How to arrange VND230 trillion to build north-south highway


VietNamNet Bridge – The Ministry of Transport (MOT) has said that the north-south highway requires lower costs compared with other projects, but the Ministry of Finance (MOF) says the required investment is high compared with the long-term public investment plan.

MOT has submitted to the government a project on building a north-south highway with the total length of 1,372 kilometers.

The north-south highway project is to be implemented under the mode of BOT (build, operation, transfer) with the state’s investment. There would be 4-lane (22 meters in width at minimum) roads where there is heavy traffic, expected to receive 30,000-35,000 vehicles a day by 2030. The sections of roads with less heavy traffic would have a width of 17 meters.

It is estimated that the project will cost VND229.800 trillion, of which VND136.3 trillion would come from the investor, and VND93.5 trillion from the State (40 percent).

MOT, emphasizing that the highway is necessary to satisfy transport demand by 2030, affirmed that the conditions of implementation allows savings.

MOT’s Deputy Minister Nguyen Nhat explained that Highway No 1 cannot be enlarged further. 

If a Hanoi-HCMC high-speed railway is built, it would be very costly, about $55 billion.

Moreover, it would take 10-15 years to build the high-speed railway and Vietnam, which still cannot master the technology, would have to rely on foreign sources. Therefore, MOT believes that it would be better to build a highway and rely on domestic sources.

Is it beyond the country’s means?

While MOT believes that the conditions for the project implementation are favorable, MOF said the amount of VND93.534 trillion the state would have to spend to fund the project, equal to 2 percent of GDP, is huge compared with the medium- and long-term public investment plan being compiled. 

The ministry also commented that this is not in line with the provisions of the Public Investment Law and the 2015 State Budget Law. 

The ministry also pointed out that it is not feasible to mobilize capital from other sources such as government bonds, ODA and preferential loans. If it is impossible to arrange the state’s capital as planned by MOT, the project will be delayed.

Meanwhile, Nhat stressed that the state’s capital is mandatory for the project development. Since the required capital for the projects on the north-south route is always huge, investors won’t be able to take back the investment if they rely only on fees collected from vehicle owners.