Vietnam: ‘It’s a promising market, but domestic companies will take the lead’

The rapid pace of rail development in Vietnam is making it harder for multilateral funding bodies to keep up, Japan International Co-operation Agency’s Senior Representative for the country Chihiro Fukuda tells Benjámin Zelki. ‘Vietnam will be a promising and fast-expanding market in the next five to 10 years’, Chihiro Fukuda, Senior Representative of JICA’s Vietnam Office tells Railway Gazette International. The co-operation between the JICA and the Vietnamese government resumed in the 1990s, when JICA provided support for the reconstruction of 19 railway bridges on the Hanoi – Ho Chi Minh City main line. Some of these had been damaged in the Vietnam War, while others were in poor condition due to a maintenance backlog. JICA did not only provide official development assistance loans for the project, but also technical assistance through the introduction of new technologies and know-how and the implementation of training programmes, Fukuda explains. Today, amid rapid economic growth and urbanisation in the country’s two key conurbations, Hanoi and Ho Chi Minh City, attention is again focusing on how Vietnam can fund an increasingly ambitious slew of rail and metro projects. Vietnam: Ambitious metro expansion targets lie just out of reach ‘It can be promising for foreign companies which are willing to expand their markets or supply a huge amount of their products, but I expect it will be primarily promising for domestic companies,’ Fukuda suggests. He believes that, from the perspective of foreign donor agencies like JICA, ‘it might be increasingly difficult to get involved in upcoming projects’. He ascribes this cautious outlook to the pace of delivery sought by the various public bodies now pushing rail schemes around the country. ‘The national government and city authorities in Hanoi and Ho Chi Minh City have an urgent desire to move forward with urban and main line railway projects in order to meet their ambitious targets for completion of several lines by the end of the next five-year plan in 2030.’ Domestic companies and PPPs While the Vietnamese government and local authorities are very much focused on quick project delivery, which is promising from the perspective of urban and main line rail expansion, ‘for us as JICA, and other international donor organisations, to support these projects, authorities have to comply with various procedures, including the donors’ procurement guidelines. In addition, implementing agencies must also comply with Vietnamese laws and regulations, which would mean slower delivery in many cases’, Fukuda says. ‘To overcome this, I expect the national government and Hanoi and Ho Chi Minh City authorities will be proceeding with PPP schemes and higher domestic private sector involvement to secure the financing. ‘From the perspective of international private investors, the construction of new railway lines is generally not considered bankable unless the project structure is carefully designed. Otherwise, the investment risks can be too high relative to the expected returns. Domestic companies, on the other hand, often maintain close relationships with the government and may be willing to accept higher risks, and they may also benefit indirectly from stronger financial support through preferential treatment in other projects. ‘As a result, future urban railway developments are likely to be driven primarily by domestic companies, while foreign companies possessing technology and expertise participate mainly as suppliers. This would also be consistent with the current administration’s policy direction of strengthening domestic enterprises.’ A fast-growing market Fukuda suggests that the long-planned Hanoi – Ho Chi Minh City high speed railway is ‘maybe the largest project under discussion, but it is not clear yet how much international involvement we can expect’, although he notes that Siemens Mobility has already established itself as a significant international player in the market. The München-headquartered group announced on September 22 that it had expanded its earlier agreement with local development partner VinSpeed to cover the supply of 10 Velaro Novo high speed trains for two lines in Vietnam, linking Hanoi to Hạ Long and Ho Chi Min City to Cần Giờ. The company also agreed in December to supply ETCS Level 2 with ATO, telecommunications, and electrification systems. This is just one example of the fierce competition in the Vietnamese market. Alstom and Vingroup subsidiary Vinhomes entered into an agreement on October 6 for the supply of up to 83 five-car Metropolis trains from France for urban rail projects in Hanoi, along with a technology licence to support the local assembly of 117 additional trains. Earlier this year, local holding group THACO signed agreements with Hyundai Rotem for the supply of 54 three-car driverless metro trainsets for Ho Chi Minh City along with a technology localisation deal to create a 320 ha manufacturing and maintenance complex in the city. At the same time, Hanoi’s metro Line 5 is being jointly financed by the national government and the lead contractor under a PPP model. The engineering, procurement, and construction consortium is led by the Chinese Pacific Construction Group. Ho Chi Minh City metro package Nevertheless, the Japanese development agency has already made its mark in growing the footprint of metros in Vietnam. Since 2007, JICA has provided four Japanese ODA loans as well as technical co-operation over 10 years to support the delivery of Ho Chi Minh City’s metro Line 1. Opened in December 2024, this 19.7 km route links Ben Thanh market in the city centre to the densely populated suburb of Suoi Tien, serving 14 stations. The programme involved Japanese consultants to support the project delivery and the use of Japanese technology. Hitachi supplied 17 three-car metro trainsets, as well as track, signalling, telecommunications, electrical and mechanical systems under a ¥37bn contract signed in 2013. JICA brought in Tokyo Metro as a specialist partner to provide support for the project, including assistance in operations and maintenance for the initial two years after opening. The JICA co-operation programme also included support for establishing an organisational structure for Ho Chi Minh City Urban Railway Number 1 Company, which is operating and maintaining Line 1. ‘This job included the preparation of rules, laws and regulations. JICA supported the preparation of manuals for operations and maintenance procedures and a practical operational plan’, Fukuda reports. ‘We designed the organisational structure and governance of the organisation and documents for undertaking staff training. We also prepared operations manual for customer services, station management procedures, asset management and for railway safety management systems.’ Ho Chi Minh City – city map JICA also conducted workshops and training sessions in Japan for Vietnamese railway managers, engineers and operations staff. ‘Plans are currently under consideration to increase the amount of rolling stock on Ho Chi Minh City metro Line 1 and to extend the route from Suoi Tien northwest to Binh Duong New City and north towards Biên Hòa in Dong Nai province. JICA is willing to continue its involvement in these extension projects,’ Fukuda adds. Hanoi Line 2 complications JICA provided an ODA loan for the Hanoi city authority which in 2009 enabled Japanese consultancy Oriental Consultants Global to begin a 10-year partnership covering detailed design for the capital’s metro Line 2. However, although a groundbreaking ceremony was held in October 2025, no civil works contracts have yet been signed and the line is not yet under construction. Hanoi – city map ‘Because this line is included in Hanoi’s development plan through 2030, the city authorities are keen to move the project forward as quickly as possible and are exploring all available options’, Fukuda explains. ‘JICA remains ready to support the project through ODA loans.’ Supporting railway training JICA’s role in the Vietnamese rail market extends further than just financing projects. Since 2021, the agency has also been supporting the development of urban rail staff training at the Railway College in Vietnam, which was established in 1955. JICA has facilitated the hiring of Japanese consultants to prepare the curriculum and the textbooks for the railway college, Fukuda says. These materials cover various topics related to metros and suburban rail development, including operations management, safety and risk analysis, signalling & telecoms technology, and maintenance of rolling stock and infrastructure. ‘As Vietnam’s economic development advances, it is natural that the role of development partners evolves as well. Japan has been involved for more than 30 years, and we strongly hope to continue contributing to the development of Vietnam’s railway sector in the years ahead’, Fukuda concludes. This article first appeared in the November 2026 issue of Railway Gazette International Read the issue See also Japan: Part-privatised Tokyo Metro looks to grow internationally Philippines: A comprehensive package of Japanese know-how Consortium appointed to deliver five metro projects in Hanoi