The Asian Development Bank (ADB) and the Government yesterday signed a USD540 million loan agreement for the construction of an urban mass rapid transit (MRT) line to reduce traffic congestion in Ho Chi Minh City.

Traffic congestion on Phan Dinh Phung Street in Ho Chi Minh City.

"The project promotes a modal shift from private vehicles to public transport," said Ayumi Konishi, ADB Country Director for Vietnam.

"Such a shift - if successful - will not only significantly reduce traffic congestion and accidents but also substantially reduce greenhouse gas emissions, making Vietnam one of the leading countries in the region to address climate change mitigation through low carbon transport modes," he said.

As an integral part of the first three MRT lines being developed in the city, the 11.3-km Mass Rapid Transit Line 2 will run 9.3km underground with 2km of elevated and transition track. It will stretch from Ben Thanh in the city\'s centre, near the city\'s largest market, out past the Tan Son Nhat International Airport, to Tham Luong.

Konishi said the project would have clear indirect poverty reduction impacts. Major beneficiaries would be public and private transport users, with women, students, children and older people expected to benefit the most from improved transportation, as well as communities in districts along the MRT lines.

Ho Chi Minh City is the largest city in Vietnam, and its current population of over 9 million is expected to grow to almost 14 million by 2025. Private vehicles dominate the city\'s transportation, but road infrastructure is reaching saturation point. In Ho Chi Minh City, traffic will continue to worsen as more motorbike users convert to cars as their incomes increase.