Socialist Republic Of Vietnam: Review: East Asia And Pacific Region Transport Sector Unit

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East Asia and Pacific Region Transport Sector Unit
Alberto Nogales - Version: June 1, 2004*

The Socialist Republic of Vietnam (Vietnam), surrounded by China in the north, Laos and
Cambodia in the west, is located in the eastern part of the Indo-China peninsula. Its land area of
331,688 km2, stretches over 1,650 km from north to south and 600 km from west to east, and it has 2,260 km long S-shaped coast lines. In 2002, with an annual growth rate of 1.2 per cent the country had a population of 80 million located in the two large delta areas developed in the plains along the Mekong river in the south, the Red river in the north and along the coast. About three fourths (76%) of the population live in rural areas and the urban population accounts for about one fourth (24%). The major urban centers include Hanoi and Hiphong in the north, Ho Chi
Minh (HCMC), Mytho, and Can Tho in the south, and Hue, Da Nang, Nya Trang, Qui Nhon,
Camran and Vung Tau along the coast.
During the 1990-2000 period, Vietnam moved from a food deficit nation to become the second largest exporter of rice. In this decade the real economy in Vietnam doubled its size, while the rate of poverty was halved from 70% to 35%, saving rates rose six-fold to around 25% of GDP, and exports rose by an average of 25% per year. Social indicators improved markedly and across a broad front there were widespread and visible improvements in the lives of Vietnamese citizens.
The transport infrastructure was in a poor state after the war damages and subsequent years of economic stagnation. Road, railway, inland waterway, coastal and sea shipping, and aviation play important roles in the transport sector. For long distance passenger transport the key modes are highways, railways, and aviation, while for freight transport road, rail and waterways. The transport sector grew significantly during the 1990s. For instance, inter-provincial traffic flow between 1992 and 1999, doubled (2.1) the number of passengers and almost tripled (2.9) the tonnage of goods.
Public investment priority has been to rehabilitate and upgrade the main long-distance and international links, especially roads and ports, where growth in demand has been particularly great, while relatively small amounts have been allocated to other modes. The transport sector needs are enormous. For the 2001-2010 decade the VITRANSS Study estimated in US$14.2 billion the funding requirement that includes maintenance, or roughly US$1.4 billio n per year.
This is equivalent to 2.8% of cumulative GDP for the ten year period. Historically, Vietnam has spent about 1.8% of its GDP on public expenditures in the transport sector although this figure has steadily increased to a 2002 level of 3.5%.
Transport infrastructure continues to be predominantly financed, built and operated by the public sector, either directly through the government or by quasi-independent SOEs, while transport services are also dominated by SOEs. Vietnam Airlines is government owned, and all rail services in the country are provided by Vietnam Railways, a public enterprise. There is also state control of some trucking and barge enterprises but the role of the private sector is becoming increasingly important and now probably provides the dominant share. Bus services in Hanoi are presently provided by a public sector operator, but in HCMC many private operators supply service. *

The views expressed in this transport sector brief are those of the author, based on previous work and contributions from the staff of the Transport Unit for the East Asia and Pacific Region
(EASTR), and they do not necessarily reflect the views of the World Bank.
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The development of transport infrastructure and major reforms in the regulation of the sector, resulted in the growth of the private sector and commercialization of the state sector. Various new services were introduced such as container