition abroad.

VinFast looks to long term with operational roadmap

The company wants to double EV sales when compared to last year’s figure

Potential investment from JTA Investment through an MoU between Vingroup and Qatar Investment Fund, which was unveiled last week, aligns perfectly with VinFast’s ambitious vision of scaling up production and sales in a competitive international market, the company said.

JTA Investment is exploring a potential equity investment of at least $1 billion in VinFast, the Nasdaq-listed EV manufacturer, as well as a strategic partnership aimed at supporting the company’s global expansion and technological development.

“This collaboration will unlock significant opportunities for Vingroup and its subsidiaries to drive technological, infrastructural, and sustainable economic advancement in Vietnam, while establishing a foundation for international expansion,” said Le Thi Thu Thuy, vice chairwoman of Vingroup.

Global electric vehicle (EV) competition is expected to get tougher as the demand for EVs is projected to increase further this year, but the outlook is being hindered by uncertainty surrounding tariffs and policy changes.

In 2025, S&P Global Mobility projects that 15.1 million battery EVs will be sold worldwide, a 30 per cent increase on last year. It is anticipated that 16.7 per cent of the light vehicle market will be made up of battery-based EVs.

S&P also reported that major unknowns await Chinese manufacturers BYD and Tesla in 2025 due to assumed changes to the US Inflation Reduction Act.

Last year, VinFast stated that it was delaying the opening of its North Carolina factory until 2028, which will allow the company to optimise its capital allocation and manage short-term spending more effectively, focusing more resources on supporting near-term growth targets and strengthening existing operations.

The company is expanding its strategy in India, Indonesia, and the Philippines, where EV infrastructure is developing rapidly but competition from domestic brands is limited. Experts said that in order to sustain long-term growth, it needs to compete with Chinese manufacturers and prove its competitiveness beyond its home market.

VinFast is scheduled to open factories in Subang, West Java and in the southern Indian state of Tamil Nadu this year. The plan to expand into India aims to seize growth opportunities in the world’s most populous nation and rapidly expanding EV market.

On February 28, VinFast and Motech Automotive Service Centres, through its franchisor and operator in the Philippines, signed an MoU on expanding the service network for VinFast’s EVs in the market. The agreement aims to meet the increasing demand for EVs among Filipino consumers, while affirming VinFast’s long-term commitment and determination to utilise green transformation across the region.

VinFast and Motech will collaborate to accredit over 60 Motech service workshops as approved VinFast service centres. In the Philippines, these service centres will have the authority to handle VinFast EV maintenance, warranties, and repairs. This year, VinFast intends to open over 100 similar service workshops throughout the Philippines.

In 2025, the company has set the ambitious target of doubling sales to around 200,000 EV globally after announcing impressive results in 2024, with 97,300 EVs sold globally, of which about 87,000 vehicles came from the domestic market.

Project

M&As in crucial sectors poised for rapid expansion

Published

9 hours ago

March 12, 2025

Industrialzone.net

Following the downturn, Vietnam’s merger and acquisition landscape is set to gain momentum in 2025, driven by spearhead industries from technology to manufacturing. Julien Curtet, partner of Index Partners, shared with VIR’s Thanh Van his insights into the overview and the prospect of the market.

How do you see Vietnam’s merger and acquisition (M&A) market affected by global market volatility?

M&As in crucial sectors poised for rapid expansion

Julien Curtet, partner of Index Partners

In 2024, global M&A activity rebounded, reaching approximately $3.5 trillion (a 15 per cent increase from 2023) with around 7,500 deals above $30 million. Corporate acquisitions rose by 12 per cent, and financial investor activity surged by 29 per cent, driven by private equity amid easing interest rates. Key sectors included technology, energy, financial services, and telecom.

Vietnam mirrored global trends with notable M&A activity in technology, energy, and industrial sectors, supported by a resilient macro and rising foreign investment.

In 2024, Vietnam’s M&A market experienced a downturn in transaction value, influenced by global economic uncertainties stemming from geopolitical tensions and currency fluctuations. However, deal volume reached around 160 transactions in the second half of 2024, marking a 25 per cent rise from the first half of 2024 and a 32 per cent jump from the second half of 2023, signalling a strong recovery trend and positive momentum for future growth. Some key deals in the second half of 2024 were Masan’s acquisition of an additional 7.1 per cent stake of VinCommerce from SK Group for $200 million, KIDO’s acquisition of Hung Vuong, Nvidia’s acquisition of VinBrain, and SK Group’s $300 million acquisition of Iscvina Manufacturing.

Mid-cap deals up to $25 million dominated Vietnam’s M&A market, accounting for just over half of total deal volume despite a 28 per cent drop in total transaction value. Mid-size transactions in the second half of the year included ADA’s acquisition of Customore and Elan’s $8.89 million acquisition of TMC Vietnam.

Could you shed light on some key drivers for the Vietnamese market in 2025 and beyond?

In 2025, it is set for strong growth, driven by key sectors such as infrastructure, technology, consumer, and manufacturing. Infrastructure will see a surge in investment, particularly in transportation and logistics, supported by government initiatives.

The technology sector is poised for rapid expansion, fuelled by favourable policies and accelerating digital transformation. Consumer spending is expected to rebound from a low base, signalling a recovery in the consumer sector.

Meanwhile, the manufacturing sector, which contributed over one-quarter of GDP in 2024, is projected to grow by 10 per cent in output, supported by new industrial zones and increased foreign investment.

The market is set to accelerate in the second half of 2025, fuelled by stable global interest rates and rising investor confidence.

Vietnam’s strong economic momentum, pro-investment policies, and booming sectors like technology, manufacturing, infrastructure, and recovery of consumer will drive deal activity, cementing its status as a key M&A hub in Southeast Asia.

How do foreign dealmakers approach strategies amidst global economic uncertainty, especially tariffs and new US policy?

Foreign dealmakers are reshaping their M&A strategies. Despite the challenges, Vietnam remains a key destination for cross-border investment, driven by its rapidly expanding technology, consumer, and manufacturing sectors.

Vietnam is rapidly advancing its technology sector, emerging as a significant player in the global digital landscape. Its commitment to technological innovation is evident through key partnerships, such as the collaboration with Nvidia to establish AI research and data centres in the country.

To further entice high-tech investments, the government offers substantial incentives, including up to four years of tax exemptions and a 50 per cent tax reduction for the subsequent nine years, as well as financial support from national sci-tech development funds.

Additionally, Vietnam’s consumer market is expected to recover in 2025, fuelled by a rising population, and increasing disposable incomes, boosting demand for goods and services. With consumer confidence rebounding and spending accelerating across sectors, Vietnam’s consumer market is regaining momentum as a vital driver of economic growth.

Vietnam is emerging as a manufacturing and logistics hub, attracting foreign investments due to its competitive labour costs (20–50 per cent lower than regional peers) and a 9.8 per cent increase in manufacturing output in 2024. An “anything but China” strategy is driving multinationals to shift production to Vietnam.

The country is also benefiting from major infrastructure projects, including the Long Thanh International Airport and deep-sea ports in Haiphong, are strengthening its logistics position, while expanding industrial areas and cross-border e-commerce fuel growth in both sectors.