What Vietnam can learn from other high-speed rail projects

Vietnam has an ambitious plan to build a high-speed railway. Here is what Vietnam can learn from the Laos-China Railway, the Bangkok-Nong Khai High-Speed Railway, the Jakarta-Bandung High-Speed Railway, and the Mumbai–Ahmedabad HSR.

Vietnam announced in 2024 that it plans to build a high-speed railway from Hanoi to Ho Chi Minh City.

The railway will be 1,541 km long and have a top operating speed of 350 km/h. It is estimated to cost US$67 billion and will be mostly financed domestically to avoid dependence on foreign loans.

In addition to this financing plan, the government is seeking technology transfers to not be reliant on foreign operators.

The construction timeline has been proposed to break ground in late 2027, with a completion date of 2025.

It’s an ambitious project that puts other railway plans in Southeast Asia to shame. Thailand and Malaysia should have upgraded their railway network instead of double-tracking their old metre-gauge network. You have to give credit for the audaciousness of the Vietnam HSR plan.

Of course, this plan is easier said than done. Vietnam has no modern history of new railway construction, and it couldn’t complete a renovation of the old Ha Long Railway.

It’s hard to predict how accurate the cost predictions and estimated construction timeline will be when there are no previous examples. Other railway projects in Asia offer a glimpse of what Vietnam could expect in constructing a high-speed railway, as well as examples of what not to do.

This article looks at the lessons that Vietnam can learn from the Laos-China Railway, the Bangkok-Nong Khai High-Speed Railway, the Jakarta-Bandung High-Speed Railway, and the Mumbai–Ahmedabad HSR.

Laos-China Railway

Lessons: Transformative for tourism and freight movement, but poorly negotiated terms.

The Boten–Vientiane railway (Laos-China railway) shows what a rail project looks like when China has almost complete control of the project. The 422 km line was built in 5 years at a reported cost of $6 billion.

While the Laos-China railway is not high-speed (its top speed of 160 km/h classifies it as semi-high-speed), Laos having a modern railway may have prodded Vietnam into finally committing to building a high-speed railway.

The railway has been a boost for tourism for the main cities on the line, and the train is a more efficient and environmentally friendly way of moving freight to and from China.

Laos-China Railway also gives lessons on what not to do concerning financing. The project is 60% funded with debt financing from China, while 40% is from a joint venture company in which China holds a 70% stake, and Laos holds 30%. When you read the following deals that other countries have cut with China, it looks like Laos got steamrolled at the negotiating table.

The massive debt owed to China has had Laos labelled by international media as being in a debt trap with China. This label would be an unacceptable political risk for Vietnam. One of the first details that was announced about the Vietnam HSR was that it would be self-financed and not a potential debt trap.

There are also unknown details about the LCR, including land deals given to Chinese investors near the stations. This would not be an acceptable scenario in Vietnam, where a rare protest broke out when the government was considering a SEZ land deal with Chinese companies.

Further reading: Boten–Vientiane railway (Wikipedia)

Bangkok-Nong Khai High-Speed Railway

Lessons: Self-financing and land clearance issues.

The Bangkok-Nong Khai High-Speed Railway (China–Thailand railway) provides a more realistic preview of what Vietnam could expect in building a high-speed railway.

The Bangkok-Nong Khai High-Speed Railway is being built in partnership with China. Unlike Laos, Thailand is paying for the whole project to maintain independence. This is the model that Vietnam has chosen.

The Bangkok-Nong Khai High-Speed Railway began construction in December 2017, and the first phase from Bangkok to Nakhon Ratchasima (250km) was expected to be operational in 2021. The most recent estimate is for the Bangkok to Nakhon Ratchasima section to open by 2028 and the entire line to be operational by 2030. That is 13 years to complete the 609 km line if there are no further delays.

One of the causes for the delay has been due to land clearance. This is a problem that is encountered throughout Southeast Asia, including Vietnam. The Philippines has recently set up a task force to deal with the right-of-way for railways, and Vietnam is now legislating special mechanisms to speed up land clearance for the urban railways of Hanoi and Ho Chi Minh City.

Construction of the Hanoi and HCMC Metro has been painfully slow, with land clearance being a major issue. Vietnam will need to prove that it can resolve this problem with the urban railways before it can credibly offer the current high-speed railway timeline.

As for the operation of the China–Thailand railway, China will operate and maintain the system for the first three years. It will then be a joint responsibility for the next four years and then handed over to Thailand to operate completely.

Vietnam have signalled that they want to operate the railway themselves, but like Thailand, they have no prior experience in operating a high-speed railway. A staged handover like the Thailand model might be the way forward for Vietnam.

Further reading: Bangkok–Nong Khai high-speed railway (Wikipedia)

Jakarta-Bandung High-Speed Railway

Lessons: Competition between China vs Japan and cost blowouts.

There are at least five countries that have stated that they are interested in helping build the Vietnam HSR, but the leading contenders are Japan and China.

Asia-focused media outlets love nothing better than a China vs Japan story, and they got it with the Jakarta-Bandung HSR (Whoosh).

Japan was seemingly the leading contender for the project, but in the end, China offered a deal that suited Indonesia.

The initial cost estimate of the project of $5.5 billion ended up costing $7.3 billion, an increase of 32.72% (nearly a third more than estimated). A one-third cost blowout for Vietnam would put the project close to 90 billion dollars.

Japan had initially quoted the project at $6.2 billion, so there was speculation that China had underquoted the project. The more realistic scenario was that the cost was always going to blow out. Indonesia got caught out with the cost blowout as they had to negotiate a new loan with higher interest rates.

Further reading: High-speed rail in Indonesia (Wikipedia)

Mumbai–Ahmedabad HSR

Lessons: Partnering with Japan and technology transfer.

India is currently building its first high-speed railway from Mumbai to Ahmedabad. The 508.18 km line will have a top speed of 320 km/h, and the plan is to extend the line from Ahmedabad to Delhi.

The line will use the Shinkansen system from Japan, including technology transfer so that India can develop its high-speed industry.

The high-speed railway is being developed by the National High Speed Rail Corporation (NHSRC), a wholly owned subsidiary of Indian Railways, the Ministry of Railways and the Government of India.

Vietnam is also pursuing technology transfer with whoever they end up partnering with, so the Mumbai–Ahmedabad HSR offers a perspective of what a Vietnam-Japan partnership might look like.

Another interesting aspect of the Mumbai–Ahmedabad HSR is the new model of Shinkansen trains from Japan has been delayed, so India will use indigenous Vande Bharat trains on the line until the Shinkansen trains are ready.

Japan will modify the train sets to function in India’s extreme conditions, such as temperatures exceeding 50 degrees Celsius and dustier environments compared to Japan. The environmental conditions of Vietnam would also need to be considered compared to Japan.

The delayed project means that India will get the newer Shinkansen E10 model, which has an operating speed of 400 km/h.

Vietnam has since announced that it wants local companies to build train sets, even though there are no companies that currently build trains in Vietnam. The government has asked local conglomerate Thaco to make high-speed train carriages.

Thaco has experience in manufacturing cars with international partners, and they make Thaco-branded trucks and buses. It wouldn’t be unreasonable for them to move into the train carriage business.

A perception of the Shinkansen system is that only Shinkansen can run on it. If India operates their domestically-produced trains in addition to the Shinkansen trains from Japan, that would also be of interest to Vietnam.

Further reading: Mumbai–Ahmedabad high-speed rail corridor (Wikipedia)