Railway sector to transform infrastructure, business model
Empowered to manage and use railway infrastructure, the Vietnam Railway Corporation (VNR) has begun the transformation of its business model, with the goal to streamline and improve cargo and passenger services in the modern era.
The railway sector is to receive substantial infrastructure development and change its business model. (Photo: VietnamPlus)
Hanoi (VNA)💯 – The plan on the management, use, and exploitation of the State- managed national railway infrastructure, recently approved by the Prime Minister, is a prerequisite for improving infrastructure by tapping into resources for promoting the Vietnam Railway Corporation (VNR)’s performance.
Assigned resources need to be capitalised upon
VNR General Director Hoang Gia Khanh told VietnamPlus that the plan on the management of the State railway infrastructure has a direct impact on production and business activities of the VNR.
To stay active in production and business activities, the firm needs to possess assets and be authorised to use them to develop the national railway infrastructure. This process must meet passenger and cargo transportation demand while improving services and the capacity of transporting cargo within the country and internationally via the Dong Dang and Lao Cai border gates. The use of those assets will create jobs, raise workers’ income, increase the budget revenue, and guarantee asset status.
With the power to manage and use railway infrastructure assets, the VNR will be more proactive in its production and business activities. (Photo: VietnamPlus)
The Ministry of Transport is taking the next steps to ensure the entire railway infrastructure is used efficiently and as soon as possible in conformity with regulations to optimise available resources. This includes the 3,143km of railway and the 303 stations in 34 provinces and centrally run cities. The VNR is gearing up to put the assets entrusted to it into full use, he said.
Under Government Decree 46, which is being amended this year, the attraction of private investment to the over 300 train stations, which will be placed under the VNR’s management, must meet legal compliance. The corporation will have to design investment attraction plans and submit them for approval before implementation so that the resources are utilised effectively with the national goals in mind.
The VNR has been allocated nearly 4 trillion VND (162.7 million USD) for maintenance each year, which is equivalent to around 50% of the funding needed for this work.
The firm has proactively conducted a review to propose to the Ministry of Transport plans on repair, upgrade, and necessary construction of infrastructure in the short and long terms to ensure operations and safety, he said.
Rail transport companies to be merged, stake reduction considered
Khanh noted that to carry out the VNR restructuring plan, approved by the Prime Minister in Decision No. 562/QD-TTg dated June 26, 2024, the merger of the Hanoi Railway Transport JSC and the Saigon Railway Transport JSC to the Railway Transport JSC must be completed in 2024. At present, the merger is being considered by the State Securities Commission of Vietnam, which is expected to licence the public offering soon so that the merger could be carried out.
On that basis, the VNR Members’ Council will order the representatives of the VNR’s stakes at the Hanoi Railway Transport JSC and the Saigon Railway Transport JSC to make the next moves in line with regulations to merge the two companies.
The VNR plans to conduct business registration for the new company in early the fourth quarter of 2024 to ensure the merger is completed in 2024 as directed by the Prime Minister, according to the executive.
He revealed that as the Railway Transport JSC takes shape, the VNR will scale down its stake in the firm to attract investment to improve the quality of rail services. This issue was mentioned in its restructuring plan by 2025 and reported to the Prime Minister by the Commission for the Management of State Capital at Enterprises (CMSC).
The railway sector will merge two passenger transport companies, aiming to help end internal competition and promote the efficient use of available vehicles and assets. (Photo: VietnamPlus)
In particular, the CMSC agreed with related agencies on the building of an appropriate roadmap for cutting the parent firm’s stake at the Railway Transport JSC after the merger. The roadmap should also be flexible to enable capital divestment when there are partners. The decrease of the dominant stake will create conditions for new investors to engage in reforming and improving rail transport services.
After the Railway Transport JSC runs operation for one - two years, the VNR will consider how to orient the scale-down at the new company, with the goal to professionalise cargo and passenger transporation services in its restructuring plan to 2030, its General Director added./.
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