The Asian Development Bank agreed to lend Vietnam $540 million for the construction of a subway line to reduce traffic congestion in Ho Chi Minh City, according to a statement from the lender released in Hanoi today.
Total investment for the project is about $1.37 billion, according to a separate government statement handed out at the signing ceremony today. Construction will start in 2012 and a test run is planned for 2016, the statement said.
“We are fully aware that the real challenge is to change the people’s mindset,” Ayumi Konishi, the ADB’s country director for Vietnam said. “We sincerely hope public transportation will be supported by people in Ho Chi Minh City as improved and cheaper transport will create business opportunities, reduce congestion, and improve the quality of life.”
The European Investment Bank will provide 150 million euros ($206 million) for the project, according to the government statement today.
Kreditanstalt fuer Wiederaufbau, Germany’s state-owned development bank, earlier this month agreed to give Vietnam 10 million euros in aid and 18 million euros in loans for the project, as part of the German government’s plan to provide Vietnam with 85.75 million euros in non-refundable aid and 155 million euros in loans to help finance the construction of the subway line.
The 19-kilometer (12 miles) subway, Ho Chi Minh City’s second line, is part of wider efforts to curb traffic jams in the city caused by inefficient public transport and increasing use of private vehicles. The city government plans to build a $7.5 billion metropolitan rail system by 2020, with 84 percent of the funds expected to come from overseas lenders.
To contact the Bloomberg News staff on this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net
To contact the editor responsible for this story: Alan Soughley at asoughley@bloomberg.net
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