Vietnam Railways struggles to compete with budget carriers

By Hung Le   January 8, 2020 | 05:51 pm PT
Vietnam Railways struggles to compete with budget carriers
A train going through the countryside in northern Vietnam. Photo by VnExpress/Thu Phuong.
The Vietnam Railways Corporation (VNR) has admitted its inability to meet performance targets because of competition from low-cost airlines.

VNR transported VND8.4 trillion ($362 million) worth of cargo in 2019, up 5 percent year-on-year, but 1.9 percent off the annual target, chairman Vu Anh Minh said at a recent industry conference. Revenue was VND8.19 trillion ($353 million), the same as in 2018, but only 97.2 percent of the target.

Railway sector employees earned an average of VND9.12 million ($393) a month, Minh said.

The railway sector continues to face rising competition on freight transport from the road and marine sectors, and its passenger section has to contend with low-cost carriers and highways, Minh said, but did not provide comparative statistics.

Furthermore, investment in railway infrastructure has been limited because of bottlenecks in policies and investment mechanisms, including land management regulations. The railway sector has only received 40 percent of state capital earmarked for its business and production activities, and among other things, this has undermined railway traffic safety, Minh added.

Because the railway infrastructure and stations belong to the state, VNR cannot use its own money to conduct repairs, he noted.

For instance, VNR needed to spend VND30 billion ($1.29 million) to repair and upgrade infrastructure at the Song Luy station in the southern province of Binh Thuan, but it could not do so because of regulatory constraints, Minh said.

Vietnam currently has over 3,000 kilometers of railway tracks, none of them high-speed. 

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