Vietnam is touted as one of the most promising economies in the Southeast Asian region. However, rapid growth in population has resulted in unprecedented stress on the country’s transportation network. As a result, many of the country’s expressways, highways, ports and airports are congested and have been facing capacity constraints. In a bid to lessen the widening infrastructure gap and improve regional connectivity, the Socialist Government of the People’s Republic of Vietnam has come up with a number of projects under its Vision 2030. The socio-economic development plans (SEDPs) outline a series of five-year plans. The third plan – Five-Year National SEDP, 2016-20 – has prioritised private sector development, service sector development, integrating urban infrastructure, increasing public sector efficiency, etc.

The transportation-specific development plans (that cover the land, water and air transport infrastructure segments) have been consolidated under the Transport Development Strategy 2020 (Transport Strategy 2020) to align with the country’s broader vision toward 2030. The plan envisions 6.24 billion passenger movements annually by 2020, of which 86-90 per cent will be by road, 1-2 per cent by rail, 4.5-7.5 per cent by inland waterways and 1-1.7 per cent by air.

Roads accounts for a dominant share of freight transport in Vietnam, 77 per cent of all freight transport being by road; road transport also accounted for 94 per cent of all passengers transported in 2016. Amongst the Association of Southeast Asian Nations (ASEAN) countries, Vietnam has the highest number of road and bridge projects in the pipeline. As per ASEAN Statistics 2018, the total road network in Vietnam stood at 370,664 km, of which 262,857 km is paved.

Given the predominance of the road sector in passenger and freight movement, the Vietnamese government has plans to invest $134 billion during 2016-40 in developing the sector. As part of its Transport Strategy 2020, the government has a master plan to develop the North-South expressway – one of the most important road networks in the country. The master plan includes two north-south expressways – one in the east and the other in the west.

Eastern North-South expressway project: Scope and progress so far

Expected to entail an investment of $5.06 billion (118 trillion dong), the eastern North-South expressway project is a 654 km long project. The expressway will run through 13 provinces and cities from the northern province of Nam Vinh to the southern province of Vinh Long. It is being divided into 11 sections, of which three sections will be implemented on an engineering, procurement and construction (EPC) basis and the remaining eight sections will be implemented on a public-private partnership (PPP) basis through build-transfer-operate (BTO) contracts. The scope of work for the EPC contractors will include design, procurement, construction and handover of the project. On the other hand, under the BTO contracts, the investor will be given the right to operate the project for a specified period of time after it is transferred to the government.

The three sections which will be implemented through government funds are Cao Bo-Mai Son (15 km), Cam Lo-Son La (98 km) and My Thuan 2 Bridge (6.6 km). They are expected to entail an investment of $614 million (14.28 trillion dong). The remaining eight, which will be implemented on a PPP basis, are the Mai Son-National Highway (NH)-45, NH-45-Nghi Son, Nghi Son-Dien Chau, Dien Chau-Bai Vot, Nha Trang-Cam Lam, Cam Lam-Vinh Hao, Vinh Hao-Phan Thiet and Phan Thiet-Dau Giay sections.

Of the three public-funded sections, construction work on the Cao Bo-Mai Son and Cam Lo-Son La sections is expected to begin in 2019 itself. The Cao Bo-Mai Son expressway will connect the Cau Gie-Ninh Binh expressway with NH-1. It is planned to be developed as a two-lane road at a cost of $227 million (5.29 trillion dong). The 98 km long Cam Lo-Son La expressway will connect Ho Chi Minh highway with the under-construction La Son-Tuy Loan expressway and the Da Nang-Quang Ngai expressway. It will be developed with a budget of $330.28 million (7.7 trillion dong). Construction work on the third public-funded section, the 6.6 km long My Thuan 2 Bridge, which will cross the Tien river to connect the southern provinces of Tien Giang and Vinh Long, is expected to begin by the first quarter of 2020.

With regard to the PPP sections, international bids for the eight sections were first invited in May 2019. Following this, the Ministry of Transport (MoT) organised a pre-bid meeting for selected contractors for seven out of the eight sections. A total of 51 submissions were received from the domestic and foreign investors in the pre-selection round, of which 36 were from South Korea and China, and two from France. The key companies which submitted bids for the project include China Harbour Engineering Company Limited (Nghi Son-Dien Chau and Dien Chau-Bai Vot highways), Daewoo Engineering & Construction Company Limited, Lotte Engineering and Construction Company Limited, Hyundai Engineering and Construction Company Limited, China Railway Construction Corporation Limited and the China Bridge and Road Group. According to the project plan, after the pre-qualification results, the bidding process will start in October 2019, with bid evaluation; the results are scheduled to be declared in March 2020, and negotiations and the signing of contracts are slated for April 2020. Meanwhile, Deloitte Touche Tohmatsu Limited and E&Y were appointed as consultants for reviewing the financial structure, and drafting the bidding documents and contract forms for the project.

A number of foreign investors including those from the European Union, Japan, the US and South Korea have expressed their willingness to fund the project. The World Bank is also willing to provide technical support for the project. According to reports, the World Bank will develop the general design, and the construction and financing plan for the project. Besides, the China Pacific Construction Group has evinced interest in investing in the PPP section of the project.

As of June 2019, the MoT has approved investment plans for all the 11 sections and is working on the technical designs and site clearances for the projects. The process is expected to be completed in 2019 itself. The Vietnamese government intends to begin construction work on the project in April 2020 and complete it by 2021.

The way forward

Rapidly increasing trade, economic and population growth have made it critical for Vietnam to upgrade its transportation sector. Although some transportation projects have faced a funding gap which could hamper their implementation, recent reforms in the PPP framework offer a bright future for the transportation sector in the country.

Being the dominant mode for passenger and freight movement, the Vietnamese government has laid strong emphasis on the development of the country’s road network. Although PPP investment in the road sector remains limited at present, it is expected to play a significant role in the times to come, thereby ensuring long-term growth and presenting significant opportunities for both the domestic and global private players.