31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Industry
Vietnam Railways set to receive gov’t contract for railway network maintenance
Ngoc Mai 05:13, 2021/05/25
The state-run railway operator would be responsible to keeping smooth operation of railway system.

Vietnam Railways (VNR) is set to receive a government contract under the instruction of Prime Minister Pham Minh Chinh to maintain the country’s railway network for this year.

 Railway worker at Hanoi Station. Photo: Pham Hung

The move is seen as an effective solution to clear hurdles in disbursing state fund for maintaining the railway network and paying salaries of over 11,000 workers of VNR.

Under the PM’s decision, the VNR would be responsible to keep  smooth operation of railway system in accordance with the law.

“The PM’s message is to create the utmost conditions for the railway sector to grow,” said VNR’s Chairman Vu Anh Minh.

Given the serious degradation of the railway infrastructure over 100 years of operation, former Deputy Minister of Transport La Ngoc Khue argued it is appropriate to hand the job of railway infrastructure development to the VNR, the state-owned operator of all railways in the country.

“Only those directly operate and supervise the system everyday can understand what should be done,” Khue said.

In April, the VNR sent a letter to the PM calling for the government support as the state firm is on the brink of bankruptcy.

According to the VNR, the railway operator was expected to receive VND2.8 trillion (US$121 million) in 2021 from state fund to repair the railway system and pay the salaries of over 11,300 workers.

But, four months on, the firm has not received the fund to cover its expenses.Under the State Budget Law, state budget recipient, in this case the Ministry of Transport (MoT), is only allowed to allocate funds for its subordinate units.

The situaiton became complicated when the VNR was transferred to the Committee for State Capital Management (CSCM) in 2019, meaning the ministry would have to disburse the capital for VNR via the Vietnam Railway Authority (VNRA).

But the main problem is that the VNRA does not have the capability to draft the estimate for the maintenance works as well as supervising the whole process.

Tip of an iceberg

While this remains an issue for the VNR, transportation expert Nguyen Xuan Thuy told Hanoitimes it is the old mindset and obsolete business approach of the railway sector that is making them dependent on state budget for operation.

“In the current market mechanism, other transportation modes by air, road and water have been transforming to enhance their competitiveness, the railway continues to stand still,” Thuy said.

“The railway sector keeps relying on state budget for operation but do not have any plan to move on in case the fund runs out,” he continued.

Sharing Thuy’s view, economist Ngo Tri Long noted it is the huge apparatus of the railway sector that is causing the problem.

“With over 11,000 workers, funds required to pay their salary is already a major issue, not to mention upgrading the infrastructure or revising business models,” Long told Hanoitimes.

“It is time for the sector to look at a comprehensive solution to revise its governance and business models, as they have to stand on their own feet,” he stressed.

TAG: VNR vietnam railways funding infrastructure
Other news
17:58, 2023/58/24
Vietnam’s tourism forecast to strongly rebound in five years
In 2024, Vietnam's tourism revenues are expected to reach US$11 billion, which will surpass the pre-pandemic amount of $10.8 billion in 2019.
11:16, 2023/16/22
Tourism firms upbeat about Vietnam's 2023 outlook
Local businesses are advised to be more creative, react faster, and have more resources to adapt to unforeseen changes by 2023.
23:12, 2023/12/21
Surge in travel demand in Vietnam's airports ahead of Tet
Noi Bai International Airport in Hanoi has taken measures to prepare for a throughput of over 100,000 passengers per day during Tet holiday.
17:08, 2023/08/18
Hanoi to host AeroExpo Hanoi & Vietnam Aviation Forum 2023 in March
Leading firms from 15 countries will bring advanced products and technologies to the four-day event.
16:59, 2023/59/18
Vietnam, S.Korea eye US$100-billion trade turnover in 2023
South Korea is currently the largest foreign investor in Vietnam, with total FDI commitments of $80.5 billion, and the third trade partner with a total turnover of $88 billion in 2022.
14:05, 2023/05/09
[Infographic] Vietnam's tourism performance before and after Covid-19
Vietnam's tourism continues to demonstrate a strong and steady recovery from the pandemic's effects despite mounting economic and geopolitical challenges since its reopening to international visitors in March 2022.