Vietnam rail debt to China comes due, but trains don’t run

Debt owed by Vietnam to China for construction of a rail line in the capital Hanoi is now due for repayment, but the project remains behind schedule and trains are still unable to run, government sources say.

Work began in October 2011 on the Cat Linh-Ha Dong urban railway and trains were projected to begin running in 2015. But after ten years of construction, the project—which covers a 13.5 kilometer line and 12 elevated stations—is not ready to serve passengers, and investment costs have soared to U.S. $868 million from the initial $553 million.

Vietnam has borrowed $670 million of this total from China in three separate loans, and payment on the principal of these loans is now due, sources say.

Much remains unclear about the project’s delays and overruns in cost, former Vice Minister of Resources and Environment Dang Hung Vo told RFA on Oct. 21.

“Yes, I think there are still many things about this project that are not transparent,” Vo said. “This is a question that has been raised by many Vietnamese, as the railway line stretches only a little more than 10 kilometers, while its current total cost has more than doubled from its projected cost.”

“Moreover, Vietnam now has to pay its principal debts, though the project keeps failing to come into commercial operation to meet Hanoi residents’ transport demands,” he said.

In early June, French joint venture consultancy Apave-Certifer-Tricc (ATC) released a list of safety risks related to the Cat Linh-Ha Dong railway project, including failure to ensure the safety of the electric traction and brake systems.

Eight out of ten emergency procedures had failed on the line’s test run, the French firm said.

Photo: AFP

An urgent review of the project should now be held, with evidence presented to Vietnam’s National Assembly, to identify where mistakes were made and who was responsible for them, including any Vietnamese agencies that may have been involved, Vo said.

“Why were we so imprudent? Why did we allow so many severe consequences to occur?” Vo asked, adding that Vietnam in its handling of the project’s financing and management appeared to have fallen into a debt trap.

“I think the biggest consequence is the loss of Vietnamese people’s trust,” he added. 

Observers in Vietnam have grown increasingly wary of Chinese President Xi Jinping’s sweeping Belt and Road Initiative (BRI), which China says is aimed at strengthening infrastructure, trade, and investment links between China and 154 countries and international organizations at an estimated cost of around U.S. $1 trillion.

Citizens and NGOs in Vietnam’s neighbors Laos and Cambodia have also criticized the build-up of debt to and dependence on China for dams and other big-ticket infrastructure projects.

Critics say China is using investment to push a diplomatic and political agenda, and that nations involved in the initiative will see their sovereignty undermined if they fall into debt traps that leave them beholden to Beijing because they are unable to meet regular payments on loans and default.

Reported by RFA’s Vietnamese Service. Translated by Anna Vu. Written in English by Richard Finney.



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