How large a package can a Vietnamese enterprise bid for a high-speed railway project?

Many domestic construction enterprises have proposed the scale of the bidding package that they can undertake if they are allowed to participate in the construction of the North-South high-speed railway project.

Big room but many barriers

Today (March 21), the Vietnam Association of Construction Contractors (VACC) organized a workshop for domestic contractors to promote their internal resources to participate in the construction of high-speed railway (HSR) projects on the North-South axis.

Leaders of Railway Project Management Board informed at the workshop.

Mr. Chu Van Tuan, Deputy Director of the Railway Project Management Board (Ministry of Construction) said that currently, besides the 7 existing railway lines, there are 2 railway projects that have been approved by the National Assembly for investment policy, which are the high-speed railway project on the North-South axis and the Lao Cai - Hanoi - Hai Phong railway project.

Of which, the Dong Nai Railway Project was approved for investment in November 2024 with a length of 1,541km through 20 provinces and cities. The total preliminary investment of the project is more than 67 billion USD, using the State budget and other legal capital sources.

In response to the Government's request to start the project at the end of 2027 and basically complete it by 2035, according to the established roadmap, the implementation of the feasibility study report will be carried out from 2025.

Currently, the Government is directing the Ministry of Construction to select project management consultants and conduct international bidding to select foreign consultants from March to May 2025. From September 2025 to April 2027, select consultants to design the feasibility study report and submit for approval the pre-feasibility study report. In December 2027, it is expected to organize the selection of construction contractors and start the project.

Forecasts show that investment in developing railway infrastructure until 2035, with a vision to 2050 (including national and urban railways) will bring about 76 billion USD to the construction market and 34 billion USD to the equipment market. The construction market from high-speed railway projects alone will be about 33 billion USD.

"According to the assessment, for construction items, domestic construction enterprises can basically master 90 - 95%. Some items with special technical requirements can be transferred and assigned to Vietnamese contractors to undertake," Mr. Tuan informed.

In order to ensure the progress of project implementation, 19 specific mechanisms and policies have been approved by the National Assembly. However, the Railway Project Management Board also pointed out a number of barriers for Vietnamese construction enterprises in the project.

Specifically: The project has complex techniques and technology, applied for the first time in Vietnam, which is a big challenge for domestic contractors (design and construction) who do not have experience participating in projects of similar nature; The total investment is large, the division of large value packages, contractors will find it difficult to ensure criteria on financial capacity and similar projects; There is no special credit package for loans for project construction packages with preferential interest rates...

Perspective of the North-South high-speed railway project (Photo: AI).

How much is enough to divide the bidding package?

According to VACC Chairman Nguyen Quoc Hiep, among our current construction contractors, the number of enterprises with capital of over 1,000 billion VND can be counted on one hand.

Instead of international bidding, the authorities can consider appointing contractors and reducing the construction value by 5% as they did in the North-South Eastern Expressway project in the 2021-2025 period. "However, what is the appropriate size of the bidding package for Vietnamese contractors is something that needs to be discussed?", Mr. Hiep suggested.

Going straight to the point, Mr. Pham Van Khoi, Chairman of the Board of Directors of Phuong Thanh Transport Investment and Construction Joint Stock Company, said that based on the actual capacity of constructing key expressway projects, many large contractors in Vietnam are currently capable of undertaking bid packages of about 1 billion USD.

"Doing quick math, in the North-South Expressway project phase 2, a 5,000 billion VND package only takes about 2 years.

The DSTDC project will take about 5-7 years, and the value of each package that can be implemented is 20,000 billion VND if the site and materials are fully met. If the contractors form a joint venture or association, the division of the package can achieve a higher value," Mr. Khoi analyzed.

Promoting the motto: Projects using domestic capital sources should be prioritized for domestic contractors, according to Mr. Khoi, designated bidding is a mechanism that needs to be considered.

"The division of the bidding package should not be calculated from the foundation to the rails, but should consider dividing the infrastructure separately, the rails and equipment are a separate part. With that plan, the construction items applying the designated bidding are similar to the road project, similar criteria can be considered, optimizing time, speeding up the project progress", the leader of Phuong Thanh Company expressed his opinion.

