Vinspeed plans high-speed rail: State should finance 80%!

Vinspeed plans high-speed rail: State should finance 80%!

The Vietnamese company VinSpeed, a member of the Vingroup Group, has unveiled plans to build a high-speed railway between the north and south of Vietnam. With an estimated total investment requirement of approximately VND1,562 trillion (approximately $61.35 billion), VinSpeed ​​plans to provide VND312.33 trillion (approximately $12.27 billion) as equity capital. The remaining 80% of the project will be financed through an interest-free loan from the state Vietnam.vn reported.

In 2024, Vingroup, which includes VinSpeed, achieved net sales of VND189,068 billion and profit after tax of VND5,276 billion. Its chairman, Pham Nhat Vuong, is VinSpeed's largest shareholder with 51% of the shares. The company plans to use the capacity it owns to realize the north-south high-speed railway in Vietnam.

Structure and financing of the project

Vietnam's National Assembly in November approved an investment project with a preliminary cost of about VND1.7 quadrillion ($67 billion), equivalent to about 14% of Vietnam's 2024 GDP. Construction of the high-speed rail is scheduled to begin in December 2023, with the aim of having the entire line operational by December 2030. Following approvals from the National Assembly, capital mobilization will take place through government bonds and foreign loans, with VinSpeed ​​investing directly in the project.

It is expected that the payback period for the project could be up to 70 years. Experts support the idea that private investors should play a central role in financing and implementing important infrastructure projects. VinSpeed ​​also plans to use the Transit-Oriented Development (TOD) model to develop urban areas around train stations and thereby realize new real estate projects.

Cooperation with the state and long-term goals

VinSpeed ​​intends to apply for 80% of the total investment, approximately VND1.25 quadrillion (approximately $49.1 billion), as an interest-free loan from the government. These funds are to be approved for a period of 35 years. The company believes it is important that investments comply with national requirements, while the possibility of transferring shares was announced by Vingroup as part of the capital raising to strengthen VinSpeed.

With its strong market position and Vingroup's financial resources, VinSpeed ​​sees the high-speed rail project as a long-term contribution to the national infrastructure. However, experts warn of the need for transparency and balanced incentives to ensure that the project benefits everyone and does not provide excessive benefits to just a few companies, as well VNExpress reported.

Overall, VinSpeed ​​is at the forefront of one of Vietnam's most ambitious infrastructure projects, which is intended not only to improve mobility in the country, but also to provide new economic stimulus.