Vietnam's High-Speed Rail Drama: The Billionaire's Exit, Siemens' Win Over China, and a $67 Billion Mega-Project in Limbo

[Vietnam's High-Speed Rail Drama: The Billionaire's Exit, Siemens' Win Over China, and a $67 Billion Mega-Project in Limbo]

On Christmas Day, Vietnam's business world dropped a bombshell.

On December 25, 2025, Vingroup — the conglomerate of Vietnam's richest man Phạm Nhật Vượng — officially withdrew from the north-south high-speed rail bid. The line would connect Hanoi and Ho Chi Minh City, span 1,541 kilometers, and carry a price tag of USD 67 billion, making it the largest infrastructure project in Vietnamese history. Vingroup shares hit the daily limit down on the news, and Phạm Nhật Vượng's net worth fell by USD 1.9 billion in a single day, topping Forbes' Christmas wealth-loss chart.

Yet just eight days earlier, Vingroup subsidiary VinSpeed had signed a high-profile deal with Germany's Siemens to bring 350 km/h technology to its own 121-kilometer Hanoi–Quảng Ninh (Hạ Long Bay) rail line.

What is going on with this high-speed rail saga? Let us start from the beginning.

A Rail Dream 15 Years in the Making

Vietnam's high-speed rail ambitions date back to 2010. That year, the National Assembly voted down a Japan-backed north-south rail plan, citing excessive cost and insufficient state finances. Fifteen years later, with Vietnam's economy in a very different place, the project finally won National Assembly approval in November 2024.

The plan calls for 23 passenger stations and 5 freight stations, cutting the current 30-hour train journey to 5 or 6 hours. It is not just a transport project — it is seen as a symbolic step toward developed-nation status.

The Billionaire's Ambition Meets Government Resistance

Vingroup set up subsidiary VinSpeed in May 2025 and immediately entered the high-speed rail bid. Phạm Nhật Vượng's proposal was bold: self-fund 20% and borrow the remaining 80% from the government at zero interest over 35 years, with principal repaid in a lump sum at maturity.

The proposal sparked fierce debate within the government.

The State Bank of Vietnam voiced concern first. Officials pointed out that Vingroup was already highly leveraged, lacked railway construction experience, and that guaranteeing such a massive loan could destabilize the entire banking system. The Ministry of Finance was blunter: zero interest plus a 30-year repayment deferral amounted to a state subsidy, and any failure could drag down Vietnam's sovereign credit rating.

An internal document obtained by Reuters showed that relevant authorities believed the proposal would require "special state guarantees" — effectively transferring all risk to taxpayers.

The contradiction: insiders revealed that senior government officials had initially encouraged Vingroup to bid, even discussing real estate development along the route. This push-and-pull reflected Vietnam's dilemma in pursuing a "national champion" strategy.

A Dramatic Reversal in One Week

On December 17, VinSpeed and Siemens held a grand signing ceremony in Hanoi for two VinSpeed-built lines: the 121-kilometer Hanoi–Quảng Ninh (Hạ Long Bay) line and the 54-kilometer Ho Chi Minh City Bến Thành–Cần Giờ line. Siemens' global CEO attended in person, with the German ambassador to Vietnam as witness. The two sides announced the introduction of Siemens' latest Velaro Novo high-speed trains — capable of 350 km/h, 30% more energy-efficient than the previous generation, and carrying 10% more passengers.

German outlet Table.Briefings called Siemens' win on the Hanoi–Quảng Ninh line — beating Chinese, Japanese, and South Korean rivals — a critical "door opener" into Southeast Asia. In a region where Chinese firms have long dominated, Siemens' breakthrough was read as a signal of shifting geopolitical plates.

Yet just eight days later, Vingroup pulled out of the far larger prize — the north-south rail bid.

The Real Reason for the Exit

Vingroup's official line was "concentrating resources on other major projects." Phạm Nhật Vượng does have plenty on his plate: a 9,000-hectare Hanoi Olympic City, a super coastal city at Cần Giờ in Ho Chi Minh City, a VinMetal steel plant, an LNG power plant in Hải Phòng, a wind farm in Hà Tĩnh — each one a capital-hungry behemoth.

But those familiar with the matter know the real issue: financing terms could not be agreed upon.

VinSpeed's CEO told media plainly: "We only ever proposed this one model. If the format changed to a public-private partnership, we simply could not raise that 80%." In other words, unless the government offered exceptionally favorable loans, no private company could shoulder this mega-project alone.

This also explains an apparent contradiction: Vingroup quit the north-south bid yet broke ground on the 54-kilometer Bến Thành–Cần Giờ line in the same week. The difference is that the latter has more favorable financing — and the route happens to run through a real estate hub Vingroup is actively developing.

Phạm Nhật Vượng's business logic has always been clear: if it does not make money, let it go, no matter how big. In 2020, he sold the VinMart supermarket chain to Masan Group with the same decisiveness.

Siemens' Victory and China's Absence

VinSpeed's choice of Siemens over Chinese firms for the Hanoi–Quảng Ninh line reflects Vietnam's complicated feelings about Chinese infrastructure.

Vietnam's relationship with China has always been delicate. The two countries have overlapping sovereignty claims in the South China Sea, and border tensions flare from time to time. More importantly, Vietnamese public trust in Chinese-built infrastructure is low. Hanoi's Cát Linh–Hà Đông metro line is a living cautionary tale: built by a Chinese contractor, it suffered severe delays and massive cost overruns and remains a sore point among residents.

After the Siemens signing was announced, Vietnamese social media erupted in approval. One commenter wrote: "Not using a Chinese company is the right call. We don't want them touching any major national project." Others extended the discussion to sovereignty: "We should stay away from those who covet our territory."

As for the north-south high-speed rail, the technology partner has not been decided. Vietnam's Ministry of Transport stated it would prioritize partners with "high safety standards and financial transparency" — language that, while naming no one, leaves little doubt about who it targets. Siemens' win on the Hanoi–Quảng Ninh line may have already set the tone.

What Happens Next?

With Vingroup out, other bidders are circling. The most closely watched is THACO, Vietnam's largest automotive group, which has signed a strategic cooperation agreement with South Korea's Hyundai Rotem. State-owned Vietnam Railways and Discovery Group are also in the running.

The government has announced it will reveal the final investment model and winning bidder in January 2026. Only then will this 15-year-old rail dream truly begin its countdown.

The significance of this high-speed rail saga goes well beyond infrastructure news. From the choice of technology partner to the financing tug-of-war to the question of who ultimately pays, every step is intertwined with Vietnam's strategic positioning amid U.S.-China competition. Whether the line will actually open by its 2035 target remains anyone's guess.