German media: Vietnam's largest business group Vingroup withdraws its $67 billion North-South High-Speed Rail project investment
Vietnam's largest business group Vingroup said this week that it will withdraw its investment proposal for the $6.7 billion North-South High-Speed Rail project in Vietnam to focus on other projects. Just days before Vingroup announced its exit from the high-speed rail project, its subsidiary VinSpeed had just signed a comprehensive strategic partnership and technology transfer agreement with German railway technology giant Siemens Mobility.
Vingroup stated in a statement that it decided to withdraw the bid plan submitted in May due to a re-evaluation of the group's resources. Previously, Vingroup had secured several national-level major projects in Vietnam, including an Olympic-standard stadium and railways connecting key locations.
After the announcement, the stock prices of Vingroup and its subsidiaries fell by 7%.
In May this year, the subsidiary Vinspeed, established by Vingroup Group Chairman Pham Nhat Vuong, proposed bidding for the railway project connecting Hanoi and Ho Chi Minh City, which is 1,540 kilometers long, promising to self-fund 20% of the project and seeking an 80% state-funded, zero-interest loan over 35 years.
However, the State Bank of Vietnam expressed concerns about Vingroup Group's high leverage ratio and lack of experience in railway infrastructure construction, while warning that the loan application and required guarantees could pose risks to banking stability. A document reviewed by Reuters dated May 19 indicated that the scheme required "special state guarantees."
The Ministry of Finance also pointed out that the zero-interest terms of the scheme and the repayment plan of 30 years, only repaying debt at maturity, amounted to state subsidies, which could affect Vietnam's credit rating.
Just days before Vingroup announced its withdrawal from the high-speed rail project, its subsidiary VinSpeed had just signed a comprehensive strategic partnership and technology transfer agreement with German railway technology giant Siemens Mobility. The framework agreement clearly includes providing vehicles and related subsystems for two additional railway projects of VinSpeed (Binh Thanh - Can Gio line and Hanoi - Quang Ninh line).
Vingroup Group stated that its withdrawal would not hinder the progress of the project but rather allow the company to focus on other major projects.
Other investors, including automotive industry company THACO, Vietnam Railway Company, and Vietnam Investment Development Group, have also shown interest in the high-speed rail project.
Hanoi has announced that the winner of the North-South railway project will be announced in January next year.
Source: DW
Original: toutiao.com/article/1852798044216328/
Statement: This article represents the views of the author alone.