Vietnam is moving ahead with its North-South high-speed rail project, a national undertaking estimated at $67 billion, and China is emerging as a major rival in the global bidding race. With a public-private partnership, or PPP, model seen as the likely approach, financing capacity is becoming a key factor in who wins contracts.
According to the construction industry on April 28, the Vietnamese government has completed a feasibility study and is preparing plans to tender construction for some sections under a PPP structure.
The project calls for building a 350 kph rail line stretching 1,541 kilometers from Hanoi to Ho Chi Minh City. It also includes 23 passenger stations, five freight stations and nine depots. More than half of the route is expected to pass through urban areas, and bridges are estimated to account for about 60% of the work.
Under PPP arrangements, private firms build and operate public infrastructure such as urban development, transport links and plants, while the public sector provides compensation and policy support. Vietnam, facing costs too large to cover with public funds alone, has sought to boost investment incentives by establishing a PPP law since 2020. It also introduced a loss-sharing mechanism under which the government covers part of the shortfall if revenue falls below 75% of projections.
In South Korea, a dedicated task force has been formed centered on Korea Railroad Corp., and the Korea Overseas Infrastructure & Urban Development Corp., or KIND, is expected to play a financing role. With PPP rather than a standard contracting model considered likely, industry officials say competitiveness will hinge not only on technology but also on the ability to raise funds.
China, backed by its capital strength and experience in Vietnamese infrastructure projects, has become a strong competitor. Chinese President Xi Jinping recently underscored rail cooperation in talks with Vietnam’s leadership, signaling Beijing’s intent to pursue the work. China has already won and advanced the Lao Cai-Hanoi-Hai Phong railway project. Japan and France are also expected to join the competition, citing high-speed rail technologies such as the Shinkansen and the TGV.
A key issue is the scale of South Korea’s financing capacity. KIND can raise its capital up to the statutory limit of 2 trillion won, but its paid-in capital stands at 658.6 billion won, limiting its ability to support a project of roughly 100 trillion won. Additional bond issuance is also capped at no more than five times the combined total of paid-in capital and reserves. Because KIND typically participates through equity investment, its capital ceiling effectively becomes its investment ceiling, sharply reducing room to support larger projects.
Park Yong-jeong, head of the industrial research office at Hyundai Research Institute, said large projects make it difficult for domestic companies to raise all needed investment on their own, increasing the need for government support. “Countries or companies that can secure financing smoothly will inevitably have an advantage,” Park said, adding that KIND’s overall limits leave “not that much” investment capacity on a project-by-project basis. He called for stronger institutional measures to address capital-limit constraints so equity participation can expand.
* This article has been translated by AI.
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