High-Speed North-South Rail Project: Why is VinSpeed Willing to Take a Loss?

In a response to the press, a representative from VinSpeed candidly acknowledged that this project is a contribution to the country’s development and is not merely profit-driven.

Beyond Profit:

During a recent meeting with various ministries, the Prime Minister directed the units to study VinSpeed’s proposal to build a high-speed railway. Responding to the Prime Minister’s directive, the Government Office announced that the ministries and agencies fundamentally supported and welcomed VinSpeed’s proposal to invest in the North-South high-speed railway project.

Echoing this sentiment, many experts expressed their encouragement at a private enterprise taking the initiative to invest in one of Vietnam’s most challenging projects.

” The enterprise’s proposal is highly commendable as they are willing to shoulder significant national responsibilities and even accept the associated risks ,” said Dr. Le Xuan Nghia, former Vice Chairman of the National Financial Supervisory Commission.

Prof. Dr. Tran Dinh Thien emphasized his belief in the potential of Vietnamese private enterprises with sufficient strength and ambition to not only accelerate infrastructure projects but also contribute to enhancing the country’s overall capacity.

However, both government agencies and experts expressed concerns about the project’s prolonged losses and uncertain profitability. Worldwide, high-speed railways have served as a pivotal catalyst for development but are also known as a “guaranteed loss-making venture,” with 98% of projects incurring high and prolonged losses even after decades of operation. This has been evident in countries like South Korea, China, Japan, and several European nations.

Consequently, according to the Government’s resolution, this project must commence construction before December 2026. However, challenges arise in determining the enterprise that will take charge of investment, operation, and management. In this context, having a bold enterprise like VinSpeed proposing to invest in this project is a significant contribution, as stated by Dr. Le Xuan Nghia.

VinSpeed itself does not deny this reality. In an interview, Ms. Dao Thuy Van, Deputy General Director of VinSpeed High-Speed Railway Investment and Development Joint Stock Company, shared: ” We recognize this as a contributory project, driven by our aspiration to contribute to the country’s development rather than solely focusing on profits .”

Will Vingroup Achieve Another Milestone?

While welcoming the proposal, some have expressed concerns about whether a newly established enterprise like VinSpeed can undertake such a monumental task and complete it within five years—half the initially projected timeframe—for a large-scale national project like the North-South high-speed railway.

Addressing this concern, Dr. Le Xuan Nghia expressed his confidence in VinSpeed’s capabilities. He highlighted that while VinSpeed is a new name, it is backed by billionaire Pham Nhat Vuong and Vietnam’s most extensive multi-sector ecosystem.

The expert particularly emphasized the proven execution capabilities of enterprises under Mr. Pham Nhat Vuong’s leadership, evident from various large-scale infrastructure projects, including the VinFast automobile factory built in 21 months, the ahead-of-schedule completion of the Belt Road 2, and the construction of a national-scale exhibition center within just ten months.

” Before VinFast, few believed that Vietnamese could manufacture automobiles, but now they are the top-selling brand in the market with a current localization rate of nearly 70%. I believe VinSpeed carries this ‘gene of miracles’ ,” Dr. Le Xuan Nghia illustrated.

Sharing a similar viewpoint, Lawyer Truong Thanh Duc, Director of ANVI Law Firm and Arbitrator at the Vietnam International Arbitration Center (VIAC), emphasized that engaging a domestic private enterprise to build the high-speed railway aims to expedite the process, enhance efficiency, and bring more benefits to the country, rather than loosening control or evading responsibility.

” The state can better focus its resources on establishing mechanisms, setting conditions, and conducting supervision and inspection to ensure that the project aligns with the goals and benefits the people and society, instead of expending effort on direct investment and business activities ,” stated Lawyer Truong Thanh Duc.