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«Chapter 3 Transportation in and around Hanoi: current issues and challenges Nguyen Ngoc Son Vietnam Development Forum and National Economics ...»

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Business environment and policies of Hanoi

Chapter 3 Transportation in and around

Hanoi: current issues and challenges

Nguyen Ngoc Son

Vietnam Development Forum and

National Economics University

1. Introduction

Like other infrastructure services, transportation is an intermediate input,

which helps to increase the productivity, economic growth, solve social

problems such as poverty elimination and decreasing inequality gap among

regions. In other words, transportation plays an importation part in economic development through increasing productivity, providing necessity, and improving living standards. For enterprises, the transportation system is very essential in their business activities. With a good system, enterprises can have lower business costs, and allows access to production resources like capital, labor, materials and consuming market.

Transportation system development will have impacts on the three aspects of sustainable development: economic, social and environmental development.

(See Figure 1) In short, we can see that transportation system development has a great impact on sustainable development of an urban area, a region or a country in general. Transportation is an essential element in the investment environment. Therefore, when choosing an investment location, investors Transportation in and around Hanoi… always consider transportation as one of the most important factors.

According to the Investment Climate Survey of the World Bank 2005, transportation is considered the third constraint for business activities and enterprises. Moreover, transportation in Vietnam is seen as a greater constraint than neighboring countries like the Philippines, Indonesia, Malaysia, India and China (see Figure 2) 20. According to this survey, there are 24% of enterprises in Vietnam think that transportation is a constraint for their business. The road quality makes the transportation cost increase significantly. That is one among many factors that enterprises worry about most. In Brazil, the structure of roads is very bad, so the transportation cost accounts for 20 – 40% of the product price. In Russia, due to low quality roads, transportation cost accounts for 15% of the price. In Western Europe and the US, the transportation cost share is 7 – 8%. In Vietnam, there is not an official assessment on the transportation cost, however, it is clear that the road infrastructure is no better than the mentioned above countries 21.

Investment Climate Survey of the World Bank 2005 was conducted in 58 developing countries and transition economies. The Investment Climate Survey in Vietnam, conducted by the International Development Center of Japan and CONCETTI in the summer of 2005, has one of the biggest samples in the world. It comprises 1,150 firms located in 25 provinces across five of the eight regions of the country.

The World Development Report 2005

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Transportation in and around Hanoi… Figure 2 Percentage of enterprises consider the transportation system is a constraint for their business in some Asian countries

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The survey on 66 enterprises in Hanoi conducted by VDF in 2005 also provides similar results 22. According to this survey, transportation quality is one consideration of investors (Figure 3).

Hanoi is an important and strategic transportation point. It plays an essential role in socio-economic and security of the country. Like other modern capitals over the world, if Hanoi wants to improve its position equivalent to other capital cities in the region and to attract more investors, it first has to comprehensively improve its transportation system, in which the transportation network for socio-economic development and for commodity transport and public transport should be the core.

The survey was conducted by VDF researchers (Pham Thi Huyen and Nguyen Ngoc Son) in 2005 and had done in the last six months of 2005, beyond 66 valuable responses. There are nine nations and territories: Australian (4 respondents), China (8 respondents), EU (9 respondents), Hong Kong (6 respondents), Japanese (10 respondents), Singapore (7 respondents), Taiwan (8 respondents) and the US (6 respondents).

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The ranking of business environment conducted by The Economics (2006) partly shows the weakness of Hanoi’s infrastructure. According to this evaluation, Hanoi stands at 112th among 127 cities, even after HCMC with the position of 105th. The quality of the domestic and international public transport network and travel distance to the nearest airport are also criteria to be considered (accounting for 20%). Hanoi also stands nearly at the last position in the list of good destinations for entrepreneurs in 2006. Also, due to the weaknesses of the transport system, Hanoi ranks 155th out of 255 cities in 2006, according to the ranking of MERCER, a Human Resource Consulting Company, located in New York. In the ranking list, Hanoi stands at nearly the last position in South East Asia, compared with Manila, Bangkok, Kuala Lumpur, Singapore and HCMC.

The survey of VDF also reveals that transportation is not only an important factor that investors have to consider but also the third constraint to Transportation in and around Hanoi… production and business activities of enterprises. Enterprises in Hanoi agree that Hanoi transportation system is the third obstacle of business constraints, and it is much more serious than that of the whole country.

Figure 4 Constraints to business activities of enterprises Lacking workforce Discipline in working Officers' attitude Complicated procedure Unstable law system Land/office problem Banking/financial Lack of supportive Transportation Lack of functional co-ordination Corruption rate 0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 Source: VDF’ survey, 2005. Respondents were asked to measure the negative aspect of Hanoi from 0 to 2. The higher scale means the bigger problem The transportation network in Hanoi includes: national radial railways, western ring railways, airlines, national radial roads, ring roads, inner city roads, roads on outskirt, main ports in Hanoi, and river ways (see Figure 5).

In this chapter, the author mainly focuses on analyzing current problems and the challenges of urban transportation inside the city, from Hanoi to other provinces, and international transportation lines from Hanoi.

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2. Hanoi’s internal transport problem

2.1. Poor transportation infrastructure The Hanoi transportation network has not been completed. Road infrastructure in Hanoi center includes 326 streets, but the quality of roads is inadequate, the width of roads in the Old Quarter have limited width to only 6 to 8 meters, and the old streets have width of 12 - 18 meters with too many crossings, which create conflicts and decrease the speed of transportation.

