Vietnam’s Public Infrastructure Drive: More Haste, Less Speed?

Vietnam is embarking on an ambitious infrastructure investment drive to propel its economic growth. In 2025, the total approved public investment capital is set to reach VND875 trillion (US$35 billion), marking an increase of 37.7 per cent compared to the corresponding figure disbursed in 2024. Key infrastructure projects under construction include the North-South Expressway and Long Thanh International Airport. Plans are also under consideration for the North-South high-speed railway, which will cost more than US$67 billion and is slated for completion by 2035.

While this aggressive push aligns with Vietnam’s development goal, it presents significant risks, including wastage and corruption, subpar construction quality, and unsustainable public finances. If ignored or improperly managed, these risks could undermine the initiative’s economic benefits and threaten the country’s long-term economic stability.

Vietnam is targeting an 8 per cent GDP growth rate this year, with hopes for double-digit growth in the coming years. However, reaching these ambitious targets is challenging, particularly as key growth drivers like exports and domestic consumption encounter significant obstacles. Meanwhile, improving productivity through education or technological innovation takes time. All this makes it imperative for Vietnam to promote both public and private investment to stimulate growth. Public investment projects like the North-South Expressway and Long Thanh Airport are designed to enhance connectivity, reduce logistics costs, and improve the country’s overall economic competitiveness. Yet, the haste to deploy capital and showcase progress introduces significant risks.

One major risk is the persistent wastage in Vietnam’s public infrastructure projects. Local officials, aiming to meet disbursement targets and stimulate local economies, sometimes propose unnecessary or low-priority projects. The proposed Ca Mau–Dat Mui expressway, designed to link Ca Mau City in the Mekong Delta to Vietnam’s southernmost tip, exemplifies this issue. With a sparse population and minimal industrial activity, the project’s economic justification is weak, suggesting it may primarily serve local political interests over national economic needs.

Corruption further compounds wastage, as officials take advantage of the national push for infrastructure to bypass due process. A recent case involves Son Hai Group, which raised concerns about irregularities in the bidding process for an expressway segment in Binh Phuoc Province. Despite being a reputable contractor with the most competitive bid, Son Hai lost to a consortium of two lesser-known companies whose bid was VND133 billion higher. It is widely recognised that corruption is rampant in Vietnam’s public infrastructure investments, with at least 10 to 20 per cent of funds allegedly lost to corruption. This often occurs through inflated contracts or kickbacks to officials to secure bids.

By prioritising transparency, quality, and fiscal prudence, Vietnam can ensure its infrastructure investments deliver sustainable growth and reinforce public confidence in its leadership.

Construction quality is another critical concern, as the government’s focus on rapid disbursement and accelerated timelines tends to compromise oversight. The pressure to complete projects ahead of politically significant milestones, such as party congresses or national holidays, often results in rushed work and lax quality management. Tan Son Nhat Airport Terminal 3, a US$450 million project, illustrates this issue. Despite being put into operation two months ahead of schedule, reports of a leaking roof and substandard flooring have raised concerns about corners being cut to meet an accelerated timeline. These problems not only increase maintenance costs but also pose safety risks and erode public confidence in infrastructure projects. Government leaders’ emphasis on visible achievements, like early completions, often overshadows the need for rigorous quality controls, resulting in infrastructure that fails to deliver long-term value.

Financial sustainability is an equally pressing concern. Vietnam’s public debt was about 34.7 per cent of GDP as of late 2024, a manageable level compared to regional peers. However, the ambitious infrastructure agenda, which is mostly funded by the state budget and public borrowing, alongside potential revenue shortfalls from volatile tax collection, especially amid global economic uncertainties, could push debt levels higher. Without careful planning, massive infrastructure investments might increase public debt and servicing costs, straining public finances and limiting fiscal space for future investments or economic stimulus. This will become particularly true if global conditions worsen.

Poorly planned projects also risk fuelling inflation, which reached 3.63 per cent in 2024 but could escalate faster this year with increased public and private spending and a declining Vietnamese dong. Higher inflation would erode purchasing power, disproportionately affecting lower-income households and offsetting the economic benefits of infrastructure investment.

Vietnam should adopt a more prudent approach to maximise the benefits of its infrastructure initiatives and minimise risks. Curbing wastage and corruption is essential, not only to protect economic resources but also to maintain public trust in the Communist Party of Vietnam and its leadership under General Secretary To Lam. Enhancing transparency in public tendering and enforcing anti-corruption laws can reduce opportunities for misconduct. Independent audits and stricter oversight of project proposals would ensure alignment with national priorities. The government should prioritise robust quality management over political timelines for construction quality. Financially, focusing on key projects with high economic impact rather than a bloated and fragmented infrastructure agenda will help safeguard public finances and reduce inflationary pressures.

Vietnam’s infrastructure drive holds great potential to catalyse economic growth and advance the country’s development ambitions. However, resources may be squandered without addressing the associated risks, undermining long-term goals. By prioritising transparency, quality, and fiscal prudence, Vietnam can ensure its infrastructure investments deliver sustainable growth and reinforce public confidence in its leadership.

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