Infrastructure Costs Are Holding Vietnam Back

The Vietnamese newspaper Tuoi Tre reports it costs 50-100% more to build expressways in Vietnam than in neighboring China, Indonesia, and Thailand — because of wasteful use of equipment, poor project management, the demands of overseas investors, and corruption.

Costs for expressways can approach $45 million per mile, and some highway projects have experienced long delays.  An example is Hanoi’s Thang Long Highway that opened in October 2010 to mark the city’s 1,000th anniversary but remains unfinished.

In Ho Chi Minh City, the Trung Luong Expressway cost $16 million per mile, a relatively modest price compared to another highway project priced at $45 million per mile.  The report says the average cost of building a mile of expressway in China is about $10 million and the US $13 million.

None of this makes sense in light of Vietnam’s lower labor cost and cheaper materials unless you consider the huge sums needed to finance inefficient project management — which helps account for the reluctance of foreigners to invest in Vietnam.

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