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NEWS UPDATES 14 June 2010

Brakes on Vietnam's high-speed rail

The Reunification train sits baking on the Hanoi platform as passengers settle in to hard wooden seats next to open windows. Almost two days of travel lie ahead before it reaches southern Ho Chi Minh City, but a controversial government plan would cut that journey to less than six hours.

Vietnam's communist authorities are seeking legislative approval for a bullet train that would cover the 1,570-kilometre (975 mile) distance at speeds of 300 kilometres an hour.

It would be built by 2035 and cost 56 billion dollars, almost 60 percent of the country's gross domestic product (GDP) last year. That price tag has left a cross-section of society questioning the government's priorities.

The debates are closed to foreign reporters but have been widely covered in local media ahead of a June 19 vote on the plan.

Vietnam is developing rapidly, but roughly half the population still works in agriculture, the per capita income is about 1,000 dollars, and the minimum government salary is 730,000 dong (38 dollars) per month.

For Nguyen Hoai Thu, 22, a Hanoi college student, the Reunification train may not be perfect but it gets her home economically to Ha Tinh province, 350 kilometres south of Hanoi.

"It takes only eight hours and it costs me just 86,000 dong," she said.

A bullet train could make the journey in just over one hour but Tran Thi Ca, 65, also heading to Ha Tinh on the single-track railroad, said the funds could be put to better use.

He argued that over a long distance the train could not compete with airlines. A rail ticket would cost about 70 percent of a flight from Hanoi to Ho Chi Minh City, which takes only two hours by plane.

Modernising the current train system and further developing maritime transport and roads would be more efficient, Doanh said.

He described the high-speed train investment as "very risky" given the country's economic imbalances.

According to the World Bank, Vietnam's budget deficit reached a "very high" 8.4 percent of GDP last year. Public debt accounted for about 47.5 percent of GDP, which the World Bank said was high but sustainable if the government is prudent.

The Bank does not object to the high-speed train but said it has no involvement.

A Vietnamese government spokesman has been quoted as assuring the high-speed railway will not bankrupt the nation.

There is no time to waste, according to Nguyen Huu Bang, general director of the state-owned Vietnam Railways Corp.

"This is a project of the future but we ought to start implementing it right now, lest we be ready too late," he said, quoted by VietnamNet news portal. "It will put Vietnam in the first rank of rail travel."

Doanh, the economist, said the project seems to reflect the government's strong desire to develop the country but, "it looks very much like a white elephant.”


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