Vingroup, Vietnam’s largest diversified conglomerate, announced on Thursday (December 25) that it is withdrawing its bid for the 67billion(approximatelyS86 billion) North–South high-speed railway project, causing a sharp drop in its share price.

The group stated that it is stepping back from the high-speed rail tender to focus on other projects. The decision follows a reassessment of its resources after being awarded several major national infrastructure assignments, including an Olympic-standard stadium and railway lines connecting key locations, leading it to withdraw the bid it originally submitted in May.

Following the announcement, shares of Vingroup and its subsidiaries—including property developer Vinhomes and retail operator Vincom Retail—plunged by 7%, while hotel unit Vinpearl fell by 3%, dragging Vietnam’s benchmark stock index down by 2.24%.

In May, Vinspeed, a subsidiary founded by Vingroup Chairman Pham Nhat Vuong, had proposed to build the 1,540-kilometer railway linking Hanoi and Ho Chi Minh City. The company pledged to self-finance 20% of the project cost and sought an 80% zero-interest, 35-year state-backed loan.

However, the State Bank of Vietnam expressed concerns over Vingroup’s high leverage and lack of experience in railway infrastructure, warning that its loan request and required guarantees could pose risks to the stability of the banking system. A May 19 opinion letter reviewed by Reuters indicated the proposal would require “special state guarantees.”

Vietnam’s Ministry of Finance also noted that the zero-interest terms and the proposed 30-year repayment schedule—with principal due only at maturity—amounted to a state subsidy that could negatively impact Vietnam’s credit rating.

Besides Vingroup, other interested bidders include automotive firm THACO, state-owned Vietnam Railways, and the Vietnam Investment and Development Group.

Vingroup emphasized that its withdrawal would not hinder the project’s progress and would allow the group to concentrate on delivering other large-scale initiatives.

The Vietnamese government said the winning bidder for the North–South high-speed rail project will be announced in January next year.

Vingroup, Vietnam’s largest diversified conglomerate, announced on Thursday (December 25) that it is withdrawing its bid for the 67billion(approximatelyS86 billion) North–South high-speed railway project, causing a sharp drop in its share price.

The group stated that it is stepping back from the high-speed rail tender to focus on other projects. The decision follows a reassessment of its resources after being awarded several major national infrastructure assignments, including an Olympic-standard stadium and railway lines connecting key locations, leading it to withdraw the bid it originally submitted in May.

Following the announcement, shares of Vingroup and its subsidiaries—including property developer Vinhomes and retail operator Vincom Retail—plunged by 7%, while hotel unit Vinpearl fell by 3%, dragging Vietnam’s benchmark stock index down by 2.24%.

In May, Vinspeed, a subsidiary founded by Vingroup Chairman Pham Nhat Vuong, had proposed to build the 1,540-kilometer railway linking Hanoi and Ho Chi Minh City. The company pledged to self-finance 20% of the project cost and sought an 80% zero-interest, 35-year state-backed loan.

However, the State Bank of Vietnam expressed concerns over Vingroup’s high leverage and lack of experience in railway infrastructure, warning that its loan request and required guarantees could pose risks to the stability of the banking system. A May 19 opinion letter reviewed by Reuters indicated the proposal would require “special state guarantees.”

Vietnam’s Ministry of Finance also noted that the zero-interest terms and the proposed 30-year repayment schedule—with principal due only at maturity—amounted to a state subsidy that could negatively impact Vietnam’s credit rating.

Besides Vingroup, other interested bidders include automotive firm THACO, state-owned Vietnam Railways, and the Vietnam Investment and Development Group.

Vingroup emphasized that its withdrawal would not hinder the project’s progress and would allow the group to concentrate on delivering other large-scale initiatives.

The Vietnamese government said the winning bidder for the North–South high-speed rail project will be announced in January next year.