Distance to the crossroads is only 50 – 100 meters in the Old Quarter and 200 – 400 m in the old streets, leading to limited vehicle speed of only 17.7 –

27.7 km/h. Those streets all have big traffic volume; furthermore, it is mixed traffic including non – motorized vehicles, trishaws, cars and a number of motorcycles and bicycles. Intersections in the City including railways and roads and intersections between the main trunk road are all at grade, Transportation in and around Hanoi… adversely affecting the traffic; many of them lack traffic management equipment and facilities.

Road cross – sections are generally narrow, with limited possibility to expand the roads in the City center because of the land acquisition problems.

Sidewalks are occupied for motorcycle keeping of business, leaving no room for pedestrians. There are so many intersections in the road network (in the area inside the Ring Road II, there is averagely one intersection every 380m).

Important intersections at present are all at grade, some of them are now under improvement to be grade separate intersections. Usage of traffic lights or arrangement of roundabouts at the crossroads is unable to satisfy the traffic operation, causing congestion.

Table 1 Comparing Hanoi’s road quality with other cities in Vietnam

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The Table 1 shows that the land fund reserved for transportation inside the city of Hanoi is too small, the road area is only 7% of total land area.

Although this rate is still a little bit higher than that of HCMC and Da Nang, it is very low compared with 20 – 25% of other capitals over the world. The road density in Hanoi is 1.09km/km2 much lower than the rate of other capitals in the region and in the world, which are 5 – 6 km/km2. It is not only

Business environment and policies of Hanoi

that the area is smaller but the road density is not equally allocated also. The rate of the transportation road is 12% in Hoan Kiem district, but it is only 5% for other districts. Several olds streets or urban centers have relatively road networks but are densely populated, with a high density of transport participants, while many other residential and urban areas including newly developed areas haven’t had complete road networks. Road density is rather small in the outskirts, with inconvenient transport conditions resulting in population concentration in the City center, seriously affecting the traffic management and social services.

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To achieve the land area of 20 – 25% for transportation, Hanoi needs 15 million square meters; the cost for land clearance is USD14 million 23.

So if a focus in placed on the transportation infrastructure in the inner city, the people will be discouraged from moving to new urban areas. As a result, the land price will remain high and the population deconcentration program will not be effective. Therefore, Hanoi should invest in transportation infrastructure and develop new urban areas with diversified services, low priced housing. The area inside the ring road number II should be kept intact Provided that the price is equivalent to the compensation price used when clearing the Kim Lien – O Cho Dua area, the city must spend about USD14 billion to get 15 million square meters.

Transportation in and around Hanoi… with small refurbishment. According to some economic experts, Hanoi can set up a new political, economic, educational, and medical center outside the ring road number III.

Moreover, urban development concentrates in the West and South West of the City are increasing the population density and traveling demands, while road networks haven’t been developed adequately, leading to more and more serious traffic congestion at the gates to the city.

Inner and outer ring roads in combination with the radial highways create a complete road network, playing an important role in realizing the internal and external transport function of Hanoi Capital. Moreover, Hanoi does not have a complete ring road system, so the commodity and passenger vehicles all have to go through the center of Hanoi, which easily creates traffic congestions, and pressure on the traffic system inside the city. In the coming time, Hanoi should complete the ring roads numbers I, II and III, and build ring road number IV (see Map 1).

At present, there are only 3 bridges crossing the Red River: Thang Long, Chuong Duong, and Long Bien. But Long Bien Bridge has been seriously damaged and mainly used for bicycles and trains only. Bridges crossing the Red River are not enough to meet the transportation demand. Chuong Duong bridge is often overloaded. This is the reason for frequent congestion on the Eastern gateway of the Capital. Meanwhile, slow building progress of Thanh Tri Bridge and Vinh Tuy Bridge makes the congestion on the Eastern gateway more serious. In the future, Hanoi will build the ring road number 4 and there will be 7 bridges crossing the Red River.

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2.2. Traffic congestions getting more serious Congestion is one of the most prevalent transport problems in large urban agglomerations. The essence of congestion is that the supply of transportation infrastructure can not meet the demand. As Figure 7, we see the demand for transportation system from 6 am to 8 am and from 4 pm to 7 pm is very high.

Countries base on this demand and on the ability to satisfy this demand to make investment decisions in transportation system. If the countries have enough resources, they will invest to meet the highest demand. However, not all of the countries have enough resources. Hence they have to choose the satisfaction of medium demand or evenly lower level. As a result, congestion can not be avoided when they chose the lower project.

Transportation in and around Hanoi… Figure 7 Demand for transportation infrastructure in day Demand

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Although the traffic congestions in Hanoi are not as serious as in other cities like Bangkok, Manila and Jakarta, it is beginning to have impacts on economic efficiency. At present, there are 70 traffic congestion points in Hanoi.

Like other East Asian countries, Hanoi also has 3 rush hour times: in the morning, during noon and in the afternoon. The rush hour times for trucks and vans are 8 am and after 10 pm. During the rush hours, trucks and vans make a long queue waiting for the allowed time to enter the city center and traffic congestions for trucks and vans happens very often. Traffic congestion in Hanoi increase in both density and time. According to a survey on 20.000 households in Hanoi conducted by Institute of Sociology funded by JICA, there were 63% who agreed that traffic congestion in Hanoi is very serious and 53% think that traffic congestions have gotten more serious in the last 5 years.

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The following part will provide some explanation for traffic congestion in Hanoi.

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