Thursday, September 20, 2007

Vietnam expects $4.5 billion to be invested in ports in the next five years

Big port investment seen in Vietnam to ease logjam

Some US$4.5 billion may be invested in port building in Vietnam and a similar amount in related infrastructure by 2012 to ease congestion as cargo volume is forecast to rise 25 percent annually, an official said.

Vietnam, whose economy is growing at a robust 8 percent a year, joined the World Trade Organization in January and investors say it now needs to improve its infrastructure, especially in the transport and energy sectors.

"We expect $4.5 billion to be invested in ports in the next five years and corresponding investment in landside infrastructure," Tan Hua Joo, APL Vietnam managing director, told an international conference on Vietnam's ports and logistics.

APL is a subsidiary of Singapore-based Neptune Orient Lines, the world's eighth-biggest container shipping firm.

Exports and imports in Vietnam of $84 billion last year were equivalent to 140 percent of gross domestic product.

Containerized volume growth of 19.8 percent per year in 1995-2006 would accelerate to 25 percent in coming years, Tan said. Last year the country handled 3.71 million twenty foot equivalent units, 21.6 percent more than in 2005.

Vietnam faces problems with shortages of modern equipment, low productivity, poor road quality and shallow draft conditions at ports, Tan said at the conference.

"Congestion in Ho Chi Minh City is a major concern during the period of 2007-2009," he told officials from foreign and local shipping lines and port operators.

Ports in Ho Chi Minh City handled 72 percent of Vietnam's container volume last year and 22 percent went through the northern city of Hai Phong.

Better planning needed

Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry, said the country was opening up for the private sector to invest in building infrastructure such as ports and roads, an area previously covered by the state budget.

But industry officials say Vietnam also needs better strategic planning in the sector, in addition to funds.

"New port developments must be focused on the key cargo origins of Ho Chi Minh City and Hai Phong," APL Vietnam's Tan said.

He said a government plan to invest $3.5 billion by 2020 to turn Van Phong Bay in the central province of Khanh Hoa into a transhipment hub might lead to inefficiency as Vietnam's central region would not be a major area for cargo movements.

Da Nang Port and Quy Nhon Port in central Vietnam now handle less than 3 percent of the country's total cargo volume, he said.

He also said the berth and draft at Cai Mep container port now being built in the south would not be able to handle large vessels.

"Port infrastructure must be built to serve needs up to 20 years ahead," he said.