Saturday, October 20, 2007

Vietnam's lack of developed ports to hurt exports

Lack of ports could choke exports, experts warn

The severe shortage of ports and related infrastructure could soon hold up Vietnamese exports with cargo volume forecast to rise 25 percent annually, according to experts at a recent conference.

“Poor infrastructure is now Vietnam’s biggest weakness,” Deputy Industry and Trade Minister Nguyen Thanh Bien told a recent workshop on seaport services and trade logistics in Da Nang.

With domestic and foreign investments on the rise, “we are facing power shortage, poor road systems, and, especially, a serious shortage of seaports, which is threatening to gridlock exports.”

The country has 266 seaports in 24 cities and provinces that handle over 80 percent of all imports and exports.

However, only nine ports could be upgraded to handle 50,000 DWT (dead weight ton) cargo ships or 3,000 TEU (twenty-foot equivalent unit) container ships, Bien said.

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

Last year, 3.71 million twenty foot equivalent units passed through ports, 21.6 percent more than in 2005.

US Counselor for Economic Affairs Alan Tousignant told the workshop that port infrastructure would soon be overloaded and logjammed as Vietnam’s trade keeps growing.

He said the lack of ports and related infrastructure was holding back Vietnam’s potential to become an important sea transport hub in Asia.

The country plans to invest US$4.5 billion in ports in the next five years. Tousignant added it should pour a corresponding amount in land-based infrastructure.

He pointed out that only 19 percent of roads in Vietnam was asphalted while the railroad system too needed upgrading to meet increasing demand.

Logistics accounted for 15 to 20 percent of Vietnam’s gross domestic product, which was almost twice the ratio in more developed countries, he added.

Better planning needed

Under the government’s port development strategy, a seaport system with three main hubs – to be called “international gateway ports” – will be capable of handling 100 million tons of goods by 2010.

However, Bien said the strategy had been drawn up 10 years ago and should be revised for the present situation, especially now that the country has joined the World Trade Organization.

“The new port system must be armed with modern equipment, technologies, and management to help Vietnam become more competitive regionally and globally,” Bien said.

The Chairman of the Binh Dinh Province People’s Committee, Vu Hoang Ha, said the national strategy had to spell out the development focus instead of allowing coastal authorities to invest indiscriminately and ineffectively in ports.

The Ministry of Transport should play the central role in implementing the strategy, he said.

Tan Hua Joo, managing director of APL Vietnam, a subsidiary of the Singapore-based Neptune Orient Lines, the world’s eighth biggest container shipping firm, told another conference last month that new port developments should be focused on HCMC and Hai Phong.

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

Da Nang and Quy Nhon ports handled less than 3 percent of the total cargo, he pointed out.

“Port infrastructure must be built to serve the need up to 20 years ahead,” he said.

Source: Vietnamnet