The $67 Billion Railway: Vietnam’s North-South High-Speed Line

The North-South high-speed railway is a decision about what kind of country Vietnam intends to be by 2045, dressed as a transport project. The existing metre-gauge line, built by the French in 1936, takes more than thirty hours between the two big cities; the new line is meant to take five and a half, carry freight on a separate track, and bind twenty provinces into one labour market. Its cost, technology, financing and the unusual competition between the state and its own tycoons to build it are all still being worked out. This article sets out what has been decided, what has not, and what history suggests. It is part of the Vietnam Company Stories hub.

Why did Vietnam reject high-speed rail in 2010 and approve it in 2024?

In 2010 a $56 billion Shinkansen-based proposal equalled roughly half of GDP, and deputies judged it unaffordable; by 2024 the economy was about four times larger, public debt was around 37 percent of GDP against a 60 percent ceiling, and the political leadership had decided the line was a matter of national ambition rather than transport arithmetic.

The 2010 vote was a landmark. It was the first time the National Assembly had rejected a government project of that scale, and it did so after a debate in which economists pointed out that the state could not service the debt and that Japanese ridership assumptions did not transfer to a country with far lower incomes. The Ministry of Transport kept the idea alive through studies over the next decade, but Vietnamese infrastructure money went to expressways, which were cheaper, faster to build and easier to award in pieces.

The revival began in 2019, when the ministry proposed a 350 km/h passenger line at about $58 billion and the Ministry of Planning and Investment countered with a 200 to 250 km/h mixed passenger-freight line at roughly $26 billion. The dispute, essentially about whether Vietnam should buy the fastest technology or the most useful, ran for four years. The Politburo settled it in principle in 2023 and confirmed the 350 km/h option in September 2024, after which the government moved the resolution through the assembly in under three months.

The political logic was explicit. The leadership set targets of 8 percent growth in 2025 and double digits thereafter, and identified infrastructure as the lever. The railway, the expansion of Long Thành airport and a national nuclear programme were presented together as the projects that would define the 2030s. That framing has made the line difficult to question on cost alone.

What exactly has been approved, and what is still open?

The route, speed, station count, cost envelope, public-investment model, timetable and a package of nineteen special mechanisms are fixed by the resolution; the technology supplier, the precise alignment through each province, the rolling stock, the fare structure and the operating company are not. The feasibility study running through 2025 and 2026 is meant to settle them.

The approved alignment runs from Ngọc Hồi in southern Hanoi to Thủ Thiêm in Ho Chi Minh City through what were twenty provinces and, after the July 2025 provincial mergers, fifteen. It is designed for passenger trains at 350 km/h and axle loads of 22.5 tonnes, with the capability of carrying freight at lower speeds when required, though the freight case rests mainly on the parallel upgrade of the existing line. Land recovery is estimated at more than 10,000 hectares, with resettlement of well over 100,000 people, and the resolution separates land clearance into a project that provinces must complete ahead of construction.

The special mechanisms are the part that most worries fiscal conservatives and most reassures builders. They allow the government to use ODA, government bonds and other sources without returning to the assembly, exempt parts of the project from ordinary tendering, let provinces exploit land around stations, and fast-track approvals for domestic suppliers. They were modelled on mechanisms used for the North-South expressway and for Long Thành, both of which have run late.

What has not been chosen is the train. Japan, China, France, Germany and South Korea all operate 350 km/h systems and all have lobbied. The resolution is technology-neutral, the government has said it will prioritise transfer of technology and domestic production, and the choice will shape financing: a Japanese system tends to arrive with yen loans, a Chinese one with Chinese credit and contractors, as the Cát Linh to Hà Đông metro showed.

How will Vietnam pay for a project worth 15 percent of GDP?

Largely with domestic government bonds and budget allocations spread over more than a decade, supplemented by ODA where terms are acceptable and by land value captured around stations. Spread across 2027 to 2035, the annual outlay is about VND 200 trillion, on the order of 1 percent of GDP a year, which the government argues is affordable within the debt ceiling.

