Vietnam’s largest conglomerate, Vingroup, scraps bid for $67-billion Vietnamese rail line
Vietnam Government was wary of financing proposals made by country’s biggest conglomerate
HANOI – Vietnam’s largest conglomerate, Vingroup, said on Thursday it would withdraw its investment proposal for the country’s $67-billion North–South high-speed railway project to concentrate on its other projects.
The decision on the registration, which was submitted in May, followed a reassessment of resources after Vingroup was awarded major national projects, including an Olympic-standard stadium and rail lines connecting key locations, the company said in a statement.
Shares of Vingroup and its units, including developers Vinhomes and Vincom Retail, fell 7% and the hospitality firm Vinpearl was down 3% after the announcement, dragging the benchmark Ho Chi Minh index down 2.24%.
In May, Vinspeed, a subsidiary founded by Vingroup chairman Pham Nhat Vuong, proposed the bid for the 1,540-kilometre railway linking Hanoi and Ho Chi Minh City, promising to self-fund 20% of the project while seeking an 80% state-funded loan at zero interest over 35 years.
However, the central bank expressed concerns over Vingroup’s high leverage and lack of experience in rail infrastructure, warning that the loan request and required guarantees could pose risks to banking stability.
An opinion dated May 19n and reviewed by Reuters indicated the proposal would need “special state guarantees”.
The finance ministry also flagged the proposal’s zero-interest terms and 30-year debt repayment schedule, servicing only at maturity, as equivalent to a state subsidy that could impact Vietnam’s credit ratings.
In addition to Vingroup, investors including the auto industry company Thaco, Vietnam Railways and Vietnam Investment and Development Group have shown interest in the high-speed rail project.
Vingroup said its withdrawal would not impede the project’s progress and would allow the company to focus on delivering other large-scale initiatives.
The government has said the winner of the North-South railway bid will be announced in January.
Source: https://www.bangkokpost.com/business/general/3163485/vingroup-scraps-bid-for-67billion-vietnamese-rail-line
