01 September 2020
Vietnam’s High-Speed Railway and the Profitability of “Shinkansen”
Executive Summary
The first plan to construct a High-Speed Railway (HSR) in Vietnam was rejected by the national assembly in 2010 due to its high cost. The government prepared an amended plan for the national assembly’s approval again in May 2020. This paper analyses the profitability of the HSR project in Vietnam. Based on the estimated relationship between the population density of regions along the railways and the profit margin of railway companies in Japan, we find that passenger service alone would not make Vietnam’s HSR profitable. The project should consider connectivity to suburban areas around highly populated cities and have a diversified business plan with 32 to 54 per cent of profits coming from non-transport sectors such as hotel, real estate, and retail. Moreover, we find that the HSR could be more profitable when it is extended to Phnom Penh and Bangkok as a part of the Southern Economic Corridor connecting Vietnam, Cambodia, and Thailand in the future.
Source: Unsplash
Executive Summary
The first plan to construct a High-Speed Railway (HSR) in Vietnam was rejected by the national assembly in 2010 due to its high cost. The government prepared an amended plan for the national assembly’s approval again in May 2020. This paper analyses the profitability of the HSR project in Vietnam. Based on the estimated relationship between the population density of regions along the railways and the profit margin of railway companies in Japan, we find that passenger service alone would not make Vietnam’s HSR profitable. The project should consider connectivity to suburban areas around highly populated cities and have a diversified business plan with 32 to 54 per cent of profits coming from non-transport sectors such as hotel, real estate, and retail. Moreover, we find that the HSR could be more profitable when it is extended to Phnom Penh and Bangkok as a part of the Southern Economic Corridor connecting Vietnam, Cambodia, and Thailand in the future.
Source: Unsplash