The arithmetic assumes the cost estimate holds. At $67 billion the line works out to roughly $44 million per kilometre, below Jakarta to Bandung’s $51 million and well below Californian or British figures, but above Chinese domestic costs of $17 to $21 million. Vietnamese officials say the number includes land, stations, depots and rolling stock; sceptics note that it was produced before design and before a supplier was chosen, which is exactly when Vietnamese estimates have historically been lowest.

Precedent is not encouraging. Hanoi’s Cát Linh to Hà Đông line, 13 kilometres built by a Chinese contractor with Chinese loans, was approved at $552 million in 2008, opened in 2021 at about $868 million, and needed the National Assembly to approve additional borrowing. Ho Chi Minh City’s Metro Line 1, 19.7 kilometres built with Japanese ODA, was approved in 2007 at around $1 billion, opened in December 2024 at roughly $1.9 billion and spent years frozen while the city and the finance ministry argued over who would repay the loans.

Land value capture is the untested element. The resolution allows provinces to plan and auction land around the 23 stations, in the manner of Japanese and Hong Kong rail operators, and the private bidders have made station land central to their proposals. Vietnam’s experience with transit-oriented development is thin, and its land-auction system was overhauled by the 2024 Land Law, so the revenue is plausible but unproven.

What happened when VinSpeed and Thaco offered to build it?

In May 2025 Phạm Nhật Vượng founded VinSpeed and proposed to build the entire line in five years for about VND 1.56 quadrillion, financed 20 percent by the company and 80 percent by an interest-free state loan repayable over 35 years; Thaco followed with a similar 20-80 structure using state-guaranteed bank loans and a seven-year build. Both asked for station land and a long operating concession.

The proposals surprised the ministries, which had spent five years designing a public project, and they reframed the debate. VinSpeed argued that a private builder would deliver faster and cheaper than the state, pointing to Vinhomes townships completed on schedule and to VinFast’s factory built in 21 months. Critics answered that an interest-free 35-year loan for 80 percent of the cost was a subsidy on a scale that no other private company had ever received, and that the state would carry the risk while the company kept the land and the fares. The wider pattern of Vingroup expansion, and the founder’s own history, is set out in his profile.

Thaco’s bid came from a different place. Its founder, Trần Bá Dương, built the country’s largest private industrial group on vehicle assembly and mechanical engineering, and his proposal emphasised domestic manufacture of rolling stock and components, with the railway as an anchor order for a Vietnamese rail industry. It asked for loan guarantees rather than free money, and for a longer build.

The government directed the Ministry of Construction, which absorbed the transport ministry in March 2025, to evaluate both proposals against the public route. Through the first half of 2026 the public-investment model in Resolution 172 remained the legal basis, with the feasibility study proceeding, while the private bids were assessed and their terms debated. Whichever path is chosen, the offers changed the politics: the state now has to explain why it should build the line itself when its two largest private groups say they can, and the private groups have to explain why they need the state to fund four-fifths of it.

Who will supply the steel, trains and engineering, and can Vietnam build any of it?

Rails may come from Hòa Phát, which committed in 2025 to a dedicated mill in Phú Yên; rolling stock will initially be imported from whichever system is chosen, with Thaco and state rail enterprises seeking assembly and maintenance work; and civil engineering will be split between foreign contractors and a Vietnamese construction sector that has built expressways but never a high-speed line.

The localisation ambition is real. The government has set out that domestic industry should supply track, civil works, stations and, over time, parts of the trains and signalling, and it has used the railway to recruit the private conglomerates. Hòa Phát has announced a rail-steel plant of roughly half a million tonnes a year, state-owned Vietnam Railways is being restructured into an operator, and universities have opened rail engineering programmes. Vietnam has almost no experience with the precision civil engineering of 350 km/h track, where settlement tolerances are measured in millimetres.

