Ho Chi Minh City plans to prioritize mobilizing more than 39 billion USD to invest in 183 km of urban railway (metro) from domestic capital sources such as land auctions, bond issuance and the budget.
Ho Chi Minh City plans to prioritize mobilizing more than 39 billion USD to invest in 183 km of urban railway (metro) from domestic capital sources such as land auctions, bond issuance and the budget.
Priority investment with state capital
The Ho Chi Minh City Department of Transport has just issued Document No. 14229 to the City People's Committee to clarify the capital structure for investing in 183 km of urban railway and assess public debt when investing in urban railway lines.
According to the Department of Transport, to complete 183 km of urban railway in Ho Chi Minh City by 2035, more than 39 billion USD is needed. With such a large amount of capital, Ho Chi Minh City will mobilize maximum resources to invest according to the proposed plan.
When investing, the City determines and structures capital sources based on the principle that while the routes being invested in are funded by ODA loans, the remaining sections can be considered and studied for continued investment using ODA capital or state budget capital.
For the remaining routes, priority will be given to investment using state capital, mobilizing additional capital from other sources to gradually access technologies towards localizing the urban railway system, taking full initiative in implementing and accelerating project progress.
Therefore, according to calculations by departments and branches, the capital demand for investment in urban railway lines in Ho Chi Minh City in the period of 2026-2030 is 21.31 billion USD. Of which, the City budget and revenue from land auctions along stations (TOD) is 7.81 billion USD (accounting for 36.65%); issuance of local government bonds and other forms of domestic borrowing is 6.67 billion USD (accounting for 31.3%); Central support (expected) is 4.78 billion USD (accounting for 22.44%); BT capital is paid in installments is 2.04 billion USD (accounting for 9.58%).
By the 2031-2035 period, the City needs 17.26 billion USD for investment, of which, the City budget and revenue from TOD are 9.48 billion USD (accounting for 54.95%); Central support (expected) is 3.19 billion USD (accounting for 18.51%), BT capital is paid in installments of 4.58 billion USD (accounting for 26.54%).
Domestic capital mobilization is feasible.
Looking at the above capital structure, Associate Professor, Dr. Vu Anh Tuan, Director of the Vietnam-Germany Transport Research and Development Center, assessed that the solution of mobilizing capital from auctioning land exploitation according to the TOD model, issuing bonds such as urban bonds, local government bonds is completely feasible. "These capital sources can be completely used to develop urban railways, because Resolution 98/2023/QH15 has given Ho Chi Minh City a mechanism corridor, which can be completely implemented," Mr. Tuan analyzed.
Mr. Tuan believes that developing the TOD development model will have many advantages in the future, when it creates satellite cities, helps decompress urban space and population density for the central areas of the city, and reduces personal vehicles, traffic jams, pollution...
Regarding the land fund exploitation plan and TOD development, the Project has been approved by the City Party Committee and the City People's Committee and issued an implementation plan in 2 phases (2024 - 2025 and 2026-2028) in some land plots around metro line 1 and 2 stations and around Ring Road 3 intersection according to the specific mechanism of Resolution 98/NQ-QH15.
The capital that Ho Chi Minh City plans to mobilize from local government bonds is VND160,000 billion (VND10,000-40,000 billion/year) in the period of 2026-2030 to exclusively invest in urban railways, which is also completely feasible. Because according to calculations by departments and branches, the City's outstanding loans as of December 31, 2023 are VND26,729 billion. Therefore, in the case of borrowing local government bonds according to the Project's plan of VND 160,000 billion and the condition that the expected growth rate of state budget revenue reaches a growth rate equivalent to the City's GRDP growth target in the period of 2026 - 2030 (average of about 9.5 - 10%/year), the total outstanding loan balance of the City is still guaranteed not to exceed 120% of the City's budget revenue according to the decentralization prescribed in Resolution No. 98/2023/QH15.
Therefore, to ensure the completion of 183 km of urban railway by 2035, the Department of Transport has developed a detailed schedule for each phase. In particular, in the 2025-2027 phase, the project preparation work must be completed; in 2027-2028, the compensation, support, resettlement and site handover for construction must be completed; construction must start in 2027, no later than 2028; and 183 km must be completed by 2035.
To increase the feasibility of mobilizing domestic bond capital, the Department of Transport recommends that the City People's Committee direct departments and branches to conduct market surveys, research and apply attractive enough interest rates, and diversify bond issuance forms.
Source: https://baodautu.vn/tphcm-uu-tien-huy-dong-hon-39-ty-usd-lam-183-km-metro-d228876.html
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