Traffic HCMC Shifts to Domestic Funds for Major Metro Project

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Picture courtesy of Vietnam News

 

Ho Chi Minh City has decided to forego borrowing from Germany’s KfW development bank for Metro Line No. 2, opting instead to utilise domestic funding. This decision, approved by Prime Minister Phạm Minh Chính, aims to bypass delays linked to procedural hurdles and disbursement issues.

 

On 8th July, the Prime Minister issued a resolution allowing the termination of two financial agreements with KfW from 2011. These agreements included €155 million (about 6 billion Thai Baht) in concessional loans and €66.2 million (approximately 2.6 billion Thai Baht) in non-refundable aid. The city is now mandated to manage the residual non-refundable assistance and cover any costs incurred from cancelling the agreements, such as commitment fees.

 

Metro Line No. 2, which will extend from Bến Thành Market in District 1 to Tham Lương in District 12, has faced significant delays. Initially approved in 2010 with a budget of 26 trillion Vietnamese Dong (around 82 billion Thai Baht), costs rose to nearly 47.9 trillion VND (about 151 billion Thai Baht) by 2019.

 

Despite these financial adjustments, major work on the project has yet to begin. Negotiations with foreign partners have stalled contractor selection, threatening future progress. To move forward, city authorities will tap into local resources under the medium-term public investment plan. They will also leverage fast-track procedures allowed by the National Assembly’s Resolution No.188.

 

The HCM City Management Authority for Urban Railways (MAUR) reports that all site clearance and technical relocations are finished, and they are expediting the hiring of design consultants and contractors to gear up for construction. If all goes as planned, construction may commence by the end of 2025, with operations starting in 2030.

 

In addition to government funding, interest from private investors is growing. Companies like THACO and a joint venture involving Đại Dũng, Hòa Phát, and CC1 have submitted investment proposals. The city’s Department of Finance is currently evaluating these options to determine feasible investment strategies.

 

The transition to domestic funding highlights the city’s strategic shift in policy, aiming to streamline urban railway development and cut red tape. Ho Chi Minh City, which currently operates a single metro line completed late in 2024 after numerous setbacks, views Metro Line No. 2 as crucial to its planned mass transit system. Once fully developed, the line will extend over 48km, forming a key component of the city’s transport infrastructure.

 

  Adapted by ASEAN Now from Vietnam News 2025-07-09