By Choi Sung-jin
Korea and Japan are fiercely competing to carve out a larger share of the rapidly enlarging construction market in Vietnam, business sources said Friday.
The Vietnamese government plans to build up the country’s poor social infrastructure with airports, railways and subways, and it is estimated to spend more than 30 trillion won ($24.8 billion) doing it.
The Japanese builders’ main advantages are abundant funds and accumulated know-how while their Korean competitors’ strengths are their experience of rising from a developing to a developed country and superior information technology, sources said.
The central and provincial administrations in the Southeast Asian country are going all out to build roads and expressways, thinking that the lack of social infrastructure is one of the biggest stumbling blocks to brisk economic development, they said.
In 2014, motorcycles accounted for 81.4 percent of all means of transport in Ho Chi Minh City, remaining almost unchanged from the 81.8 percent of 2004. Bus transportation and other means of mass transit slightly increased, from 6.9 percent to 8.4 percent, during the period.
“Unless we quickly improve underdeveloped roads and establish mass transit and modernize our rail system, our transportation problems will pose a big obstacle to economic growth,” a Vietnamese government official was quoted as saying at a recent workshop in a report by the Korea Trade-Investment Promotion Agency (KOTRA).
In Vietnam’s two biggest cities, Ho Chi Minh City (formerly Saigon) and Hanoi, there are no urban transportation systems such as city buses that are seen in major cities of the world. Up to 80 percent of Ho Chi Minh City’s main roads are four lanes or narrower, which explains why motorcycle use has hardly declined over the past decade.
Until recently, the Vietnamese government had pushed for a $31 billion high-speed railway to run through the country from north to south, in which the well-funded Japanese builders enjoyed a competitive edge. The country’s parliament later rejected the ambitious project, forcing the government to shift to the modernization of existing railways, subway systems in major cities and new ports and airports.
“The Japanese builders once seemed to win most of the projects to construct Vietnam’s transportation infrastructure but the situation has changed now,” said Park Sang-hyup, head of KOTRA’s Ho Chi Minh City office. “Korean contractors with strength in the IT sector are now moving around briskly.”
Among the major projects up for grabs are a $16.5-billion project to build a new airport in Ho Chi Minh City, a $9-billion railway master plan and a $1.8-billion project to build the fifth subway line in the capital city, which has completed its feasibility studies and is seeking main contractors. Also under way are programs to build mass rapid-transit systems incorporating buses and rail in major cities, which require not only hardware but software, such as traffic control systems, in which Korean companies have advantages.
“The Vietnamese government also is well aware that the expansion of roads and railways alone will not work, and that it is important to establish an efficient operational and control system,” said a transport expert here. “The Korean builders need to differentiate themselves by emphasizing their competitive edge in these areas.”