Key ports to unlock Vietnam's potential

15 Nov 2009

Source:Thanhnien News

Another deep-sea port will also get underway in the north in less than a month. Van Phong Transshipment Port in Van Phong Bay, Khanh Hoa Province will be able to handle container ships carrying up to 9,000 twenty-foot equivalent units (TEU) of freight once the first stage is finished. The original plan was for a docking capacity of 6,000 TEU vessels. Since a port of this capacity was already being built elsewhere in Vietnam, the Van Phong project was put on hold for nearly three years while the planners reworked their ideas.

An unsurprising investor in the US$3.55-billion project is Vietnam National Shipping Lines, or Vinalines, which will build two 690- meter piers in Van Phong Bay at an estimated cost of $200 million. One year after the first dock is finished, the port can facilitate 11,000 TEU container ships and will be able to handle 710,000 TEU of freight annually. Since it will be Vietnam’s sole international transshipment port for some time, Van Phong will be expanded to accommodate 18,000 TEU container ships.

The general idea behind the 20- year plan to build three deep-sea ports is to take advantage of Vietnam’s strategic location and put the country on an equal footing with regional shipping hubs like Singapore. The first port, scheduled to open for business in 2012, is going up next to a 16-meter-deep stretch of the Thi Vai River in Ba Ria-Vung Tau Province, some 100 kilometers southeast of Ho Chi Minh City.

Cai Mep-Thi Vai Port in Tan Thanh District will be big enough to take ships of 80,000 DWT and should reduce the pressure on the existing ports in the south, according to the transport ministry’s Project Management Unit 85. The construction budget for the Japanese-funded project is VND11.5 trillion ($640 million). It involves building two separate deep-water ports, linked by road, to relieve the pressure on HCMC’s urban ports and gradually replace them, unclogging the truck-laden roads in the process.

The third deep-sea port, able to take ships of 6,000 TEU, will be appropriately located in Hai Phong on the north coast.

Vinalines says it will invest $1.4 billion to build Hai Phong International Gateway Port in Lach Huyen District.

Shipping experts believe the three ports, while costly, will be priceless assets for Vietnam.

Still, they do see problems ahead for Van Phong, the most important port, as it will be hard to tempt large ships there given the comparative advantages of Singapore, Hong Kong, Taiwan’s Kaohsiung, China’s Shanghai, Korea’s Busan, Thailand’s Laem Chabang, and Malaysia’s Klang and Tanjung Pelepas. These advantages include more modern handling and storage facilities and, in the experts’ opinion, superior location and calmer weather.

Overload , Vuong Dinh Lam, director general of the Vietnam Maritime Administration, says the volume of cargo coming into and leaving Vietnam is set to soar in the next 20 years, hence the need for massive investment in port infrastructure. The country’s 49 seaports and 166 other commercial wharves handled 212 million tons of freight last year, a 17 percent increase on 2008.

Its forecast is for the annual volume to reach 500-600 million tons by 2015 and 1.6-2.1 billion tons by 2030.

Lam says the government is looking for foreign and domestic sources of investment, including government aid, to build and expand Vietnam’s ports in line with the master plan.

Above all, it sees public-private partnerships as the way of the future.

Lam says foreign investors have registered to engage in 17 port projects with combined investment capital of $1.5 billion in 2010 and $2.4 billion by 2020.

One of these is a joint venture between Saigon Port and PSA Singapore, which is building a general-purpose port on 54 hectares of the upper Cai Mep-Thi Vai area.

Another venture, between P&O Port Saigon Holdings and IDC Tan Thuan, is investing $249 million to build Saigon Port Container Terminal with a one-kilometer-long wharf able to take 50,000 DWT ships.

The eight foreign-invested container ports in the south that will start operating in 2009 or 2010 account for 45 percent of the foreign investment in container port development and 56 percent of container handling capacity, according to the 49-member Vietnam Seaports Association.

The Vietnam Seaports Association observes that, while port construction proceeds apace, port development and hence economic growth is being impeded by a failure to improve transportation infrastructure, maritime and information services, customs clearance, or logistics and support utilities.