The European Investment Bank (EIB) will begin disbursing US$164 million in capital for urban railway constructions in Hà Nội and HCM City as part of efforts to cement the Viet Nam-EU partnership. EIB Vice President Jonathan Taylor spoke to Việt Nam News about the bank’s involvement in the country’s infrastructure development and future co-operation potentials.

Can you elaborate on the EIB’s latest support for the Hà Nội Metro Rail System?

This EIB loan, divided into two packages of $83 million and $81 million, will support completion of the first part of the Hanoi Metro’s Line 3. It will cover the construction cost of 12.5 kilometres of rail from Nhổn Depot to Hà Nội Station, 12 new stations and purchase of new trains.

The volume of our lending was calculated through careful consideration of costs and contributions for this particular part of the line, and will not be associated with any potential expenses increase or decrease in other parts. 

We make no other technical requirements like train carriages types or construction methods, and provide no other procurement but the pledged amount of money. Additionally, we have a team of engineering experts at hand to provide technical assistance during individual phases of the project.

Any further macro-level legal and sustainability growth support will be provided by the Delegation of the European Union to Việt Nam.

How did the EIB choose to finance this project?

Despite having two and a half times more capital than the WB, the EIB focuses 95 per cent of its funding within Europe and other nearby countries. In Asia, our biggest portfolios so far have been in India and China, and it is time we shifted our focus to countries like Việt Nam.

Furthermore, we are positive about Việt Nam’s state of public spending and financial management through this project. The Hanoi Metro Rail System Project Line 3 has demonstrated genuine economical value, and we believe it to be a sound investment, meeting certain financial, environmental and social standards.

As I have witnessed its impressive scale and construction firsthand during my onsite visit earlier today, I am even more convinced of your government’s technical ambition in fighting congestion and pollution.

Having met with Vietnamese senior government ministers, city leaders and representatives of financial institutions and diplomats to discuss the transformational impact of past EIB investment and how future bilateral engagement can be strengthened, I am confident our support will help your government in transforming public transport, improving travel time and urban environment.

So what is your take on the EIB’s impact on Việt Nam’s development?

Since 1998 the EIB has invested more than $850 million in Việt Nam, in partnership with local banks. We look forward to giving you further financial support for national development in near future, including transport, renewable energy and energy efficiency projects.

As this particular loan will carry a near zero interest rate, we hope to assist the Vietnamese government in contributing to sustainable development, further strengthening our presence and engagement in the country to unlock new investment across crucial sectors. It demonstrates both Europe’s commitment to support world class climate related investment across Asia and its strong engagement in Việt Nam.

I would like to clarify that the EIB and its shareholders also promote co-operation with other international development banks in helping Việt Nam progress. The increasing presence of foreign lending in the country through multilateral loans can very well be beneficial for Việt Nam, not just within the already well-endowed financial and banking sector.

How will EIB continue facilitating Việt Nam’s future growth?

Since Việt Nam will soon graduate from receiving development aid from institutions such as the World Bank (WB), the EIB as the world’s largest financier for climate related investment can offer the country other similar and useful loan packages in the future.

As Việt Nam moves up the global scale, we wish to provide complimentary support and co-finance development projects with other banks in and outside of Europe. With that in mind, we will not provide strictly concessional financing, but rather competitive lending, for the period ahead.

We here at the EIB are committed to strengthening climate related investment worldwide and Việt Nam is a key partner on the EIB’s Asian investment map. It is important that your leaderships sees the prospect of cooperating with our bank, especially when the country is in need of other sources of funding besides aid from the World Bank or the Asian Development Bank.

The EIB and Vietnamese authorities will co-operate closely to address global challenges. We share a commitment to tackling climate change via unique technical experience and finance expertise.

We really hope that in 2020, we will have connected Việt Nam with the banking network in Europe and across Asia, so that the country gets even more development opportunities. — VNS