HANOI, Feb 6 (Reuters) - Vietnam will build a high speed railway with aid from Japan at an estimated cost of $33 billion, a project that would cut travel time by two-thirds between Hanoi in the north and southern Ho Chi Minh City, the government said. Prime Minister Nguyen Tan Dung gave approval to state-run Vietnam Railways to invest in the 1,630-km (1,010 miles) track, a statement on the government's Web site (www.vietnam.gov.vn) late on Monday said.
Dung has assigned the unlisted railways firm to work with Japanese experts on a detailed investment plan, the statement said.
Seventy percent of the funding will come from the government, mainly in the form of Japanese official development assistance, and Vietnam Railways will raise 30 percent of the cost from loans, Nguyen Huu Bang, director of the state firm said.
The train service monopoly does not release profit figures, but its revenues in 2006 rose 13.2 percent from the previous year to 5.3 trillion dong ($330 million), the Vietnam News reported on Tuesday.
Japan is the single biggest country donor to Vietnam. It has pledged $890 million in aid for the country this year, or 6.5 percent higher than the 2006 level of $835.6 million.
International governments and agencies have pledged a record $4.45 billion in aid to communist-run Vietnam for this year as the Southeast Asian country seeks to improve its under-developed infrastructure.
The track, to be built over a six-year period with a wider gauge of 1,435 mm, will reduce the train journey between the capital Hanoi and the commercial hub of Ho Chi Minh City to less than 10 hours from more than 30 hours.
It will enable train speeds of 300 km to 350 km (186-217 miles) per hour, state-run media said.
The country's north-south trains now travel between the two cities on a single track with the narrow gauge of 1,000 mm over 1,726 km (1,070 miles). ($1=16,084 dong)
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