WB will not join Vietnam’s North-South high-speed railway project

World Bank (WB) said they would not participate in Vietnam’s North-South high-speed railway project.

Regarding the $56 billion express railway project, WB’s economic specialist, Martin Rama, advised Vietnam to focus on three key points namely GDP in coming years, sponsors’ loans, and money flow factor.

“There are so many things needed to be considered to avoid an enormous debt burden for the next generations” he said during a press conference ahead of the Donors Consultative Meeting for Vietnam that will be held on June 9 and 10 in the southern province of Kien Giang.

The difficulty is when Vietnam becomes a middle-income country, ODA and preferential policies on lending rate will no longer be like before. Besides, in order to do the super-large projects, Vietnam should give it a serious thought, said Martin Rama.

Martin Rama gave an example of Korea. Korea has many Chaebol, which are super large scaled corporations and groups. Vietnam does not have any group called a Chaebol in the country. And if Vietnam wants to model Korea then the efforts will be enormous, and moreover, Vietnam needs to have appropriate thought.

When being proposed to evaluate the economic effects of this project, Martin Rama said it is very hard to calculate.

“Remember another example, Dung Quat oil refinery project, before carrying out the project, there have been many comments disagreeing on the location of the refinery. However, until now, even when the plant started operation, there is not the exact answer on its economic effectiveness” he said.

Additionally, representative from WB said that Vietnam’s infrastructure needs to be improved. Apart from road system, infrastructure on power will be also a concern. So far, the electricity shortage is still challenge for each household and producer.

Many opinions said that Vietnam will increase the debt burden; the investment capital exceeds 42 percent of GDP when designers plan to borrow capital for carrying out the project. Maybe Japan and Asian Development Bank (ADB) will finance this project.

Vnexpress

Tags: Vietnam Infrastructure, Vietnam railway project