VinSpeed ​​plans high-speed rail: State loan in focus!

VinSpeed ​​plans high-speed rail: State loan in focus!

VinSpeed, a newly founded company of Vingroup Corporation, plans to build a high-speed railway that will cross Vietnam from north to south. With a total investment requirement of around VND1,562 trillion (approximately $61.35 billion), the proposal calls for VinSpeed ​​to raise 20% of the investment capital itself, while 80% would be taken as an interest-free loan from the government. This would be a significant project, with construction targeted to begin in December 2023 and be completed by December 2030.

Vingroup is one of the largest private companies in Vietnam and has a broad ecosystem that includes real estate, electric vehicles and tourism, among others. With net sales of VND189,068 billion and profit after tax of VND5,276 billion in 2024, the company is financially strong. VinSpeed ​​has a registered capital of VND6,000 billion, which is less than 1% of the estimated project cost.

Financing details and investment model

The National Assembly (NA) approved an investment project in November with a preliminary cost of about VND1.7 quadrillion ($67 billion), equivalent to about 14% of Vietnam's 2024 GDP. VinSpeed ​​plans to self-mobilize the 20% of investment capital of approximately VND312.33 trillion (approximately $12.27 billion) and borrow the remaining capital as an interest-free loan for 35 years.

Among the approved mechanisms, the NA has approved public-private partnerships (PPP) as possible models to finance the project. The proposals also include direct private investment with VinSpeed ​​as the lead investor. Experts estimate that 98% of high-speed rail lines worldwide are loss-making, requiring additional consideration of economic viability.

Long-term perspectives and challenges

VinSpeed ​​intends to manage the project under the Transit-Oriented Development (TOD) model, which includes using the land around the stations for urban development and real estate projects. This could make a significant contribution to urban infrastructure in Vietnam.

While VinSpeed's proposals are still being considered by relevant ministries and authorities, experts raise concerns about the terms of the interest-free loan and suggest strict conditions to avoid excessive benefits for individual companies. The Ministry of Construction plans to submit a report to the NA on VinSpeed's proposals by May 20.

Pham Nhat Vuong, the chairman of Vingroup and VinSpeed's largest shareholder, has a 51% stake in the company. With the planned involvement of private investors in infrastructure projects, the role of the private sector in the development of Vietnam's economic landscape will be further strengthened.

For further information on developments surrounding the high-speed rail construction project vnexpress.net about the specific financing mechanisms and the role of VinSpeed. Also reported vietnam.vn about Vingroup's current company data and strategic plans.