Wednesday, October 01, 2008

Foreign giants take over maritime sector in Vietnam

Hanoi (VNA) – Leading international marine giants are investing heavily in Vietnam ’s seaports, but there are muted concerns that they hold too much power and could ultimately harm the interests of traders. 

In the Southern Key Economic Zone, foreign investors pumped money into the construction of 10 large container ports, slated to begin operations from 2009-2010, reported the Vietnam Seaports Association (VPA). 

Investors include the Hong Kong International Terminals (HIT) of China , SSA Marine of the United States and France ’s CMA-CGM Group. 

In 2006, the Dubai World Corporation, the second largest marine terminal operator in the world, began building a deep-water port near the Hiep Phuoc Industrial Park in Nha Be district, earmarked to be one of Ho Chi Minh City ’s main shipping routes. 

In addition, some 20 overseas enterprises are looking into invest in the Cai Mep – Thi Vai Seaport in southern Ba Ria – Vung Tau province as joint ventures or wholly foreign-invested firms. 

Overseas giants are deepening their interests in large seaports in the country, making the most of their superior financial power, world-class experience and management skills. 

Ho Kim Lan, the VPA general secretary, said: “Many big domestic firms have conceded management rights to international giants in joint ventures, as they mainly contributed land.” 

The association predicted that by 2010 foreign investors would still only hold a stake of no more than 45 percent in each joint venture, but that their management power would reach around 56 percent. 

According to VPA, most of the small seaports are owned by local companies, while overseas businesses hold stakes in large ones. 

Economists say foreign interest is good for Vietnam ’s ports industry and the economy in general. 

While domestic firms lack capital and experience, powerful overseas giants will be able to speed up development of the national port system, turning them into world-class facilities capable of attracting lucrative customers. 

The sector has witnessed annual growth of around 20-25 percent. 

However, the sector faces some difficulties, according to Lan. “Marine transportation account for a mere 10 percent of the total goods moved in and out of the country.” 

At present, the average terminal handling charge is 65 USD for 20-foot container and 98 USD for a 40-foot container, according to Lan. 

VPA worries that foreign companies could collude together to fix rates. Nevertheless, competition between local and international port operators should limit any price rises, said Lan.-