Vietnam’s expressway pipeline leans on private money that tolls must repay

Vietnam is asking private investors to carry most of its next expressway programme, and whether they will depends on a distinction that the headline total blurs. At the heart of the list are two widenings of the eastern North-South Expressway, where 966 km of sections built with public money would be folded into two build-operate-transfer (BOT) contracts worth a combined 150.41 trillion Vietnamese dong (about $5.8 billion). Roads that already carry traffic are a far easier sell to lenders than new routes through the Mekong Delta and the Central Highlands.

The Ministry of Construction set out the pipeline at an investment promotion conference in Hanoi on 29 September: 29 priority projects for public-private partnership (PPP) financing, with preliminary total investment estimated at about 923 trillion dong. Its briefing ahead of the conference put the count at 28 projects worth approximately 922,812 billion dong, yet listed 15 projects in priority group 1 and 14 in group 2. The groups add up to 29. Investors should treat the total as a preliminary estimate, not a committed figure.

The list sits inside a larger bill. Over the next five years Vietnam is expected to build 2,829 km of new expressways and expand or complete 1,187 km of existing ones, requiring total investment of about 1,269 trillion dong, of which roughly 846 trillion dong must come from outside the state budget. Another 1,252 km is under construction today, alongside 3,345 km in operation.

The ministry’s case for private appetite rests on the last cycle. Since 2021, PPPs have raised 444.57 trillion dong for 17 BOT projects. Construction minister Tran Hong Minh, who says expressway investment is moving away from a model in which the state carries the full burden, said the result showed ‘the practical appeal of transport infrastructure to investors when projects are implemented within an appropriate institutional and policy framework’. The new list is far larger than that five-year total, and the non-budget requirement larger again. The record shows BOT can work in Vietnam; it says much less about whether it works at this scale.

North-South widenings carry the bankable traffic

Le Thang, director of the ministry’s Project Management Unit 2, said 15 component projects on the eastern North-South Expressway, covering 966 km, have completed public investment. Mai Son-Cam Lo in the north would span 415 km at 72.19 trillion dong, with a 20-year toll collection period and a targeted opening in 2030. Quang Ngai-Dau Giay in the south would stretch 551 km at 78.22 trillion dong, with a 15-year capital recovery period and the same target date.

These are the most financeable assets on the list. The roads exist and carry traffic, so an investor is underwriting a capacity upgrade and a tariff rather than betting on whether drivers will turn up. Expanding Ho Chi Minh City’s Ring Road 3 from 4 lanes to 8 lanes over 76 km, at 38,000 billion dong, belongs in the same category. A study presented at the conference projected traffic volumes rising by 55–90 per cent between 2030 and 2050, which supports adding capacity on established corridors.

The weak point is pricing. The southern project must recover more capital over a shorter period than the northern one, which assumes higher tolls or denser traffic south of Quang Ngai. The ministry has published neither the toll rates nor the traffic forecasts behind those periods, and those numbers will decide whether either contract reaches financial close.

New routes in the Delta and Highlands need the state

Group 2’s 14 projects are mainly new routes and expressway expansions, led by Can Tho-Ca Mau at 70 trillion dong, with Ho Chi Minh City-Vinh Long and Phu Yen-Buon Ho at 35 trillion dong each. Group 1 also carries four-lane routes such as Ha Tien-Rach Gia in An Giang province, 87 km at nearly 56,000 billion dong. Where a route is new, there is no toll history for a lender to test, and demand risk sits squarely with whoever holds the concession.

Ho Minh Hoang, chairman of Deo Ca Group, a major contractor in the southern region, said the state and businesses should design each project together from the outset, classifying every section by traffic volume, revenue and capacity to recover investment. ‘For routes with strong traffic volumes and revenues, private resources can be mobilised to the maximum extent. For projects with lower traffic volumes, the state needs to participate at an appropriate level to ensure feasibility,’ he said.

That is the right structure, and it means the private share of the pipeline will be smaller than the headline implies. The last of the ministry’s seven priority criteria favours routes that can attract resources outside the state budget, or where local authorities proactively supplement them from local budgets. In practice, the weakest routes may advance only where a province is willing to pay. The ministry has not disclosed a state capital share for any project.

Minh called for revenue risk-sharing mechanisms under the PPP Law to be implemented effectively. Lenders want more than the statute. Tran Hoai Nam, deputy director of VietinBank’s Corporate Banking Division, proposed faster determination of revenue shortfalls, audited revenue and timely budget allocations wherever the state is required to meet obligations under PPP contracts.

His proposals point to where a guarantee can fail: in the gap between a shortfall arising and the state paying for it. Until shortfall payments are seen to arrive on schedule, banks will price that delay into their loans, and the marginal routes in group 2 will struggle to clear.

Banks and builders face a crowded order book

Nam set out what lenders watch before a road opens: ‘During construction, banks pay particular attention to site clearance, delays, increases in total investment, the capacity of EPC contractors and their ability to fully contribute the required equity.’ The ministry has asked financial institutions to consider medium- and long-term credit packages suited to PPP projects.

Bonds offer limited relief. Nguyen Viet Long, deputy general director of consulting at Ernst & Young Vietnam, said corporate bonds account for around 10–11 per cent of GDP, well below South Korea and Malaysia. ‘However, bonds cannot replace bank credit. During the initial stage of a project, credit remains important; once a project is completed, operates stably and has a verified cash flow, bonds can become an appropriate refinancing channel,’ he said. Construction risk on the new list will therefore sit with domestic banks for years, while they also finance the 1,252 km already being built.

Hoang’s ‘PPP++’ proposal would bring construction companies, financial investors and suppliers of materials, equipment and technology into the project value chain alongside the state, investors and banks. That widens the pool of equity, but it also means the same contractors that must deliver the roads could end up funding them. Local authorities have been asked to accelerate land clearance and secure construction materials.

Three things would sharpen the picture: a published state share and toll assumption for each project, a financial close on Mai Son-Cam Lo or Quang Ngai-Dau Giay, and evidence that revenue-shortfall payments are made on time. The widenings should find backers. The new routes will be built at the pace the budget, not the private market, sets.