Vietnam: Is Ho Chi Minh City’s metro rail project staying on track?

A night view of Ho Chi Minh City. Hopefully, Vietnam can avoid problems caused by the “too much too soon” effects of rampant tourism. Source: Shutterstock

A STAY in glitzy District 1 in Saigon used to involve a pretty view of the city’s opera house as you sipped a cocktail at The Rex Hotel’s famous rooftop drinking den. The view is still there, but it isn’t so pretty anymore.

The first phase of the Metro Rail Project, aimed at revolutionizing urban travel, is way behind schedule and cuts an unsightly swathe of construction through the center of the city, which is now unceremoniously partitioned behind sturdy blue fencing.

It was due to be finished in 2018, but that date has been pushed to 2020 and the project, partly funded by the Japanese, could potentially go billions of dollars over budget.

It’s not unusual for infrastructure projects to go somewhat beyond initial costings, but the bill for Line 1 (of a planned six) has ballooned from US$1.4 billion to US$2.49 billion with city officials citing design adjustments, higher wages and fluctuations in the cost of building materials as the reasons for the blowout.

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The cash shortfall has knock-on effects, too. The Japanese contractors who are undertaking the venture are owed money and there are fears they may even cease construction if funds are not forthcoming. This would add to delays and further nudge the numbers.

This is already a contentious relationship as the contractors previously requested compensation for delays in 2015 when there was a lag in clearing sites to begin building in key areas of the city.

With not much to show yet, except irritating nocturnal digging, traffic detours and some controversial missing trees, Ho Chi Minh City needs the Metro project to be seen as succeeding. Particularly in light of the fact the government is looking to speed up construction of the city’s new airport and is hoping to garner support from Japanese investors.

However, this could just be a small blip on the way to big things. Vietnam is a country on the up and major infrastructure is part of a plan to lure both business and tourism in the future. A similar metro project is underway in Hanoi and improvements to the broader rail network are afoot.

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With 10 million international visitor arrivals in 2016 and a target of 20 million by 2020, Vietnam is set to achieve US$30 billion in revenue from tourism by the end of the decade.

Planning and investment ahead of time is a powerful magnet for money, particularly in real estate, as JLL Hotels and Hospitality Group senior vice-president (investments sales) Adam Bury told Viet Nam News:

“With huge commitments made by both state and private stakeholders into infrastructure and transport linkages, hotel investors are keen to capitalize on the Vietnamese market.”

Perhaps, by playing the long game, Vietnam can avoid problems that countries such as Thailand now face from the “too much too soon” effects of rampant tourism. A cocktail at The Rex might be aesthetically inferior right now, but tourists could perhaps close their eyes and picture a metropolis of the future.