Studying solutions to mobilization of capital from private sectors for Viet Nam railway development

Abstract

     Vietnam Railways, in its 130 year history, played an extremely important role in the national transportation system. The organisation was responsible for 40-45 percent of the total amount of traffic flow in the country in many years. However, the proportion of railway transportation in Vietnam has decreased dramatically; as only 2-3 percent of passengers and 5-6 percent of freight are being transported by trains presently. One reason that may have led to the significant fall in railway traffic is the outdated infrastructure and railway vehicles, which have experienced a shortage of investment for a long period of time. It will also be of extreme difficulty to finance future investment using funds from Vietnamese national budget or from the organisation itself because of the scarcity of them. To deal with this hardship, Vietnam Railways may raise capital from other economic sectors.

    This paper presents solutions to raise funds from private investors, by examining the experience of Japanese National Railway Company when privatise the whole national railway system.