Report Ho Chi Minh City Shifts to Local Funding for Metro Line No. 2

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Picture courtesy of VN Express

 

Ho Chi Minh City has decided to halt borrowing from Germany's KfW bank for its Metro Line No. 2 project, choosing instead to utilise domestic funds to avoid further delays.

 

On Tuesday, Vietnam’s Prime Minister, Pham Minh Chinh, passed a resolution permitting the city to end two financial agreements from 2011 with KfW. These agreements totalled €155 million (about 7 billion THB) in concessional loans and €66.2 million in non-refundable aid.

 

The city's People's Committee is now tasked with managing the remaining non-refundable aid according to local regulations. Additionally, the city must cover all costs associated with this cancellation, such as commitment fees and other charges imposed by KfW.

 

This decision follows years of hurdles that have stalled progress on Metro Line No. 2, which aims to connect Ben Thanh Market to Tham Luong. Initially approved in 2010 with a budget of VND26 trillion (around 32 billion THB), the cost was adjusted to nearly VND47.9 trillion in 2019 due to delays and increases.

 

Despite budget adjustments, construction has been slow. The city faces low disbursement rates and lengthy negotiations with foreign partners, obstructing contractor selection and jeopardising plans to break ground this year.

 

To address these challenges, city officials propose using local funds within the city's medium-term investment plan. They aim to leverage faster procedures allowed under the National Assembly's Resolution No.188, which supports HCMC development.

 

The HCMC Management Authority for Urban Railways (MAUR) reports that site clearance and infrastructure relocation are complete. The focus now shifts to selecting design consultants and contractors.

 

If all proceeds smoothly, construction could commence by the end of 2025, with the metro operational by 2030. Two private investor groups, including THACO and a consortium of Dai Dung, Hoa Phat, and CC1, have shown interest in investing. The city's Department of Finance will evaluate these proposals and advise on investment decisions.

 

Currently, the city operates one railway line, Ben Thanh - Suoi Tien, completed in December 2024 after several delays. Metro Line No. 2 is poised to be the backbone of HCMC's future mass transit network, extending over 48 km when fully realised.

 

  Adapted by ASEAN Now from VN News 2025-07-11