Economic Committee reviews investment policy for North-South high-speed railway project

Meeting transportation needs, creating premise and driving force for socio-economic development

Presenting the Proposal on the investment policy of the North-South high-speed railway project, Minister of Transport Nguyen Van Thang said that in the past time, the Central Executive Committee and the Politburo have had many conclusions on the investment policy of the North-South high-speed railway project; in which, at the 10th Conference of the 13th Party Central Executive Committee, the investment policy for the entire route, speed of 350km/h, was agreed upon and relevant agencies were assigned to complete the dossier to submit to the 15th National Assembly at the 8th session for consideration and decision to approve the policy, some specific mechanisms and policies to mobilize resources and investment procedures for the project.

Regarding the context of the project, the Minister of Transport said that the Project's pre-feasibility study report assessed the domestic and international context and the development of railway infrastructure, and clearly stated the reason why the high-speed railway on the North-South axis was not approved by the National Assembly in 2010 due to concerns about the speed, exploitation plan, and investment resources in the context of the low economic scale in 2010 (GDP was 147 billion USD; at that time, the project's E&P was about 55.8 billion USD, equivalent to 38% of GDP), and high public debt (56.6% of GDP). With the increasing demand for transportation, the economic scale in 2023 will reach 430 billion USD, nearly 3 times higher than in 2010; public debt is low at about 37% of GDP; It is expected that by the time construction begins in 2027, the economic scale will reach 564 billion USD, so investment resources will no longer be a major obstacle.

Minister of Transport Nguyen Van Thang stated that the goal of the Project is to build a high-speed railway to meet transportation needs, contribute to restructuring the transportation market share on the North-South corridor in an optimal and sustainable manner, create the premise and driving force for socio-economic development, and ensure national defense and security.

The high-speed railway line starts in Hanoi (Ngoc Hoi station) and ends in Ho Chi Minh City (Thu Thiem station), passing through 20 provinces and cities; the length of the line is about 1,541 km. Regarding the scale of investment, the construction of a new double-track railway line, 1,435 mm gauge, electrification, design speed of 350 km/h, load capacity of 22.5 tons/axle; transporting passengers, meeting dual-use requirements for national defense and security, and transporting goods when necessary.

Railway running on rails, passenger trains using distributed power train technology, freight trains using centralized power; signal information equivalent to the system currently used in countries operating high-speed railways in the world. Proposed selection of technical standards to ensure train design speed of 350km/h. Preliminary total land use demand of the Project is about 10,827 hectares, resettled population is about 120,836 people. The agency submitting the proposal for the project investment form is public investment, the division of the project into components is carried out when approving the investment project. Preliminary total investment of the Project is about 1,713,548 billion VND (about 67.34 billion USD).

Correctly assess the actual financial performance of the Project

Reviewing this content, Chairman of the Economic Committee Vu Hong Thanh said that, regarding the meeting of the criteria for a national important project and the Project dossier, the Project is suitable for the criteria for a national important project and basically meets the requirements for the Project dossier as prescribed by the Law on Public Investment. There are opinions suggesting to supplement the dossier proposing to change the purpose of forest use to another purpose. Regarding the necessity of the Project, the Standing Committee of the Economic Committee agrees with the necessity of investing in the Project with the political bases, legal bases and reasons stated in the Submission No. 685/TTr-CP.

At the same time, it is recommended to clarify the plan to connect the high-speed railway line with the national railway network, urban railway and other transport systems; connect with regional and international railway networks...

Regarding the capital source for the Project, Chairman of the Economic Committee Vu Hong Thanh said that, compared to the total medium-term investment capital from the State budget, the preliminary E-commerce Project exceeds (by 114%) the total medium-term public investment capital from the State budget for the period 2021 - 2025 (maximum of 1,500,000 billion VND, including the reserve amount) and is equivalent to 59.7% of the total medium-term public investment capital from the State budget for the period 2021 - 2025. Meanwhile, in the period 2026 - 2030, public investment resources need to prioritize continued investment in important projects and programs. With the huge capital demand for the Project as above, to ensure capital, it is necessary to synchronously implement many solutions to mobilize resources, increase state budget revenue, cut regular expenditures (including defense and security tasks) and may have to accept increased state budget deficit in some years (this leads to risks in borrowing needs, mobilization capacity and debt repayment obligations in the future). Therefore, it is necessary to study and consider carefully.

At the meeting, members of the National Assembly Standing Committee agreed to submit to the National Assembly for consideration the investment policy for the North-South high-speed railway project.

Concluding this content, Vice Chairman of the National Assembly Nguyen Duc Hai said that this is a project of unprecedented scale in our country, with no precedent for implementation, and has been approved by competent authorities. This is also a project that affects many aspects of socio-economics, budget finance, and public debt in the context that Vietnam does not have technology, does not have human resources, and is not proactive in capital sources.

Compared to the current budget situation, the project investment capital mainly relies on borrowed capital, therefore, the Vice Chairman of the National Assembly proposed that the Government accept the opinions of the National Assembly Standing Committee and the appraisal opinions to complete the project dossier, in which it is noted to continue reviewing and calculating the total investment and preliminary design plan to ensure savings and efficiency; supplementing explanations of comparison plans to clarify the basis for choosing the project route according to the Government's proposal; further assessing the rice growing area, the forest area to be converted, solutions to ensure the indicators on rice growing land, forest cover ratio that the competent authority has decided; assessing the project's impact on the environment; further studying the arrangement of the number of stations.

Along with that, the Vice Chairman of the National Assembly suggested carefully assessing the factors affecting the project's progress to find solutions to strive to basically complete the entire route by 2035; paying attention to land acquisition, compensation, resettlement support, investor selection, meeting technology, human resources, materials, and electricity needs during the construction, implementation, and exploitation of the project.

Regarding the capital source for project implementation, the total investment capital for the project is particularly large, including construction costs and operating and exploitation costs. Therefore, to ensure feasibility and national financial security, it is necessary to evaluate more carefully, considering the conditions in which the country is implementing many urgent and necessary infrastructure projects in the fields of transportation and energy to have solutions to control risks, especially avoiding risks due to failure to complete or put into use due to lack of capital, risks of budget imbalance in the medium term when debts due for payment and repayment are large, risks of over-dependence on foreign loans, affecting the financial and budgetary initiative of the country.

The Vice Chairman of the National Assembly agreed that there should be outstanding and special policies to implement the project. However, to ensure feasibility and increase persuasiveness, the Government was requested to review the 19 policies with more specific explanations, assess their impacts carefully, and only include in the resolution policies that are truly necessary and have little negative impacts, ensuring the mechanism for assigning and coordinating power control among agencies and units, and the mechanism for inspection and supervision, to avoid loss, waste, and negativity. Paying attention to the policies, the reviewing agency suggested that there should be no amendments or careful assessment of impacts when prescribing.

At the same time, the Vice Chairman of the National Assembly proposed to review and complete related standards and norms, ensuring consistency and unity in implementation. Calculate and explain more about technology and technology transfer, ensure mastery of railway technology, mastery of raw materials. Ensure conditions during the construction process and the process of putting the project into operation and use as well as prioritize the development of supporting industries and railway industry. Clarify the basis for calculating and forecasting the project's transportation needs; review and explain more about the project's socio-economic efficiency and financial efficiency. Carefully study the opinions of the appraisal agency to complete the project dossier and draft resolution on the conformity of related planning and plans.