Director of Department of Corporate Finance Dang Quyet Tien: It is impossible to subsidise forever

Director of Department of Corporate Finance Dang Quyet Tien

How do you evaluate the development of the railway industry in recent years?

From the economic and financial perspective, I thought with a 140-year development industry over the past time, especially in the 30 years of Doi Moi, it seems we have not paid enough attention. It means investment in the railway industry has not had a proper long-term strategy and has innovative breakthroughs to meet the development of the economy, especially with developing the economy towards industrialisation.

Compared to other transportation sectors like aviation and road, railway is one of the underdeveloped industries due to an unchanged mindset. Most importantly, the attention of all levels and sectors to the railway sector is inadequate

Secondly, there is a need for a basic strategy and a proper investment because having a full strategic plan, we can allocate and mobilise resources for development. If a country can’t exploit railway transport infrastructure effectively, the development of the country, especially the development of heavy industry and other industrial development, would not be ineffective. The lesson showed road transport has reached saturation point so there must be a railway to ensure the competitiveness of the economy.

The lagging of the railway is a waste of the country's resources, so what mechanisms and solutions should be in place to not waste this resource as well as create conditions for businesses to invest in the railway industry?

Regarding finance or preferential financial policies for the railway industry, I think that the railway industry must be affirmed and 100% owned by State enterprises. Currently, the Railway Corporation is working to provide public products and services. Socialising or equitising for the corporation to take control was only a very small part. Therefore, we had to define clearly which were the infrastructures of the State so the State must have a policy for capital investment. As State infrastructure, tax policies and land-use fees would be exempted. However, it must clearly define which belongs to business to let them control and exploit.

Currently, large industrial zones, large seaports and rail connections are weak, leading to the major use of roads. However, when using roads, the costs of container transportation are very high. In addition, safety is not ensured and infrastructure is always degraded. Meanwhile, railways meet the requirements of large and long-distance transport of goods, especially for civil matters.

This is one of the issues believed to have a breakthrough in the period 2021-2025. From clear delineation, there is a need for a separate mechanism for the railway industry from now to 2025 with a vision to 2030. Currently, the investment for the railway industry needs to be reviewed. Recently, the Government has invested heavily in the two cities on the inner city railway with a large amount of capital, to ensure relief of traffic congestion as well as renewing the image of the city, the railway industry needs to have the same approach like that. All of these investments are public investments; the budget must be allocated or borrowed for the businesses to implement. When infrastructure reaches a certain limit, it is possible to develop socialisation to make commercial railway lines.

What do railway enterprises themselves need to do to take advantage of the policies as well as the opportunity to revive this field?

The project on the management and exploitation of railway infrastructure needed to be completed soon to clearly define which fields are the responsibilities of the State, the budget must be allocated. When separating, firms need to determine what they have to do. What policy mechanisms to motivate businesses, we designed for businesses in a period to have breakthrough solutions. It is impossible to subsidise forever.

As infrastructure of the State, the State would associate the railway planning with the road planning and planning of seaports, industrial parks, and seaports associated with the railway industry to ensure connectivity. Connections with new urban railway ensure a closed system, promoting infrastructure.

On the one hand, the State is more responsible and allocates greater resources and has a more complete policy. On the other hand, the State must show businesses where they have motivation to develop. If all resources are assigned to a business, the business would always be struggling and always face difficulties.

Passengers traveled by train in the pandemic (April, 2020). Source: Internet

What is your opinion on the proposal of Vietnam Railway Corporation on assigning enterprises to manage, operate and invest in accordance with local planning and planning of the railway station sector?

Regarding the exploitation of railway station infrastructures, it was clear that permission is required, in the immediate future the Railway Corporation is managed and operated, the corporation has to develop a project to mobilise the development of resources. The Law on Public Asset Management stipulated that if it was still a State property, it was clearly impossible to do otherwise. The State must comply with regulations of the State. If assigning this to the railway industry, the railway industry must implement the project. Because when assigning assets, capital will increase, when the capital increases, the railway industry must ensure efficient exploitation of this infrastructure.

If it was a State property, assigned to manage for use, it must comply with the Law on Public Asset Management. The responsibility of the State is allocating transport infrastructure resources and the railway sector needs to prioritise them.

For matters assigned to businesses, enterprises have full control over the use, exploitation and transformation. Conversion must comply with the law, openly, transparently and effectively. On the contrary, the Vietnam Railway Corporation must clearly define the issue of economic efficiency, right to the market and openly and transparently.

Currently, there were two points that must be done. The first is to clearly define projects on the exploitation of infrastructure resources, which ones are responsible for the State, and clearly state the responsibility of the State for additional and concretisation of investment.

Secondly, the Vietnam Railway Corporation must also restructure, rearrange the apparatus, consider how if the State allocates the infrastructure and the station, how to exploit it effectively while avoiding problems and loss. I think this is also a direction to create resources for the railway industry so that the railways can thrive in the service and freight sector. This is the responsibility of the railway industry.

Later, if the industry develops well, the State infrastructure ensures and calls for investors to invest in the services, it is also ready to expand to compete. It is necessary to create a certain position for the railway industry to become one of the logistics services for the country's development.