Recently, VinGroup’s proposal (via VinSpeed) to invest in the North-South high-speed railway and the Ho Chi Minh City – Can Gio metro line has generated various public opinions. Some are skeptical about its feasibility, while others are concerned about “group interests”. From a strategic perspective on technology transfer, this is an opportunity that should be supported if we attach the right conditions.

1. Not just railways, but technology transfer

Supporting Vietnamese enterprises to lead national key projects aims to help Vietnam’s private sector reach global markets, in line with the objectives of Resolution 68 of the Politburo. We have achieved this before with Viettel. From a military telecommunications enterprise, Viettel has now brought 5G network technology and digital solutions to many African countries. They not only sell products and services, but also elevate the position and role of Vietnamese enterprises in particular and the Vietnamese brand in general. This is the result of a process of learning, real-world application, trial and error, and thereby, mastering technology. VinGroup or Hoa Phat can completely follow this path in the metro and high-speed railway sector. No one is born knowing how to build electric trains or high-speed railway tracks. But anyone can learn if given the opportunity and a clear technology transfer strategy.

VinFast, from a company with no prior knowledge of automotive technology, has established a production line, connecting hundreds of domestic and international suppliers. We always thought we couldn’t do it until VinFast came along. Despite still incurring losses, VinFast has gradually increased its localization rate, built a team of engineers, and boldly invested globally. What we are pursuing is not just products but Vietnam’s high-tech industrial capacity.

2. Core issues to ensure substantive technology transfer

For Vietnam to genuinely receive technology for metro or high-speed railway construction, there must be binding conditions regarding the transfer of core technology, from locomotives, carriages, railway tracks, and signaling systems to digital operational management… Increasing the localization rate in stages, for example, from 30% to 70% within 10 years, and committing to training Vietnamese engineers and technicians from production and installation to operation is crucial, avoiding a “Vietnamese shell, foreign core” scenario. If this is achieved, projects like the Can Gio metro or the North-South high-speed railway will not only be transportation works but also launchpads for national technology and industry.

The “transfer” is not merely a clause in a contract – it is a whole series of conditions that need to be meticulously designed from the outset. To ensure success, we need to focus on the following legal and strategic aspects:

2.1. Integrating technology transfer from the bidding – project negotiation phase

In EPC (Engineering – Procurement – Construction) or PPP (Public Private Partnership) projects, technology transfer conditions must:

Be clearly stated in the bidding documents or EPC contract.
Include binding commitments on:
A specific technology portfolio (e.g., signaling systems, central control systems, railway tracks, locomotives, carriages).
The level of transfer (full or limited transfer).
The form of transfer (training, licensing, local manufacturing, technical support).
Note: Avoid “perfunctory inclusion” without substantive control. The role of lawyers or regulatory authorities is essential to assess the specific content, ensuring the feasibility and effectiveness of the transfer provisions.

2.2. Binding the content of transfer in the contract – accompanied by clear sanctions

Technology transfer should be specified through stringent clauses regarding:

Transfer schedule: Clearly defined for each project phase.
Detailed content: Including technological diagrams, technical drawings, and control source code (if any).
Recipients of transfer: Clearly identifying the domestic entities and individuals who will receive the technology.
Mechanism for monitoring and acceptance of transfer: Establishing a periodic evaluation and acceptance process to ensure the transfer proceeds as committed.
Penalties for non-compliance: Applying strict punitive measures if the transferor fails to deliver the technology or provide training as committed. 

2.3. Building domestic capacity for technology absorption

Transfer is only effective when the recipient has sufficient absorption capacity. Therefore, it is necessary to:

Establish or designate a lead technical unit with adequate professional expertise to receive and master the technology.
Invest in specialized research, testing, and simulation infrastructure for railways to support the process of technology acquisition and development.
Train engineers and technology experts early, both domestically and internationally, to build high-quality human resources.

2.4. Legalizing technology transfer requirements in public projects

To ensure a systematic and mandatory approach, the State needs to:

Amend public procurement laws or PPP to stipulate that: “Projects with specific technological elements or high value must include appropriate technology transfer clauses”.
Issue model guidelines for technology transfer clauses for parties to refer to and apply.
2.5. Cooperating with countries experienced in substantive technology transfer

Vietnam should prioritize cooperation with countries that:

• Have a tradition of supporting technology transfer and are willing to train Vietnamese engineers, such as Japan, South Korea, and Germany.
• Have aid programs accompanied by R&D and technical support. China also has transfer capabilities, but it is necessary to carefully scrutinize the clauses and output quality.

In summary, if we do not have individuals “taking the lead” to monitor, protect, and effectively negotiate technology interests in each project, the risk of “investing without gaining any technology” is highly probable.

If Vietnam wants to export metro or high-speed railway systems, we must master the technology chain and human skills. And to do that, we need “real learning workshops” – which are precisely our domestic projects. Let Vietnamese enterprises “learn by doing, and do to learn” right in their own country. And if we maintain effective control through legal frameworks, financial capacity, and transparent oversight, then such projects are not “sending the fox to mind the geese” but an entrustment of expectations to those capable of realizing them. No nation modernizes without mastering infrastructure technology, and there is no way to master it without allowing the private sector to experiment, make mistakes, and mature through large-scale projects. As long as we accompany it with a transparent transfer mechanism, a clear localization roadmap, and long-term national objectives.

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

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Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Business and Investment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.