Hanoi and Ho Chi Minh City are seeking funds worth a combined VND105 trillion ($4.6 billion) to invest in roads and bridges in an attempt to ease traffic jams and protect the environment.
Vietnam's infrastructure is struggling to keep up with economic growth of more than 6 percent a year, while its public debt has already exceeded a ceiling set by the country's legislative body.
Hanoi is looking to borrow VND53 trillion ($2.3 billion) through the Asia Development Bank (ADB) and Japanese Official Development Assistance (ODA) to develop key metro lines, the city said in a proposal to the planning and investment ministry. Approval is still pending.
The funds will pay for two metro lines which require a total investment of $2.7 billion, a large part of which will come from the ADB and Japanese aid, while the rest will be covered by the city's budget.
Ho Chi Minh City is also looking for about VND52 trillion to resolve the city's chronic traffic congestion and flooding, the municipal government said.
At least VND24 trillion will be allocated to flood management projects, including renovation work on key canals and low-level streets, while another VND8 trillion would go to the environmental sector, based on the city's proposal to the ministry.
The city said it will prioritize the allocation of ODA funds for the rehabilitation of its main canals and a city-wide sanitation campaign.
Ho Chi Minh City needs VND500 trillion to invest in urban infrastructure between now and 2021, and a similar amount for the next five years, according to local consultancy firm the HCMC Financial Investment Company.
Vietnam is among those leading the infrastructure race in Asia.
The country's public and private sector infrastructure investment has averaged 5.7 percent of gross domestic product in recent years, the highest in Southeast Asia but behind China's 6.8 percent, according to the ADB. Indonesia and the Philippines spend less than 3 percent, while Malaysia and Thailand spend even less at under 2 percent.
The ADB said Vietnam's efforts to improve infrastructure and lure more foreign investors seems to be paying off as foreign direct investment inflow surged to a record $15.8 billion in 2016.
While the demand for funds to invest in infrastructure is huge, Vietnam's public debt has already exceeded the 65-percent ceiling set by the legislative National Assembly, Prime Minister Nguyen Xuan Phuc said in January, despite claims by the finance ministry that debt was still below the ceiling.
Vietnam's public debt grew about 18 percent per year on average from 2011-2015, about three times above its annual economic growth, according to the finance ministry. It estimated debt stood at 64.73 percent of 2016's gross domestic product, compared to 62.2 percent the previous year.
The Global Debt Clock on the economist.com site puts Vietnam's public debt at $94.85 billion.