Vietnam may pick Sumitomo, Itochu for bullet train

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Vietnam, planning to build Southeast Asia’s first bullet train, may choose a group of Sumitomo Corp. and Mitsubishi Heavy Industries Ltd., or Itochu Corp. and Kawasaki Heavy Industries Ltd. for the US$56 billion project.

The country is favoring Japanese technology for the 1,555 kilometer (966 mile) Hanoi-to-Ho Chi Minh City line as Vietnam “is geographically similar to Japan with not enough land and too many people, and a long coastal line,” Nguyen Huu Bang, chairman and chief executive officer of Vietnam Railways Corp., said in an interview Monday.

Vietnam plans to name the consortium for the line within about a year as it overhauls French colonial-era railways that are struggling to keep up with an economy that grew an average of 7.3 percent a year over the past decade.

The National Assembly is scheduled to approve preliminary proposals for the line in May, Hanoi-based Bang, 57, said. Vietnam will then call for tenders, and overseas investors will be chosen about nine months later, he said.

Vietnam Railways is likely to pick a consortium with Sumitomo and Mitsubishi Heavy, both based in Tokyo, or Osaka- and Kobe-based Itochu and Kawasaki Heavy, because they currently run lines in Japan that are similar to what would be built in Vietnam, Bang said.

The Nomura Research Institute has helped do some initial studies into the project, and Japan’s Ministry of Economy, Trade and Industry will fund a feasibility study that will start in June, Vietnam Railways said.

Cheaper tickets

“If we want to develop our country, first we have to develop the infrastructure,” Bang said. “The railway will play a very important role in connecting the north and south of Vietnam.”

Work on the line is due to start in 2012, with services beginning on the first section by 2020, he said. The high-speed train will probably be financed by a mix of overseas development aid, state funding and public-private partnerships, Bang said.

A ticket for the full Hanoi-to-Ho Chi Minh City high-speed rail journey may cost about 75 percent of the average current plane fare, Bang said.

China is also working on building high-speed trains to support its surging economy. The country in December opened a high-speed rail link of more than 1,000 kilometers between the cities of Guangzhou and Wuhan.

China, Laos, Cambodia links

Vietnam Railways also plans to link its existing network, which was originally built by the French between 1881 and 1936, to China, Cambodia and Laos, said Bang, who joined Vietnam Railways when the war ended in 1975. He became CEO in 2003 after studying in Germany in the 1980s and 1990s.

The number of people travelling by train in Vietnam fell 2.6 percent to about 11 million last year, according to the Hanoi-based General Statistics Office, while air passengers rose 4.2 percent to 10.97 million.

Itochu has separately won a contract to work on an initial study for a 45-kilometer double-track rail link from the center of Hanoi to the capital’s Noi Bai airport, Bang said. The company will likely finish the report for the railway, which may cost about $700 million, by the end of this month, he said.

Source: Bloomberg

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