Vietnam's railway sector can expect a major improvement when large private investment begins pouring into projects.
Vietnam National Railway Corporation (VRC) and Indo Trans Logistics (ITL) last month signed a contract on the construction of a railway logistic centre and storage areas for domestic containers and export-import containers at Yen Vien railway station in Hanoi.
Though this was only a small project, estimated at VND90 billion for 2015-2018, the Deputy Minister of Transport, Nguyen Ngoc Dong, said that it was a major turning point in the local raiway sector for mobilizing private capital investment.
ITL gets control of the Nam Yen Vien storage facility for 23 years, and the project is expected to help develop port logistics activities at many seaports and rivers in the north, including Hai Phong, Quang Ninh and Hai Duong.
The chairman of VRC, Tran Ngoc Thanh, said that besides the Yen Vien Project, VRC is also calling for private investment for 17 other railway projects, including franchising the Lao Cai-Hanoi-Hai Phong route, upgrading and building new storage facilities for six stations -- Song Than, Bim Son, Giap Bat, Yen Vien, Lao Cai, and Dong Dang -- and building a new Hanoi-HCM City railway.
Franchising is under the Transport Ministry and aims to improving services at railway stations, using a model that has yielded positive results at local airports and seaports.
Vingroup has proposed buying Hanoi, HCM City and Danang railway stations, and investing in new railway stations in those cities to ease overcrowding. Danang station has attracted interest from Vingroup, Nam Viet A Joint Stock Company, Duc Binh- Thanh Long- Cienco 1, T&T Group.
"We are now open to private investors," Thanh said. "We will even welcome those who want to invest in a whole new train and we'll provide supporting infrastructure and other services."
Several companies in VRC wants to link up with private enterprises to improve their services. Saigon Railway Passenger Transport Company has opened a luxury express train route linking Hanoi and Thanh Hoa. Hanoi Railway Passenger Transport Company launched a customer service hotline to provide better care for passengers and sell tour packages.
Truong Van Phuoc, vice chairman of the National Financial Supervisory Commission, said franchising was a good way to develop infrastructure for the transport sector when the state budget is limited, but warned, "We should be careful to ensure fair competition among different transport companies and prevent a monopoly in service prices."