Vietnam rail project seen to boost trade

Planned link will enhance connectivity between SE Asia, China, say analysts

Vietnam's planned new railway that will link its largest northern port city to the border with China could boost bilateral trade and also serve as a "critical linchpin" in the realization of a pan-Asia railway, analysts say.

Vietnam's National Assembly approved on Feb 19 an investment plan for the Lao Cai-Hanoi-Hai Phong railway project. The project, which is estimated to be worth over $8.3 billion, involves a rail link stretching from Vietnam's northern port city Hai Phong to Lao Cai, which borders China's southwest province of Yunnan.

The construction of the railway aims to meet the transport demand between Vietnam and China, according to a report filed by Vietnam News Agency, citing a resolution passed by the Vietnamese parliament.

The Vietnam rail venture is the latest project that boosts connectivity between Southeast Asia and China. Early this month, the Thai Cabinet approved the second phase of the high-speed network that will connect Thailand with China through Laos.

Rail infrastructure will help bolster trade between China and Southeast Asia as it reduces the transit time as well as the delivery cost, noted Wilson Lee Flores, a political-economic analyst and honorary chairman of the Anvil Business Club in the Philippines.

He said time and cost efficiency are especially important for countries in the landlocked Greater Mekong Subregion, expanding their access to the global market.

Flores said the Vietnam railway project is "a critical linchpin" in building a pan-Asia rail network. This is because Vietnam's geographical position makes it a gateway between China and Southeast Asia.

"By integrating Vietnam into the broader pan-Asia rail network, the project would enable a more fluid movement of goods, services, and people, thereby amplifying economic opportunities across the region," he said.

Flores said China's expertise in high-speed rail technology, coupled with its unparalleled capacity for large-scale infrastructure projects, has enabled the nation to bridge historically inaccessible regions across Asia.

Rise of e-commerce

Linda Tjia Yin Nor, an associate professor in the Department of Public and International Affairs at the City University of Hong Kong, said the rise of e-commerce has pushed the demand for increased connectivity between China and Southeast Asia.

"They need to be part of the entire globalization of e-commerce development," she said.

Tjia, who has researched Chinese and Japanese railway technology, said China can contribute to the development of a regional rail network in Southeast Asia either through financing or technological transfer.

Nguyen Tuan Duong, chairman of Vietnam Trading Investment Promotion Group, said the Hai Phong Port is the biggest container port in northern Vietnam, and Lao Cai borders Yunnan. As such, the railway will facilitate freight transportation by connecting sea and rail transport.

Duong's company exports agricultural products to China. It uses sea transport to ship products from southern Vietnam to China, and container trucks to ship from central and northern Vietnam.

"The cost would be very high if we use container trucks so the railway would be the best and most convenient way for shipping agricultural products from central and northern Vietnam to China," he said.

The Vietnam railway project will span approximately 390.9 kilometers. A new electrified single-track railway line with a 1,435-millimeter gauge will be constructed to accommodate both passenger and freight services.

The Vietnam News Agency reported that Vietnam's prime minister is authorized to issue government bonds to cover any shortfalls in the annual investment plan.

Chinese Foreign Ministry spokesman Guo Jiakun said in a briefing on Feb 19 that China and Vietnam have been exchanging views on enhancing railway connectivity.

Guo said the two sides agreed to accelerate the feasibility study on the Lao Cai-Hanoi-Hai Phong standard gauge railway, speed up the plan compilation of the Dong Dang-Hanoi standard gauge railway and the Mong Cai-Ha Long-Hai Phong standard gauge railway, and advance the work of building a standard gauge railway connection point between Hekou in China and Lao Cai in Vietnam.