Gov't in hot seat on north-south railroad

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Lawmakers seethe at "˜adamant' push for rejected project

A woman carries her bicycle over railway lines on the outskirts of Hanoi on October 27. Many legislators have demanded a clear explanation from the government for persisting with a major railway project that had been rejected by the National Assembly as economically unsound and that the nation can ill afford.

Vietnamese legislators are demanding the government account for its continued interest in the transnational express railway project that was emphatically rejected five months ago by the National Assembly.

Prime Minister Nguyen Tan Dung and his cabinet members will have a chance to defend their rationale when they take the floor at a three-day questioning set to open on November 22.

"I hope that the Prime Minister will make clear why the government is determined to push for the [express railway] project," said lawmaker Nguyen Minh Thuyet, an outspoken member of the National Assembly, Vietnam's legislature.

Last June, after a last-ditch effort, the National Assembly overwhelmingly voted to scrap the government proposal of a US$56 billion transnational express railway from Hanoi to Ho Chi Minh City, saying it was economically unsound. The "surprise rejection" was hailed as an indicator that the Vietnamese legislature was steering its priorities more towards the needs of the poor.

However, just a month later, the government gave the Transport Ministry and the Vietnam Railways Corporation the go ahead to get technical assistance and grants from Japan to develop the first two sections of the railway, instead of the whole line as originally proposed.

In early September, the Transport Ministry asked the Japan International Cooperation Agency (JICA) to start conducting feasibility studies for those two portions [with one connecting Hanoi and Vinh Town in the north and the other linking Ho Chi Minh City and the coastal resort town of Nha Trang] and another for a rail line between Hanoi and Noi Bai International Airport.

On the sidelines of the ongoing biannual National Assembly session this week, Transport Minister Ho Nghia Dung confirmed that his ministry was still planning to go ahead with the project.

Risky and futile

But many legislators and experts have repeatedly said that investing in the railway project would be a "risky" venture.


Prime Minister Nguyen Tan Dung and four ministers will field questions from legislators at a National Assembly (NA) session next week.

On Monday (November 15), a government spokesperson announced that the Prime Minister would take the floor at the session along with the ministers of Industry and Trade, Health, Finance and Transport.

Last week, Chairman of the NA Office Tran Dinh Dan said that legislators requested the hearing after gathering 185 questions from legislators.

These include 19 questions for Prime Minister Dung, focusing on a bauxite mining project and the controversial restructuring of the Vietnam Shipbuilding Industry Group (Vinashin).

As of June, Vinashin had accumulated debts totaling VND86 trillion (US$4.4 billion), leading to an investigation, arrests of seven Vinashin execs including its chairman, and the initiation of a large-scale restructuring effort.

Meanwhile, the two bauxite plants under construction in the Central Highlands have drawn wide criticism from former senior officials and scholars who have expressed doubts that the mines will turn a profit.

Critics are also concerned about the environmental risks posed by the projects.

"A high-speed rail system would be futile for Vietnam at this stage since we have many other priorities in agriculture, education, electricity and other transport projects," said Thuyet.

He and several other lawmakers have said that a far more sensible option would be to upgrade the existing rail route by making it a broad gauge one, expanding the track width from 1 meter to 1.45 meters.

It is estimated that around 70 percent of the Vietnamese population still depend on agriculture for their livelihood. The nation's per capita income is about $1,000 and the minimum monthly government salary would be VND830,000 ($38) starting next year.

"For the next few years [Vietnam] needs to prioritize macroeconomic stability, to stabilize the exchange rate, bring the inflation rate down, slow down the increase in public and overseas debt and narrow the trade deficit," said Jonathan Pincus, a HCMC-based economist with the Vietnam Program at the Harvard Kennedy School. "Policies need to be assessed with respect to these important objectives."

Vietnam's public debt is on the rise, and set to hit 56.7 percent of the gross domestic product this year, according to the government. It also estimates the country's trade deficit this year at US$12 billion, revising down an earlier estimate of $13.5 billion. The government has also reaffirmed that it will take strong measures to keep inflation below 10 percent this year.

"Given that the high-speed rail would widen the fiscal and trade deficits and increase public and overseas debt, I think this is a risky [investment]," Pincus said.

He added that the more economical option would be to upgrade Highway 1 to a limited access expressway, which would reduce north south travel times and lower transport and freight costs. "It would also help the poor, who are more likely to travel on inexpensive buses than high-speed trains."

"At the very least, it deserves in-depth study and analysis," he said.

Lawmaker Thuyet said he and his counterparts were puzzled as the government had started to breathe life into parts of the express railway project just one month after it was rejected by the National Assembly.

"I have no idea why the government is that adamant," Thuyet said.

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