The first metro line, spanning 19.7 km from Bến Thành Market in District 1 to Suối Tiên Theme Park in Thủ Đức City, is set to start operations later this year. — VNA/VNS Photo

HCM CITY — HCM City plans to issue bonds to finance its long-awaited metro projects, aiming to reduce reliance on Official Development Assistance (ODA).

Under a master plan, the city plans to develop 183 km of metro lines by 2035, requiring an estimated US$36 billion.

Funding will come from local budgets, central government support, ODA loans, and other sources.

To lessen ODA dependence, the bond issuances are expected between 2025 and 2035, with annual increases of VNĐ10 trillion to VNĐ30 trillion, adhering to a 120 per cent debt to budget revenue limit.

Speaking at a recent meeting, Phan Văn Mãi, chairman of the municipal People’s Committee, encouraged citizens to invest in metro bonds to support infrastructure growth, despite potentially lower bank deposit interest rates.

The city has submitted a request for 14 capital mechanisms to the central government for funding 200 km of metro lines, including local government and project bonds.

Currently, only two of the planned eight lines and three monorails are under construction.

The first line, spanning 19.7 km from Bến Thành Market to Suối Tiên Theme Park, is set to start operations later this year, with trial runs already underway.

The overall metro plan aims to expand to over 350 km by 2045 and 510 km by 2060, with an estimated total capital requirement of $66.8 billion.

Public debt risks

Dr. Dương Như Hùng from HCM City University of Technology emphasised the need for the city to assess public debt risks while issuing bonds to reduce reliance on ODA.

The city must stay within a debt limit of 120 per cent of its budget revenue and noted that metro revenue largely depends on ticket sales, which will take time to develop.

Dr. Đinh Thế Hiển highlighted that urban and project bonds are crucial for establishing the city as a regional financial hub, supported by its financial capacity and stable revenue.

Dr. Lê Duy Bình from Economica Vietnam said it was vital to issue bonds for development of key projects, criticising ODA reliance for delays and cost overruns.

To attract investors, Bình identified the need for competitive interest rates and liquidity in the secondary market.

He recommended rates that match reputable banks’ long-term averages.

He called for collaboration among finance authorities to create a liquid bond market and cautioned against outdated low-interest practices that could deter investors.

Nguyễn Thị Tuyết Hồng from Dragon Capital noted the growth potential of local government bonds.

But she called for attractive interest rates, and credible payment capabilities to attract investors, as these bonds are often viewed as less secure than central government bonds.

She said it was important to promote transparency in financial information to reassure investors, especially given past issues with timely payments.

In a related move, the government had lately proposed using bond issuance to fund the $67.3 billion North-South high-speed rail project along with other sources. — VNS