“No Capital Transfer to Foreigners for Railway Project Investors”

On June 16th, authorized by the Prime Minister, Minister of Construction Tran Hong Minh presented the draft Law on Railways (amended).

According to Minister Minh, the draft law has added provisions encouraging organizations and individuals to invest in railway projects with non-state capital, in accordance with investment laws. The draft also includes credit incentives for organizations involved in railway business operations and preferential corporate income tax rates for enterprises investing in the development of the railway industry.

Regarding investment, for railway projects proposed by investors under the Public-Private Partnership model, the designated investor must demonstrate sufficient capacity in arranging owner’s equity, mobilizing loans, and other legitimate sources of capital. They must also prove experience or have a cooperation agreement with partners who have experience in implementing similar projects.

Before deciding to apply the method of designating an investor, the competent authority shall obtain written opinions from the Ministry of National Defense and the Ministry of Public Security regarding the requirements for ensuring national defense, security, and state secret protection.

Notably, the draft law stipulates that investors implementing railway projects are not allowed to transfer projects, capital, or assets formed after investment to foreign organizations or individuals, or organizations with foreign capital. The investor shall hand over all assets formed from the project to the State, free of charge, after the project’s operation period ends.

Independent and Transparent Monitoring

Reviewing the presentation, Chairman of the National Assembly’s Committee for Science, Technology, and Environment Le Quang Huy expressed agreement with the policy of needing specific mechanisms and policies to invest in Vietnam’s railway system. However, he suggested that the Government should refine these special mechanisms and policies to limit their scope and subjects of application.

Supporting the mechanism and policies for urban development around railways (TOD model) and land fund exploitation in the vicinity of stations, the Committee also proposed clarifying and studying the addition of regulations that clearly define the limits of local authority in adjusting planning and provide for independent and transparent monitoring mechanisms when adjusting planning.

Furthermore, the Committee agreed with the provisions granting capital autonomy to the subjects specified in the draft law, allowing the issuance of government bonds, mobilizing ODA, and using increased revenue and budget savings to supplement capital if the annual budget cannot meet the progress.