economics

June 27, 2010

Vietnam assembly derails high-speed rail link By Matt Steinglass in Hanoi

Filed under: Uncategorized — ktetaichinh @ 5:59 pm
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Published: June 21 2010 22:54 | Last updated: June 21 2010 22:54

Vietnam’s usually docile national assembly has mounted a rare display of independence by voting down a controversial $56bn high-speed rail project linking the capital, Hanoi, with Ho Chi Minh City in the country’s south.

Nguyen Sinh Hung, the deputy prime minister, and Ho Nghia Dung, the transportation minister, had staked their prestige on the project, which was scheduled for completion with Japanese aid by 2035

The plan was derailed when only 209 of the 493 deputies voted for the project in a ballot that required majority support. Vietnamese law mandates that all projects with budgets of more than $1.9bn (€1.5bn, £1.3bn) get assembly approval.

Nguyen Minh Thuyet, one of the deputies most critical of the project, said the vote was a watershed for the legislature. “It shows the assembly has become more and more independent, and more serious in its work.”

But analysts cautioned that the rejection was not necessarily a sign of a permanent strengthening of democratic governance or separation of powers in the Communist party-ruled country.

“Certain ministers will lose prestige, but not the government,” said Nguyen Tran Bat, chairman of the Investconsult Group in Hanoi. “Ministers will need to prepare projects more carefully before submitting them to the assembly.”

Opponents were critical of the project’s potential to raise the national debt, as well as the sketchy projections for usage. The proposed 1,600km trajectory was also much longer than the 800km limit at which transit analysts say high-speed rail was competitive with air travel.

In the months leading up to the rejection, Japanese officials recommended launching the rail line with shorter links.

The World Bank and Asian Development Bank had also been reluctant to fund the project.

Le Dang Doanh, a senior government economist who opposed the rail link, said the project had not been cancelled and could be re-submitted to the assembly at a later date.

The assembly is due to meet again this year. The trains were to have been built by one of two Japanese consortiums, either Sumitomo Corp and Mitsubishi Heavy Industries, or Itochu Corp and Kawasaki Heavy Industries.

Mr Thuyet said the rejection would have the most serious consequences for Mr Dung, the transportation minister. After the plan’s failure on Saturday, Mr Dung was criticised for saying he was “not sad” to see it voted down.

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