Railway Law to be revised to better serve the country’s transport needs

The Ministry of Transport (MOT) in Vietnam is currently gathering public feedback on a draft revision of the Railway Law, which proposes significant changes aimed at modernizing the railway sector. The key areas of focus in this draft include incentives and support for the railway industry, investment and management of railway infrastructure, integration of railway transport with other modes of transport, and general railway transport operations.

Key Revisions and Additions
The draft law proposes substantial changes compared to the 2017 Railway Law, retaining only 14 of the original 80 articles, while amending or supplementing 59, adding seven new articles, and annulling 12 articles.

Incentives for Railway Enterprises
The draft introduces specific incentives for both domestic and foreign enterprises involved in railway activities. In addition to existing incentives under the 2017 law, the new provisions would offer a reduced corporate income tax rate of 10%—the maximum incentive under current tax laws—for railway infrastructure and industry-related businesses. Import duties on critical machinery, equipment, spare parts, and materials necessary for railway infrastructure and operations would also be exempt.

Furthermore, state-owned enterprises could increase their capital when investing in new railway equipment and technology under certain conditions.

Railway Infrastructure Investment and Management
A significant provision in the draft is the restriction that public-private partnership (PPP) projects in railway investment should not receive more than 80% of their funding from the state. Provincial authorities would also play a more active role in allocating land near railway stations for urban development, such as commercial zones and office buildings, with proceeds from land use rights supporting reinvestment in railway infrastructure.

To speed up the implementation of high-speed and urban railway projects, the draft allows the use of front-end engineering designs instead of more detailed basic designs when presenting feasibility studies for projects that require approval from the National Assembly.

Local authorities could take on greater responsibility for regional railway projects, including infrastructure investments, after government approval. Collaboration between provinces will be key for railways that cross multiple regions, with the involved provinces needing to agree on budget allocations and project responsibilities.

Enhancing Railway Connections
The draft also emphasizes the need for stronger integration between railway and other transport modes. Railways would be required to connect to major airports (handling at least 30 million passengers annually), special seaports, and grade-I seaports, facilitating easier movement of cargo and passengers. Owners of transport-related projects would need to set aside land for railway connections, and land reserved for railway infrastructure would be exempt from rental fees.

In urban areas, passenger terminals on national railway routes would be located in city centers to improve accessibility. For new railways that cross roads, project developers would need to build non-level crossings and install safety measures, such as railway fences, to ensure safety.

Conclusion
The proposed changes in the draft Railway Law aim to modernize Vietnam’s railway system by providing greater financial incentives for investment, streamlining project approval processes, and ensuring better integration with other transport modes. The public and stakeholders are being invited to provide feedback on these important legislative reforms.