Vietnam's Bullet Train Dream

The idea of having a super-fast train that would reducing travel time between Hanoi and Ho Chi

Minh City from 30 hours to six has inspired Prime Minister Nguyen Tan Dung and his lieutenant, Minister for Transport Ho Nghia Dung, to push through an agreement with the Japanese even as intense debate was still going ahead in the National Assembly.

The government last August granted basic approval for the state-owned Vietnam Railways Corp. to use technology supplied by the famed Shinkansen Company for a US$56 billion, 1,560 km rail link across the S-shaped country.

The bullet train debate dominated the agenda in the National Assembly in May this year, but with little progress. Despite strong opposition, both the Vietnamese public and the National Assembly were startled by news reports from Japan that a deal had already been reached between the Nguyen Tan Dung government and Shinkansen, under which the Japanese company would sell the technology and build the bullet train, making the debate pointless in the face of a fait accompli.

Vietnam observers now believe the bullet train proposal is going down the same track as legislation last year to allow the development of vast bauxite mining – and potentially polluting -- operations in the Central Highlands despite widespread public protest including even an open letter from Vietnam War hero Vo Nguyen Giap to wait until the project could be studied. All but a handful of National Assembly deputies were pressed into approving the bauxite exploration because "it has been instructed by the Party." In this light, the bullet train is expected to go ahead, no matter what.

But the obvious problem is that such a project would squeeze tightly an economy that has just come out of poverty, with annual per capita income at around US$800. Critics have calculated a massive volume of foreign debt that Vietnamese future generations would have to repay should it go ahead. The US$56 billion alone would represent more than half of Vietnam's total gross domestic product, forecast at US$97 billion in 2010, with total costs potentially climbing to over $100 billion by the time it is completed, analysts say, and raises questions whether the funds could be used to develop less expensive and more necessary infrastructure such as roads or conventional rail to replace the current system, which dates back to the French colonial period.

Japanese officials, obviously anxious to sell such an expensive project, have said Vietnam's total public debt is far below Japan's and that the country can afford it. But Japan is the second most heavily indebted country in the world as a percentage of gross domestic product next to Zimbabwe, which is a basket case from years of economic mismanagement

Vietnam, with nearly 90 million people, has spent nearly 30 years recovering from a savage war exacerbated by the loss of financial support with the collapse of the Soviet Union and its disastrous flirtation with a command economy. The labor force is growing by more than a million new faces a year although the export-led economy has averaged 7 percent annual growth for a decade -- until the onset of the global financial crisis cut exports by nearly 10 percent annually. While domestic investment has been healthy at 16 percent, foreign direct investment nosedived by 70 percent in 2009.

Under those circumstances, the train, said a Vietnamese scientist, "is ridiculously extravagant."

There are also questions over its utility. The Shinkansen system is designed only to transport passengers, not cargo, and the economic benefits of a bullet train system are less than apparent with long-term state subsidies required to build and operate the system. None of the 12 developed countries that have bullet trains borrowed from overseas to build the systems.

The Japanese ambassador, Mitsuo Sakaba, is urging caution, saying on May 31 that "Vietnam needs to carefully consider the project to use Shinkansen technology and the benefits the project might bring about." In an interview with the Vietnamese newspaper Lao Dong, Sakaba cited a study by the Japanese International Cooperation Agency foreseeing little use of the route by 2020 and suggesting that the Japanese government would wait for the matter be debated in parliament before deciding if and how it might cooperate.

To counter opposition to the project on cost grounds, Deputy Prime Minister Nguyen Sinh Hung* has now announced a "new strategy for foreign debts." Looking into the next two decades, as the Vietnamese economy grows to a more advanced level, more foreign overseas development aid and development investment are expected to pour in, making greater borrowing possible, Minister Hung told the public.

The critics of the train project include former government ministers, war veterans, leading scientists, overseas Vietnamese intellectuals and a large number of bloggers. The government's suppression of the freedom of speech and pre-Congress strict media censorship have driven most of the critics of the project to air their protests on the internet, using pseudonyms.

Against the well-knit government propaganda machinery, the opposition has had little influence. However, why is there such a sudden fuss? Why does the government keep pushing ahead with such an extravaganza? Speculation in the media in Hanoi suggests two possibilities. One relates to internal fighting in the ruling Communist Party. By supporting the bullet train system, Dung's opponents among the Politburo are said to be laying a trap that would direct mounting public criticism to him personally. According to this theory, his enemies want to get rid of him in the next Party Congress, due early 2011.

The other theory is that the super train debate is being used by the leadership to distract the public from more sensitive issues such as the simmering tension with China on the South China Sea over the Spratly Islands and the regional arms race going on in Southeast Asia. Stability in the Vietnamese public is traditionally required before a Communist Party Congress. Evidence for both explanations is mostly anecdotal.

In recent years, government and corporate heads in Vietnam have been obsessed with the idea of leaving their mark while in office, thus creating "biggest things." Recent Vietnamese Guinness achievements include the biggest square cake and the biggest bottle of wine, both for King Hung (of the Ancient Viet), and a gigantic coffee cup. A bullet train is best seen as yet another attempt that reflects the Guinness-driven mentality, the critics say.

*Nguyen Sinh Hung's title was inadvertently misstated in an earlier version. We thank a reader for his correction.