January 22, 2016 3:44 pm

Tale of two metro lines shows battle for business in Vietnam

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments
This picture taken on September 12, 2014 shows motorcyclists riding past the Chinese-funded under construction sky train line in Hanoi. The cost of the 13-kilometre sky train project which began in 2008 has risen to 892 million USD according to local official media which often criticises important delays, high costs and low technology from key projects won by Chinese constructors in energy and infrastructure fields. AFP PHOTO/HOANG DINH Nam©AFP

Wrong side of the tracks: a Chinese-built section of Hanoi's urban railway has come in for criticism

A tale of two metro lines in Vietnam’s capital has thrown sharp light on how anti-China feeling plays into a battle between economic powers for sway in this frontier market.

Delays, disruption and accidents have sparked criticism of a Chinese-built section of Hanoi’s new urban railway — and unfavourable contrasts with a part of the network being worked on by a South Korean rival.

“Of course people would prefer Koreans to do this project,” said Hang, a Hanoi food seller whose street stall is dwarfed by the elevated metro line’s towering columns. “But the government agreed for Chinese companies, so we have to trust them.”

The narrative chimes with hostility towards Beijing, which exploded into riots in 2014 and rose again this week after the arrival of a Chinese oil rig in contested offshore waters. The rail duel also shows how popular sentiment in Communist-led Vietnam and elsewhere in Southeast Asia could shape a growing tussle between China, South Korea and Japan for business.

The new railway is part a number of infrastructure projects aimed at relieving congestion and pollution that threaten to overwhelm the capital. Urban rail network projects in both Hanoi and Ho Chi Minh City, the main commercial centre, have attracted extensive international interest.

China Railway Engineering Corporation is building one line in Hanoi, while Daelim of South Korea has a contract for another. A consortium including Japan’s Sumitomo is working on the Ho Chi Minh City project.

The Chinese line has come under fire after reports of deferred deadlines, cost overruns and dangers to passers-by from falling materials. The most serious accident was when a steel rod dropped from a crane, killing a man riding on his motorbike and injuring three other people, according to reports in Vietnam’s tightly policed media.

It’s like turtle walking around. I think if Japanese companies built this station, it would not be that slow

- A tea seller named Nguyen, whose stand is in the shadow of a Chinese-built station

A tea seller named Nguyen, whose stand is in the shadow of a Chinese-built station where the clang of construction was ringing out, said he feared the threat of debris and was annoyed about the prolonged disruption.

“It’s like turtle walking around,” he said of the pace of the project. “I think if Japanese companies built this station, it would not be that slow.”

The Chinese work has also prompted mockery from Vietnam’s active social media, where municipal matters are politically safer targets than central government policies or officials. One much-noticed Facebook post unflatteringly compared Chinese craft with Japanese workmanship, via a pair of pictures purportedly of parts of the Hanoi and Ho Chi Minh City metro lines.

All this ought to be music to the ears of China’s rivals, including Japanese businesses that more than tripled their investment in Vietnam to $9bn between 2011 and 2014. South Korean investment in the country leapt a third higher in 2013 and 2014 than during the previous two years.

However, legitimate concerns seem mixed with a dose of prejudice. Rhetorical attacks on China by Vietnamese government officials and other commentators ran out of control in 2014, as mobs torched and ransacked foreign factories in some of the country’s industrial parks. Some Chinese companies temporarily withdraw staff and mothballed projects for fear of a repeat.

Japan and China step up fight for Asean infrastructure contracts

(L-R) Philippine President Benigno Aquino, Singapore's Permanent Secretary for Foreign Affiars Chee Wee Kiong, Thailand's Prime Minister Prayut Chan-O-Cha, Vietnam's Prime Minister Nguyen Tan Dung, Japanese Prime Minister Shinzo Abe, Malaysia's Prime Minister Najib Razak, Laos Prime Minister Thongsing Thammavong, Brunei Sultan Hassanal Bolkiah, Cambodia's Prime Minister Hun Sen, Indonesia's President Joko Widodo and Myanmar President Thein Sein pose for photographers during the 18th ASEAN-Japan Summit in Kuala Lumpur on November 22, 2015, on the sidelines of the 27th Association of Southeast Asian Nations (ASEAN) Summit. Asia-Pacific leaders meeting in Malaysia condemned the string of Islamic extremist attacks from Paris to Mali, urging an international effort to fight the scourge. AFP PHOTO / ADEK BERRY (Photo credit should read ADEK BERRY/AFP/Getty Images)

Japan, smarting at losing out on deals, pledges to ease loan approval process and take on more risk

Nor has Hanoi’s South Korean-built metro line been problem-free: two accidents involving falling heavy materials and equipment were reported in the media in May, including a toppling crane that injured a pregnant woman and a motorbike rider. The standing of South Korean companies in Vietnam was dealt a further blow in December when a Samsung official and another Korean businessman were jailed after a scaffolding collapse killed 13 workers in March at one of the conglomerate’s construction sites in the country.

China Railway Engineering, Daelim and the Vietnamese government did not respond to questions. Many Vietnamese officials are preoccupied with the five-yearly party Congress being held in the capital.

The Hanoi Metropolitan Railway Management Board acknowledged on its website as long ago as 2012 that “various problems” were causing “difficulties” with the metro project. Now, more than three years later, some residents next to the Chinese-built section are fed up of waiting to see whether their tale will end with the best of lines or the worst of lines.

“I don’t care who is doing the project,” sighed Huong Tran, a shop worker who complained that the construction was driving away business. “But I am not happy with it because it is taking so long.”

Additional reporting by Khac Giang Nguyen in Hanoi, Li Wan in Beijing and Song Jung-a in Seoul

Related Topics

Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

The FT’s one-stop overview of key Japanese economic data, including GDP, inflation, unemployment, trade and consumer spending


Sign up for email briefings to stay up to date on topics you are interested in