A metro rail line in Vietnam's congested business hub of Ho Chi Minh City came a step closer Tuesday with financing of 540 million dollars from the Asian Development Bank (ADB).
The low-interest loans will help fund the 1.4-billion-dollar Mass Rapid Transit Line 2, an 11.3-kilometer (seven-mile) link from Ben Thanh in the center of Vietnam's largest city, to Tham Luong near the Tan Son Nhat International Airport, ADB said.
The European Investment Bank last week said it was lending 150 million euros (201 million dollars) for the same project in a city whose population is expected to rise from nine million to almost 14 million by 2025.
The ADB said without improvements in major public transport infrastructure, Ho Chi Minh City's economic growth would be constrained by high logistics costs and severe congestion.
Work on the line is to begin next year with operation expected by 2017.
The ADB said Line 2 will be built in coordination with other metro rail lines under development, the first of which has been significantly funded by the Japan International Cooperation Agency.
Civic authorities envisage nine rapid transit lines and have identified three as a priority. None has been completed yet.
Germany's KfW Bankengruppe is providing 313 million dollars for Line 2 while 326.5 million dollars will come from the government of Vietnam, the ADB said.
Foreign business leaders have repeatedly pointed out that Vietnam must improve its transportation and other infrastructure in order to secure future growth and investment.
Vietnam also plans to build an urban rail system in Hanoi and held a ground breaking ceremony in September.
The Manila-based ADB also announced a 636-million-dollar low interest loan for a 1.6-billion-dollar expressway in the south of Ho Chi Minh City.
It said the 57-kilometre highway, to open in 2017, will allow traffic to bypass the gridlocked city center.