HANOI: Vietnam’s parliament on Wednesday (Feb 19) approved plans for an US$8 billion rail link from its largest northern port city to the border with China, boosting links between the two communist-ruled countries and making trade easier.
The new rail line will run through some of Vietnam’s key manufacturing hubs, home to Samsung, Foxconn, Pegatron and other global giants, many of whom rely on a regular flow of components from China.
The route will stretch 390km from the port city of Haiphong to the mountainous city of Lao Cai, which borders China’s Yunnan province, and will also run through the capital Hanoi.
Construction of the railway was backed in a vote by 95 per cent of parliamentarians in the country’s National Assembly, an AFP journalist in the chamber said.
China will provide some funding through loans for the project, which is expected to cost more than US$8 billion.
It is one of two railway lines to China that Vietnam plans as part of its “Two Corridors, One Belt” initiative, which connects to Beijing’s Belt and Road global infrastructure programme.
The approval comes just over a year after the neighbours pledged to deepen ties during a visit to Vietnam by President Xi Jinping, as Beijing sought to counter growing US influence with Hanoi.
Vietnam’s transport infrastructure is considered relatively weak, with a road network struggling to keep up with demand and an underdeveloped rail system.
The country is an increasingly favoured destination for foreign businesses looking for an alternative to China, but low-quality infrastructure is seen as holding back surging investment.
Dan Martin, international business adviser of Dezan Shira & Associates, said the new rail link could help smooth out bumps in international supply chains caused by the current reliance on slow and costly trucks that are “prone to border bottlenecks”.
“China supplies much of the raw material that fuels Vietnam’s manufacturing sector, and keeping that pipeline steady is critical,” he told AFP.
“A modern rail link cuts through … inefficiencies, ensuring goods move smoothly whether they’re flowing into Vietnam’s factories or heading to global markets via Haiphong’s port,” he said.
