Despite being identified as a long-term growth driver, Vietnam’s infrastructure sector faces a major funding gap, with public capital covering only a portion of demand. With over 600 billion USD needed by 2040, mobilising capital, particularly from the private sector and international investors, poses institutional and financial challenges, according to experts.
Speaking at a conference on promoting sustainable infrastructure investment in Vietnam, held on September 24 in Ho Chi Minh City, Nguyen Minh Hieu, standing member of the National Assembly’s Economic Committee, stressed that infrastructure development is a strategic, long-term foundation for economic growth. Since late 2024, both the National Assembly and Government have prioritised this in their policy resolutions.
He noted that Vietnam, amid global uncertainty, is determined to boost growth through institutional reform and major investment in infrastructure. These are considered the two core pillars to achieving over 8% growth by 2025 and sustainable development beyond.
Priority is being given to large-scale, inter-regional transport projects with wide-reaching impact such as the North–South expressway, high-speed railway with a total cost of 67 billion USD, along with airports, seaports, urban rail, logistics networks, and key economic zone infrastructure. These projects fall under the public investment plan and require National Assembly approval.
However, where will the capital come from to realise these ambitious plans remains a pressing question.
According to Oxford Economics, Vietnam will require more than 600 billion USD by 2040, with a significant financing gap estimated in the hundreds of billions.
Hieu emphasised that while this is a formidable figure, it is achievable with the right approach. Beyond the state budget, private and foreign capital – via PPP models, infrastructure bonds, international fundraising, and dedicated investment funds – is essential. However, to attract long-term private capital, robust institutions, transparency, and effective project governance are key.
Nishant Kumar, Asia Regional Director of the Private Infrastructure Development Group (PIDG), noted Vietnam’s progress in developing its capital markets and laying the groundwork for sustainable infrastructure finance. Yet the scale of demand still far outweighs current funding capabilities.
He stressed that credit guarantee instruments are becoming essential—not just optional—for Vietnam to mobilise long-term private capital, especially from institutional investors. Credit guarantees act as insurance, reducing investment risk, increasing issuers’ access to capital markets, and helping bridge the gap between investors and high-risk infrastructure projects.
Experts at the conference also highlighted the potential of green bonds to finance sustainable infrastructure. Though still limited in number, green bond issuances represent a major opportunity, especially as Vietnam targets Net Zero by 2050.
Simon Chen, Head of Ratings and Research at VIS Rating, explained that infrastructure projects typically have long implementation timelines – often 10–20 years, unlike standard corporate loans which average 7–10 years. Thus, banks are not always the ideal funding source. Bond markets can fill this gap by providing longer-term, tailored capital.
Chen added that Vietnam’s corporate bond market has undergone significant reforms over the past three years, with clearer regulations now in place. These changes have improved accessibility for issuers. However, more preparation is needed to help businesses become bond-market ready, especially in infrastructure sectors.
Vietnam’s institutional investor base is still developing. Aside from insurers, only a few bond funds exist, and they remain small in scale. Therefore, analysts held that growing this investor group, particularly to support the green bond market, is essential for sustainable infrastructure financing./.
(VNA)
