Vietnam has rapidly developed its metro rail system in recent years, with several upcoming projects underway and others in the planning stages. Two major factors driving Vietnam’s metro rail development are the country’s growing population and its rapid urbanisation. As the population has increased, so has the demand for efficient and convenient public transportation. To address this demand, the government is investing heavily in urban rail systems.

In its National Strategy on Climate Change for the Period to 2050, the Government of Vietnam announced a 43.5 per cent emissions reduction target by 2030, achieving net zero by 2050. Vietnam has set an ambitious target for metro rail expansion. The government plans to continue investing heavily in metro rail systems as a key component of its strategy to expand public transportation infrastructure. These efforts align with broader urban planning objectives and reflect a strategic shift from the implementation of bus rapid transit (BRT) systems to the adoption of more extensive and integrated railway solutions. 

One of the targets is to have a total of 10 metro lines in operation by 2030 with a combined length of over 670 km. Additionally, the government plans to expand the existing metro systems in Ho Chi Minh City (HCMC) and Hanoi and to develop new systems in other major cities such as Danang and Haiphong. The aim is to provide efficient and convenient public transportation options to the growing urban population and to reduce reliance on private cars and fossil fuels.

Upcoming urban rail projects

Most of Vietnam’s upcoming urban rail projects will be concentrated in the main cities of Hanoi and HCMC. More than 500 km of urban rail lines are in various phases of development in the two cities and will require investments of more than USD40 billion by 2035. 

Hanoi’s expansion plans

The limitations of the existing BRT system in Hanoi have highlighted the need for a comprehensive urban railway network in the city. BRT lines were initially seen as a stepping stone towards a future railway network. However, with only one out of eight planned BRT lines operational, the strategy is being reconsidered. 

Hanoi has instead been proactive in revising its urban transport strategy. In early 2024, the Hanoi Municipal People’s Committee proposed adjustments to the city’s traffic and infrastructure blueprints. These include the development of four new railway lines, increasing the total to 14 lines.  Hanoi aims to have around 400 km of urban rail under operation by 2035. This expansion is expected to create a backbone for the city’s transportation network, connecting various modes of transport.

Hanoi’s long-term vision for transportation is outlined in its planning documents, which extend to 2065. The plan sets ambitious targets for increasing public transport usage. 

Figure 1 shows the short- and long-term strategies for increasing public transport usage in Hanoi. 

By 2025, the goal is for public transport to handle 27–31 per cent of travel demand, with buses serving 19 per cent and urban rail serving 4–7 per cent of the demand. These figures are projected to rise further by 2030, with public transport meeting 35–40 per cent of travel needs, buses handling 20 per cent, and urban railways accounting for to 10–14 per cent.

Projects under development

The development of an urban rail network in Hanoi will be executed in multiple phases. The initial phase, slated for full implementation by 2030, will see 96.8 km of new rail line developed at an investment of USD14.6 billion. 

The project’s second phase, slated for completion in 2035, will require an investment of USD22.5 billion to construct an additional 301 km of track, along with new stations and depots. By then, the network will be able to handle up to 11.8 million rides daily. The entire network will be completed in the final stage, slated for completion in 2045.

Table 1 lists some of the key upcoming rail projects in Hanoi. The remaining lines are in the initial stages of planning, and their length and alignment have yet to be finalised. 

This shift is essential for meeting Hanoi’s public transport goals and for supporting a proposed policy for the restriction of motorbikes. Currently, public transport usage in Hanoi stands at 19.5 per cent, far below the threshold required for effective motorbike restrictions. The city aims to increase this figure to at least 30 per cent by expanding the railway network.

Ho Chi Minh City’s urban rail plans

According to HCMC’s Urban Transport Master Plan (HUTMP), six mass rapid transit (MRT) lines and three monorail lines are proposed to be built in the city by 2040. Of these, one line is scheduled to commence operations in 2024. Most of the remaining lines are under various stages of planning, with only the first phase of Line 2 under construction.

Once completed, these six lines will add more than 149 km of MRT network in the city. 

Table 2 lists the planned urban rail projects in HCMC. 

In addition to the six new MRT lines, MAUR will also develop three monorail lines in HCMC. 

Table 3 provides details about these lines.

Challenges

Developing urban railway systems in Vietnam faces several challenges. Financial constraints, land acquisition issues, and technical difficulties are common obstacles. The high cost of construction and the need for significant upfront investment are major financial challenges. Hence, securing funding through government budgets, loans, and international assistance is critical.

Delays and cost overruns

Most ongoing urban rail projects have been hindered by a series of delays owing to cost overruns and delayed payments to contractors. As project costs rose due to changes in design, new investment estimates had to be prepared and submitted, and had to await approval from the National Assembly.

Since it was initially proposed, the total cost of the Nam Thang Long–Tran Hung Dao metro line in Hanoi has increased by more than 80 per cent due to multiple delays. Similarly, Hanoi Metro Line 3 has been delayed 11 times, resulting in a cost overrun of nearly 90 per cent from the initial estimate. Meanwhile, other ongoing projects have accumulated more than USD1 billion in cost overruns due to delays in approvals. 

HCMC’s Line 1, after multiple delays, was scheduled to start commercial operations in July 2024. It was postponed again in March 2024. 

Land acquisition

Land acquisition issues are one of the key reasons for the delayed progress of many projects. In Hanoi, these delays may result in fines amounting to USD249 million. In 2020, a contractor demanded USD19 million in compensation due to the delayed handover of land by more than 1.5 years.

Compensation rates have often been a point of contention, with many affected residents feeling that the compensation offered is insufficient. Currently, ​​compensation is not based on market pricing but is calculated by the state. This has led to prolonged negotiations and legal disputes. Effective compensation and resettlement policies are necessary to mitigate these issues.

Funding

Since 2020, the Government of Vietnam has failed to attract major international investors for ongoing urban rail development projects because of low efficiency and overlapping regulations. Moreover, due to poor project delivery, private players are not too keen to invest. 

Hanoi has been looking into alternative sources of funding to finance these projects, including auctioning parcels of lands in and around the project areas, issuing local bonds and project bonds, and deploying other legal forms of capital mobilisation beyond the public debt. Auctioning the right to develop transit-oriented development (TOD) projects in urban areas allows cities to retain land revenue that can be invested in the metro system. This approach provides a sustainable financial model by leveraging the increased land value generated by improved transit access.

Takeaway

Urban rail developments in Vietnam are a critical component of the country’s efforts to modernise its transport infrastructure and improve urban mobility. The shift from BRT to urban rail in Hanoi, coupled with the ongoing metro projects in Ho Chi Minh City, underscores a strategic commitment to sustainable and efficient public transport solutions. Despite various challenges, these initiatives hold the promise of transforming Vietnam’s urban landscape and providing lasting benefits to its citizens. As these projects progress, they will play a pivotal role in shaping the future of transportation in Vietnam.