Expecting that the State will give priority to enterprises with proven management and construction organization capacity through completed large road and tunnel projects to participate in the "super project" of the North-South Expressway, Mr. Nguyen Quang Dung, Deputy General Director of Deo Ca Group, also supports the bidding mechanism in the North-South Expressway project.

"The competent authority should also consider removing the similar construction criteria because this is a criterion that is very difficult for domestic contractors to meet for projects invested in Vietnam for the first time. Instead, allow Vietnamese contractors to use special subcontractors.

The discount rate will depend on the size of the bid package and the technology applied for accurate calculation," Mr. Dung suggested.

Regarding implementation, the leaders of Deo Ca Group want to split into two components. The construction component (from the rails down: bridges, roads, tunnels) will be assigned to domestic enterprises.

Components from the rails up (locomotives, carriages, etc.) are assigned to state-owned enterprises, using special subcontractors to have the opportunity to access, transfer, and master technology.

Discussing the participation in the DSTDC project, we must also consider the fact that large contractors are the leading birds of a group of smaller contractors, not just the fact that large contractors are working together. Based on the recommendations of the contractors, VACC will study and propose that the Government consider and appoint Vietnamese transport construction enterprises to execute the project with some specific mechanisms such as: The financial capacity of enterprises is not divided by ratio but is combined; Experience capacity is calculated as construction project experience...

Mr. Nguyen Quoc Hiep, Chairman of VACC

Research on beneficial mechanisms for domestic contractors

Speaking at the workshop, Mr. Pham Thy Hung, Deputy Director of the Bidding Management Department (Ministry of Finance), said that in the process of participating in amending the Bidding Law, there were contents mentioned in the amended Bidding Law that were similar to the proposal such as: assessing capacity and experience is moving towards reducing criteria (capacity, experience, finance) due to the fact that recently, many large and reputable enterprises have been trusted by the Government to implement large projects.

"The question that many people are interested in is: domestic or international bidding? According to the current Law on Bidding, if domestic contractors cannot do it, then international bidding will be organized. In the case of international bidding, international contractors must form a joint venture with domestic contractors to carry out the project. However, receiving core technology transfer when forming a joint venture is also considered relatively difficult.

In the process of researching and proposing regulations, we have the following viewpoint: Prioritize domestic bidding, allow domestic contractors to form joint ventures with foreign contractors, and have technology transfer requirements in the contract," Mr. Hung shared.

Discussing opinions on the issue of designated bidding or contract awarding? According to Mr. Hung, the Bidding Law does not have regulations on contract awarding, which falls into one of two current forms: designated bidding (with specific regulations), and contractor selection in special cases when other forms cannot be applied. "With the current system of regulations, we have a basis for selecting contractors in special cases," Mr. Hung commented.

Rank and select businesses to prepare early and remotely

Assessing the appropriate scale of the bidding package of the DSTDC project at about 1 billion USD, through VACC, Colonel Nguyen Tuan Anh, Deputy General Director of Truong Son Construction Corporation, also proposed that competent authorities should soon have a mechanism to select domestic contractors so that the preparation work can be deployed soon.

"Through the domestic projects that the units have implemented, the professional agency can choose the Top 10, Top 20 or a certain number of enterprises to have the opportunity to participate in the project to be proactive in preparing resources, training human resources, and investing in machinery," said Colonel Nguyen Tuan Anh.

Supporting the above opinion, Mr. Le Van Duong, Deputy Director of the State Appraisal Department of Construction Quality (Ministry of Construction) encouraged the Association of Construction Contractors to coordinate with relevant agencies to propose a mechanism for ordering large, capable contractors to have plans, invite experts, and have plans to mobilize equipment. This is also a solution that has been implemented by some countries such as: Korea, France, China.

Source: https://www.baogiaothong.vn/nha-thau-viet-tiet-lo-kha-nang-dam-duong-cong-viec-o-du-an-duong-sat-toc-do-cao-192250321160818095.htm