In Vietnam, a signed contract is not always an enforceable one. Many foreign investors are surprised to learn that a fully negotiated and executed contract can be declared invalid by a court, simply because it failed to meet specific, overlooked, legal formalities. This critical gap between a contract’s formation (the moment of signing) and its […]
The North-South expressway system, a monumental infrastructure project, is set to redefine transportation networks and fuel growth in this vibrant Southeast Asian nation. In this blog post, we will walk you through an overview of North-South Expressway projects and analyze other investment opportunities in developing Vietnam’s expressways for those seeking to capitalize on Vietnam's booming economy.
Orientation for the implementation of North-South expressway projects in Vietnam
From 2021 to 2023, the whole country inaugurated and put into operation an additional 566 km of highways, bringing the total length of highways of the country to 1,729 km. Currently, many expressway projects are under construction, with 1,756 km started by the end of June 2023.
According to Prime Minister Pham Minh Chinh, in the nine-year period from 2021 to 2030, Vietnam needs to invest and build nearly four times the number of highways built over the past 20 years.
Similarly, the National Assembly's resolution stated that by 2025, the whole country should strive to have about 3,000 km of highways and take the first steps towards expanding the North-South expressway to the East.
An overview of North-South Expressway system
According to the road network plan for the period 2021 - 2030, with a vision to 2050, the North-South expressway to the East from Huu Nghi border gate (Lang Son - northest landmark of Vietnam) to Ca Mau (southest landmark of Vietnam) has a length of 2,063 km. The construction of this expressway is divided into many projects corresponding to different phases. So far, 800 km has been completed and put into operation.
Specifically, the North-South Expressway Project Phase 1 (2017 - 2020) has a length of more than 650 km, including 11 component projects, with 8 public investment projects and 3 public-private partnership (PPP) projects. The total project implementation capital is more than 5,500 billion VND, of which investors’ capital is over 2,500 billion VND and state capital is about 3,000 billion VND.
Currently, the project has opened 6 sections of the route including: Cao Bo - Mai Son, Mai Son - National Highway 45, Cam Lo - La Son, Phan Thiet - Dau Giay, Vinh Hao - Phan Thiet, Nha Trang - Cam Lam. It is expected that on September 2, the National Highway 45 - Nghi Son section with a length of 43 km and the Nghi Son - Dien Chau section with a length of 50 km will be opened. On December 31, the My Thuan 2 bridge project will be completed. In 2024, the remaining 2 component projects, Dien Chau - Bai Vot, Cam Lam - Vinh Hao will be opened for operation.
In early 2023, the North - South Expressway component projects in the 2021 - 2025 period (phase 2) were started. The East North-South Expressway Project Phase 2 consists of 12 component projects with a total length of 723.7 km of the main route, including sections: Ha Tinh-Quang Tri (260.9 km), Quang Ngai- Nha Trang (352.06 km) and Can Tho-Ca Mau (110.9 km). The total investment of the project is up to 146,990 billion VND, in which 119,666 billion VND will be arranged in the period of 2021 - 2025, and VND 27,324 billion will be arranged in the following period 2026 - 2030. The project will fundamentally be completed in 2025 and opened for operation from 2026.
How to invest in North-South Expressway Project
General regulations on selection of contractors for investment in express railway projects.
Currently, there are no special restrictions for investors in the railway sector. Thus, investment projects to build high-speed railways can be in the form of public-private partnership (PPP) or private investment. However, in fact, attracting private investment in the field of railway construction faces several challenges due to large investment capital required, lengthy construction time, or complex administrative procedures, among others.
Meanwhile, the Vietnamese government has considered offering incentives, attracting private investment in this field. Besides, the amended Railway Law 2017 added regulations to encourage organizations and individuals investing in and building high-speed railways. In particular, the law clearly defines the contents of investment incentives and support in constructing, managing, using and maintaining high-speed railways.
In the North-South expressway super project, the Government has proposed the form of public investment to ensure "by 2025, basic completion of the North-South expressway to the East".
According to the Chairman of the Economic Committee of the National Assembly- Mr. Vu Hong Thanh, the National Assembly has passed Resolution 29 on the medium-term public investment plan for the period 2021-2025. The plan has allocated capital for various road transport investment projects under the PPP method, including North - South expressway project.
Recently, the project management units (PMUs) of the Ministry of Transport (MoT) have completed the selection of contractors and are granting contracts to sign for priority construction and installation packages of 12 component projects on the North - South Expressway in the period 2021 - 2025.
The selection process of contractors for open bidding and limited bidding
The selection of a contractor for a high-speed railway construction project is carried out in accordance with the Law on Bidding and/or the Law on Public Investment (for investment projects in the form of PPP) and related regulations.
Depending on the implementation orientation of the project, the execution sequence can be changed. However, the general contractor selection process for open bidding and limited bidding is carried out as follows (Clause 1, Article 38 of the Law on Bidding 2013):
- Step 1: Prepare for contractor selection,
- Step 2: Organize contractor selection,
- Step 3: Evaluate bids and negotiate contracts,
- Step 4: Submit, appraise, approve and publicize contractor selection results,
- Step 5: Finalize and sign the contract.
On the other hand, the appointment of contractors according to the normal process as follows:
- Step 1: Prepare for contractor selection,
- Step 2: Organize contractor selection,
- Step 3: Evaluation of proposals and negotiation of the contractor's proposals,
- Step 4: Submit, appraise, approve and publicize contractor selection results,
- Step 5: Finalize and sign the contract.
(Clause 2, Article 38 of the Law on Bidding 2013)
The way that construction project is bid will be decided by the competent authority.
To Sum Up…
Vietnam's expressway infrastructure presents a gateway to a wealth of investment and development opportunities. As the country embraces rapid economic growth, the South-North expressway system stands as a testament to Vietnam's commitment to modernization and progress. To gain deeper insights into Vietnam's current investment environment and unlock the keys to successful business ventures, reach out to our team. Our team of experts are insightful of the latest Vietnamese Market Regulations, Policies, and FDI trends to help you make informed decisions and maximize your investment potential.
Discover firsthand the untapped potential that awaits you in Vietnam and embark on a journey of profitable partnerships. Let’s embark on a remarkable journey in the dynamic Vietnamese market!
