What is slowing transportation infrastructure projects in Vietnam? – the diplomat

Pacific money | Economie | Southeast Asia

Among other things, the country’s land acquisition procedures are difficult, opaque, and difficult to appeal.

People ride on a row of concrete towers being built as part of the metro system in Hanoi, Vietnam, February 19, 2017.

Credit: Depositphotos

Major plans are underway to modernize transportation infrastructure throughout Vietnam. The first metro line of its kind opened recently in Hanoi, and it seems to be gaining in popularity. Another pair of metro lines was swinging forward in Ho Chi Minh City, along with the development of a huge airport in Long Thanh which will be accompanied by an extensive network of road and rail connections.

A long-held idea for a 1,500km north-south high-speed rail line — costing tens of billions of dollars — has also been resurfaced recently. This puts Vietnam in line with other countries in the region, such as Thailand, Indonesia and the Philippines, which have invested heavily in transportation infrastructure. But long delays in Vietnam have pushed many of these projects back by years, scrambling over financing arrangements and begging the question: What’s holding them back?

Let’s take the Ho Chi Minh City metro line 1, which was mainly funded by the Japan International Cooperation Agency (JICA). The project is being overseen by the Management Authority for Urban Rail (MAUR), an agency of the HCMC government. In 2014, the government issued a report on the project estimating that the first line will be operational by 2018. But the acquisition of land has been very slow, and they have missed that deadline. In a September 2020 news release, MAUR announced that only about 44 percent of the land needed had been delivered. It now looks like the line could be up and running by 2023, but that could easily be delayed.

The land acquisition also severely delayed HCMC’s second metro line, a project that has been held up by administrative and technical bottlenecks and land clearing for more than a decade. This complicates project financing, as the original lenders, including the Asian Development Bank and German state-owned lender KfW, have seen nearly double estimated costs. The government is now suggesting that the line will not be in service until 2030.

Things are going somewhat more smoothly with the new massive airport project in Long Thanh, which is expected to handle tens of millions of passengers and take pressure off the nearby Tan Son Nhat International Airport. With a total price tag of around $16 billion, the airport aims to anchor an extensive rail and road network in South Vietnam and is considered a project of national strategic importance. It was reported in May 2022 that 90 percent of the land needed for the first phase of the airport had been handed over, and authorities expect the project to be operational by 2025. As with the metro projects, the land acquisition has slowed things down but not by as much. severely.

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On the surface, this might seem a little surprising. Vietnam is a one-party state with a highly centralized administrative structure. Technically, all of the land is collectively owned by the people, but the state administers it on their behalf. A new land law passed in 2013 further enshrined the state’s ability to reclaim land for economic development. So why has the land acquisition caused so much delay in large public works projects?

For one thing, it’s all too common for planners and politicians to underestimate the complexity of large infrastructure programs, especially when they have limited experience with it. The Ho Chi Minh City government has never built a metro line before, and MAUR, the agency charged with implementing it, is relatively new. On the other hand, Airports Corporation of Vietnam, the state-owned airport operator, has been around for a while. So it is not surprising that they are better at building airports than MAUR at building metro lines.

But the bigger issue is that Vietnam’s land law needs work. Although it establishes the right of the state to own land for social and economic development, the process remains ambiguous and difficult to accept. Compensation is not based on market rates but is calculated by the state. The executive branch of government—at the national, regional, or municipal level depending on the project—has the most power to set terms and decide the outcome of disputes. As a result, people are offered less than market value and the law provides no clear way to challenge these findings.

When land acquisition is implemented in this way, it can proceed more slowly than if there are safeguards to ensure a minimum level of transparency (such as third-party appraisers) and legal mechanisms to challenge or challenge the will of the state. If Vietnam wanted to accelerate the pace of some of these projects—and especially if this high-speed rail project was ever built in our lifetime—a closer look at the laws governing land tenure would be a good place to start.

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