Vietnam lacks funding for new expressway: Finance Ministry

By Thanh Thanh Lan October 9, 2016 | 01:16 am PT

Illustrative photo by VnExpress

The transport ministry has been advised to seek out foreign investors.

Vietnam plans new expressway connecting Hanoi and HCMC

Vietnam’s Ministry of Finance has called for a cautious review of a massive cross-country expressway project currently under consideration.

The Ministry of Transport requested approval of a $10.2 billion expressway linking Hanoi and Ho Chi Minh City to relieve the country's overburdened National Highway 1A.

According to the proposal, the government would cover 40 percent of the cost for the 1,372km expressway. Private investors would cover the rest.

However, officials at the Ministry of Finance warn that the state will have a hard time rallying its share of the funds. As it seeks to map the allocation of public funds between 2016 and 2020, the ministry warns that the country cannot raise further funds by issuing bonds, taking out preferential loans or seeking official development assistance to fund the expressway project.

“In the event that it proves impossible to mobilize funds from the state budget for the project as specified in the proposal, we recommend the project timelines be adjusted,” the Ministry of Finance said in a statement.

The ministry also expressed doubts about banks financing the remaining 60 percent cost because they have already lent local BOT (building-operation-transfer) investors too much in recent years.

“The project should seek cooperation from foreign companies that can secure loans at reasonable interest rates,” the ministry added.

According to a proposal recently submitted to the government, the transportation ministry expects to secure approval by July 2017 and begin construction no later than May 2019.

It hopes that work will finish by December 2022 on the roadway, which has a designed maximum speed of 120kph (roughly 75mph).

If approved, the project will join a larger north-south expressway system that spans over 1,800km. About 470km of that system remain under construction and are set to be completed by 2020.