Metro costs in the world
/I still have not completed a bigger piece on ride hailing, mainly because I haven’t done any work on it. So don’t get your hopes up.
But I did see two interesting articles that piqued my interest in metro rail building in Vietnam. The first is that the Ho Chi Minh City (HCMC) government said it would not ban motorbikes in the center of the city, which is good news. On February 26 (scroll down to see the post), I said that the government couldn’t ban motorbikes. They are too important to people’s transport in the city. Now the government has “clarified” things by saying that it hopes motorbike usage will fall with more public transport. Me too! I want to be able to cross the street! [Actually, I don’t have problems crossing the street. Just go - it’ll all work out.]
Motorbike traffic may fall, if the government gets what it will want. HCMC People's Committee Vice Chairman Tran Vinh Tuyen said that the city wants a public transport stop to be within 500 meters of every resident’s home. That’s crazy, but great. He’s not talking about only metro, but also bus rapid transit, water ferries, and railway. All of which play a part.
The second article is about the HCMC government proposing to the PM that the central government pay $93m to advance the HCMC metro. The city government has fallen behind on their payments, which has pissed off the Japanese and could lead to a diplomatic issue. This money would help avoid that. I am not sure what will happen to the request, but I hope it works out, because it would be a shame to not have a metro in HCMC.
These two articles and the fact that the HCMC metro costs really seem to have ballooned started to make me wonder how expensive it costs to build metro rail in Vietnam. The table below shows Vietnam versus other metro builds.
VIETNAMESE METRO’S AREN’T AS CHEAP AS I WOULD EXPECT, BUT THEY ARE GENERALLY CHEAP. NOTES: THIS IS BUILDING OFF OF THIS BLOG POST, WITH HELP FROM THIS ARTICLE AND THIS POST. FOOTNOTES: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23 [ED - SORRY FOR ALL OF THE TINY LINKS, BUT WE WANTED TO BE COMPREHENSIVE. ALSO, THE BEIJING NUMBERS CAME FROM WIKIPEDIA, WHICH I DON’T LIKE BUT IS HARD TO DO WITHOUT KNOWLEDGE OF CHINESE]
A few things about this data.
First, I didn’t calculate it based on ppp (purchasing power parity), because, frankly, I didn’t want to do the work. What that means is that for emerging markets, of course, it is going to be a lower absolute figure (labor costs are lower, unions may not have power, regulations may be less strict, etc.). Based on other data I have seen, emerging market costs are higher than shown here on a PPP basis, meaning that these countries are paying a similar or larger portion of their income on these.
Second, underground trains costs a lot and take a long time. This story on the Hanoi metro shows that most clearly. The elevated portions of the line are completed, while the underground parts have not. So basically, if possible, don’t go underground. But that brings me to the next point.
Third, inputs are important and can vary lots. I see three major parts of the metro cost equation: 1) equipment, 2) labor, and 3) land. Equipment is probably going to be similar world wide. Steel costs might be a little less, but other than that, not much change, I would expect (I could be wrong). Labor costs are going to be significantly lower. But land could really vary. Underground lines may obviate some of the land costs, and elevated lines could also sidestep some of them (but not all). We see this with rail projects as well. If there is not a good corridor for the train tracks, then so much of the cost can be eaten up by land prices. It would be interesting to dig deeper into the actual costs of the projects.
Fourth, the cost per rider could be quite low. In Europe is about 25,000 per daily rider. In the US, in some places it is much more. If HCMC meets its rider figures (160.000 daily at first rising to 800,000 by 2040), the cost starts at $13,125 per daily rider and falls to $2,625. The metro construction that I have the best insight into is Dubai, which ended up going way over budget and cost AED28bn ($7.6bn). It now has a ridership of more than 600,000 daily, which equates to a cost per rider of $12,715, on the low end of the Europe spectrum. Given how crowded it is in rush-hour, there probably is room for that ridership to increase if they can figure out how to get more trains on the track (at rush hour, there is a train at every station basically all the time - they all move from station to station at the same time).
Even though the costs are high in absolute terms for the metro systems in Vietnam, I firmly believe that it will be a good investment. This study by Dubai shows what the multiple can be (1.6x ten years after, rising to 4.3x by 2030), even for systems that go way over budget.