Vietnam Railways not motivated to improve, economists claim

By Dat Nguyen   July 8, 2018 | 06:18 pm PT
Vietnam Railways not motivated to improve, economists claim
A train running in the central of Vietnam. Photo by VnExpress
The monopolistic sector has neither improved service quality nor lowered prices because it is not pushed to compete.

Vietnam’s railway sector will continue to be in crisis if it remains a State-owned monopoly that is not motivated to increase its quality and compete with other sectors, an economist says.

Nguyen Thi Luyen, head of the Economic Institution Department under the Central Institute for Economic Management (CIEM), said at a recent seminar that the railways sector has not tried to improve service quality and reduce ticket prices because it has no competition.

This is why the number of train passengers decreased by 15 percent from 11.2 million in 2010 to 9.5 million in 2017. Total freight carriage also dropped 29 percent from 7.8 million tons to 5.5 million tons in the same period, Luyen said.

The Tuoi Tre report on the seminar titled "Reforming the Monopoly of the State in Networking Industries" also cited Luyen as saying passenger transport market share of the railways also dropped from 0.48 percent to 0.23 percent in that period, and that of carriage downed from 0.97 percent to 0.39 percent.

While authorities say that the railways is an important part of the nation’s infrastructure, it has always received low investment and remains outdated, Luyen said.

In recent years, investment in railways accounts for just 2-3 percent of transportation sector’s total budget, said Vu Van Minh, Chairman of Vietnam Railways, had informed the National Assembly last month.

The government can only provide 30 percent of total budget required each year for railway maintenance, he said.

While the plan is to invest VND48 trillion ($2 billion) and VND110 trillion ($4.8 billion) by 2020 and 2030, respectively, “the sector has received just VND1 trillion ($43.5 million), and VND600 billion of that has to be used to repay loans from previous projects,” he said.

Vietnam has been using the meter-wide narrow gauge track for over a century, while the current standard worldwide is the 1.435-meter wide broad gauge track that increases safety while allowing trains to travel faster.

The sector is legally mandated to replace 1,000 freight cars, 200 passenger coaches and 100 locomotives in three years, but it’s facing the challenge of a high price tag and the lack of suitable equipment for an outdated system.

“Thus, it is necessary to restructure the Vietnam Railways company, and set a clear distinction between railway infrastructure development and railway transport business,” Luyen proposed.

The current situation will persist if there is no authority with adequate power to monitor the antitrust business in the country, Le Dang Doanh, former head of CIEM, said.

“The railways is in a huge crisis,” he stressed.

Vietnam currently has over 3,000 kilometers of railway tracks, none of them high-speed. All Vietnamese trains run on diesel, while Malaysia, Thailand, Korea, Japan and China have electric railway systems.

go to top