Vietnam weighs technology and localization choices for high-speed rail

A $1 billion annual investment requirement

Vietnam will need to mobilize about $1 billion a year for its railway sector over the next 10 years, Nguyen Tien Thinh, deputy director of the Vietnam Railway Authority, said at an industry seminar on October 8. Thanh Nien reported that the state budget will remain the main funding source, supplemented by local governments, private investors and international partners. Authorities are also considering transit-oriented development around stations as a way to generate additional resources.

The project pipeline includes the North–South high-speed railway and the Lao Cai–Hanoi–Hai Phong line. Private investment is also emerging: Vinspeed is the investor in the Hanoi–Quang Ninh and Ben Thanh–Can Gio railways, while the North–South project has attracted interest from several domestic investors. The spending program could create a long-term market for rolling stock, rails, signaling equipment, software, maintenance and engineering services.

Domestic companies nevertheless need clarity about future orders before committing capital to production lines, equipment and training, Thinh said. He proposed procurement mechanisms that give companies predictable demand, favor locally made products where capacity exists and attach technology-transfer requirements to equipment that Vietnam cannot yet produce. International tenders could likewise include provisions for transferring technology.

Selective localization and open technology

Austrian Ambassador to Vietnam Philipp Agathonos cautioned against pursuing localization at any cost. Vietnam does not need to manufacture every railway component, he said, but should identify activities capable of creating domestic value and genuine competitiveness. He also advocated research and technology centers that can turn innovation into marketable products, complementing imported expertise.

Technology selection will shape operating costs and supplier dependence for decades. European countries use common standards, while South Korea and China have developed their own systems for railway communications, signaling and control. Vietnamese officials said assessments should therefore extend beyond the initial purchase price to maintenance, replacement parts, software upgrades, interoperability and future network expansion.

Hyundai Rotem advised Vietnam to choose specifications compatible with its finances and ability to absorb technology. The South Korean manufacturer said it was prepared to transfer know-how and potentially divide train production between South Korea and Vietnam, as in some urban railway projects. Vietnamese companies could initially build capabilities through assembly, repairs, component replacement and maintenance before moving into equipment production.

A workforce gap alongside the technology challenge

Vietnam National Railway Corporation, or VNR, has been assigned to receive, manage, maintain and operate the North–South high-speed railway and the Lao Cai–Hanoi–Hai Phong line, as well as develop a railway industrial complex. VNR chairman Dang Sy Manh said the company has progressed from dependence toward control of core information and signaling technology, giving it a foundation for operating new systems and absorbing transferred know-how.

The labor requirement is substantial. Vietnam’s national and urban railways currently employ more than 10,000 people, most of whom work with older technology. The sector is expected to require about 35,000 personnel by 2030 and an additional 70,000 by 2035. Around 40,000 workers will also need retraining for new technology and operating requirements.

Bjorn Koslowski of the German Industry and Commerce organization in Vietnam urged immediate planning for engineers, specialists and maintenance technicians, supported by universities and vocational institutions. He also said German companies were exploring opportunities to supply steel, rails and other railway products. For Vietnam, the commercial test will be whether procurement creates durable local engineering and maintenance capacity without locking the network into costly proprietary systems.