The supplier choice will determine how much can be localised. Japan’s Shinkansen consortia have historically kept core technology closed but delivered reliably, as in Taiwan; Chinese suppliers offer lower prices and faster transfer, as in Indonesia and Laos, but with financing terms and contractor control that Vietnam has found politically difficult since Cát Linh to Hà Đông. European suppliers offer open standards and are courting Vietnam through EU financing, but at higher cost.

A useful precedent is the Lào Cai to Hanoi to Hải Phòng line, a standard-gauge conventional railway of about 390 kilometres approved in February 2025 at roughly $8.4 billion and connected to China’s network. It uses Chinese technical standards and is expected to draw on Chinese loans, and it will be the first test of whether Vietnamese contractors and Vietnam Railways can absorb a modern system before the far larger high-speed project begins.

Who rides it, and what happens to the airlines?

The line is projected to carry tens of millions of passengers a year by the 2040s, drawn mainly from the Hanoi to Vinh, Đà Nẵng to Nha Trang and Nha Trang to Ho Chi Minh City segments, where journey times of one to two hours undercut flying door to door. On the full Hanoi to Ho Chi Minh City trip of five and a half hours, aviation will keep most of the market.

International experience is consistent: high-speed rail dominates below about three hours and loses above four. Vietnam’s two big cities are 1,500 kilometres apart, further than Beijing to Shanghai, so the full route is an aviation market. The value of the line lies in the intermediate pairs, where there are today no direct flights, and in tying provincial cities such as Vinh, Huế, Đà Nẵng, Quy Nhơn and Nha Trang into the two metropolitan economies. That is also where station-area land is cheapest and where the private bidders see development gains.

The airlines are watching. Vietjet and Vietnam Airlines carry the bulk of domestic traffic on the trunk route, and both have invested on the assumption that the Hanoi to Ho Chi Minh City corridor will remain one of the busiest air routes in the world. A railway that takes the middle-distance city pairs would trim their regional networks while leaving the trunk intact, a pattern seen in Spain and China.

Fares are undecided. VinSpeed floated pricing at 60 to 75 percent of airfares; the ministry’s studies assumed a lower figure to build ridership. The choice determines the financial model: fares that cover operating cost and some capital would require prices close to flying, while fares that fill trains would leave the state or the concession holder subsidising operations for decades, as most high-speed systems outside China, Japan and France do.

What does the railway mean for investors, contractors and provincial economies?

It means a decade of guaranteed demand for steel, cement, construction services and land around 23 stations, a re-rating of provincial cities on the route, and a set of contracts large enough to reshape the balance sheets of Vietnam’s biggest private groups. It also means fiscal exposure that will constrain other public spending, and a political test of whether private capital can build public infrastructure without capturing it.

For construction and materials, the opportunity is direct. Rebar, rails, cement, aggregates and prefabricated viaduct segments for 1,500 kilometres of mostly elevated track represent one of the largest single orders in Asian construction history. Vietnamese contractors that built the expressway programme will bid for civil works, and the industrial parks profiled in Industrial Parks Inc. along the route will market rail access to manufacturers.

For property, the effect is concentrated at stations. Whoever controls the land around Ngọc Hồi, Thủ Thiêm and the provincial stations holds the most valuable transit-oriented sites in the country, which is why the private bids made station land a condition and why provinces have begun revising zoning ahead of alignment decisions. Investors should expect station-area land prices to move on announcements rather than on construction, as they did around Long Thành, and developers such as Vinhomes are already positioning townships near future stations.

For the state, the railway is the largest test yet of a model in which private conglomerates take on national projects with public financing and policy protection. If VinSpeed or Thaco build it and it works, Vietnam will have created a new kind of public-private enterprise; if it runs late and over budget under either model, the fiscal consequences will shape the 2030s. Either way, the line will be the defining infrastructure story of the decade, and it should be read alongside the developer and steel stories in this hub rather than apart from them.

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