Vietnam’s railway industry is opening a new chapter, one where the conversation is no longer just about construction spending but about shaping a domestic railway industry. As the revised Law on Railways moves towards completion, alongside the national plan to develop human resources for the industry to 2035 and the restructuring of the Vietnam Railways Corporation, the industry is approaching a pivotal moment.
For the first time, the railway industry is being recognized as a foundational component of national infrastructure - one with the potential to spread technology, create jobs, and build long-term self-reliance. These institutional shifts do more than pave the way for modern infrastructure.
Missing links
Though the potential for Vietnam’s railway industry is enormous, with multiple national flagship projects underway, the reality is that this fertile ground still lacks enough businesses willing to cultivate it.
Mr. Vo Ta Luong, General Director of the Vinh Hung JSC, a Vietnamese company providing technological products and solutions for traffic and civil and industrial construction, said one major reason Vietnam has yet to develop a sustainable domestic value chain in the industry is that nearly all technical materials are imported. The gap between existing manufacturing capabilities and the technical requirements of a modern railway network remains substantial.
Another factor, he noted, is that domestic companies have had limited access to large-scale tenders, largely due to constraints in technological capacity and capital as well as contractor selection mechanisms. On top of that, the high risk associated with investing in advanced industrial equipment discourages many from entering the field, even those with R&D and manufacturing potential. More importantly, both local and foreign experts and businesses argue that Vietnam still lacks a national technical standards system and has yet to create a testing or “sandbox” mechanism for companies to validate and refine products before commercialization.
As a result, the railway industry is highly fragmented, with technical standards varying from project to project. This is compounded by lingering bias among some consumers and investors against “Made in Vietnam” products. Many experts believe the industry’s biggest challenge today is technology localization. This process, they emphasize, must span the entire value chain, from research, design, and manufacturing to construction, rolling stock production, signaling and communications equipment, power supply, industry-specific materials, and auxiliary equipment.
The objective of localization is not only to reduce import costs but to keep value creation within the country and gain full control over technology, standards, and testing. Increasing the localization rate while upgrading technological capacity will also help reduce lifecycle costs, and enhance safety, quality, and long-term sustainability for the railway network.
In the long run, technology localization will not only save costs but also deliver advantages in time, safety, and self-reliance, and will form the foundation for building an independent Vietnamese railway industry capable of integrating into, and competing with, global supply chains.
Blueprints for self-reliance
To build a self-reliant railway industry, Vietnam must quickly refine its technology localization framework, from policymaking and technical standards to procurement mechanisms and enterprise support. Crucially, railway technology development cannot be separated from four pillars: technology, solutions, investment, and supply chains.
In terms of technology, Vietnam needs to choose an appropriate direction: avoiding costly, overly complex systems while ensuring modernity, safety, transferability, and adaptability to domestic conditions. Technology selection is not merely a technical decision but a long-term strategic choice tied to a phased localization roadmap, one that allows Vietnamese companies to learn, participate, and gradually take the lead.
Equally important is the need for comprehensive development solutions. Building a railway industry is not just about purchasing rolling stock or laying lines. It must be viewed within a broader structure that includes investment models, governance mechanisms, maintenance systems, and smart operations. Future projects should be designed with open architectures capable of integrating control, energy, data, and automation technologies, creating space for Vietnamese enterprises to contribute across every stage of the value chain.
Investment capital remains a major challenge, as the State budget can cover only part of needs. Mobilizing private and foreign investment will also require transparent, flexible mechanisms and a clear legal framework for public-private partnerships (PPP). At the same time, the government must make long-term procurement commitments to domestic firms, especially in technology, to build confidence and encourage sustained investment.
Beyond capital and technology, the supply chain is pivotal for sustainable growth. Standardizing technical requirements and establishing unified norms across projects will help consolidate the industry, expand production scale, and attract domestic investment. Vietnam must also support companies in meeting international standards, strengthening the domestic manufacturing base while enabling local firms to enter regional supply chains.
The process should prioritize private companies with strong innovation capacity and competitive costs, while enforcing mandatory localization roadmaps that require foreign manufacturers to partner with Vietnamese firms in technology transfer. In parallel, policies must protect the domestic industry, prevent origin fraud, and ensure that Vietnamese-made products are widely used in infrastructure projects.
Another critical direction is establishing a dedicated sandbox for the railway industry - a controlled environment where companies can test, validate, and refine technologies before commercialization. International experience shows that such testing spaces support not only research but also the training of engineers and high-tech workers, reducing deployment time and mitigating risks during the early stages of investment.
If implemented cohesively, these mechanisms will help Vietnam shift from an importer to a country that mastered and then gradually exported railway technology. This is not only an economic objective but also a strategic step towards sustainable industrialization, reinforcing national infrastructure capacity and elevating Vietnam’s position in the regional industrial value chain.
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