World Bank Will Not Fund Vietnam $56B Railway Project: Martin Rama

The World Bank (WB) will not participate in Vietnam’s north-south express railway project that is estimated to cost $55.8 billion, local newswire VnExpress reported June 3, citing the Hanoi-based Chief Economist Martin Rama of the WB.  Vietnam should focus on the growth of GDP and inflow of cash in coming years and lending policies of foreign sponsors while considering such mega project, Martin Rama said at a conference ahead of the mid-term Consultative Group meeting slated for Jun 9-10. The chief economist called for a serious consideration from Vietnamese government to help the country avoid an enormous debt burden for the next generations, reiterating that the country’s total debts soared to 47.5% of GDP at end-2009.
He noted that ODA and preferential policies on lending rate will no longer be like before when Vietnam becomes a middle-income country, warning of a possible interruption for the project as the Southeast Asian country currently has much reliance on foreign debts.
Regarding the economic impacts of the project which would be financed by Japan and the ADB, Martin Rama said it is very hard to calculate.
Express railway cannot completely settle down traffic jams in populous cities like Hanoi and HCM City, he said, adding that Vietnam should invest in other infrastructure projects instead of high-speed railway at the moment. The National Assembly’s Economic Committee has estimated that it would take at least 45 years to get back the investment in the railway, as against ten years for what it called an “effective” project. Earlier, Japanese Ambassador to Vietnam Mitsuo Sakaba said only a small number of passengers are expected to choose the high-speed railway for short travels, and Vietnam can only benefit from the project from 2035 when urban areas along the route are developed.