As a result the Asian Development Bank (ADB) increased its growth forecast for 2011 to 7% from 6.8%, while lowering inflation projection to 8.5% this year and 7.5% next year. “The shift from strong fiscal and monetary stimulus implemented during the global recession to a more balanced policy stance helped to stabilise financial and economic conditions and, together with the global economic recovery, paved the way for solid economic growth this year,” the report said. These growth figures will raise questions about the future and if Vietnam could sustain this growth – Vietnam’s nine-month economic growth was 6.52%, a “relatively high rise” compared with last year’s 4.62% over the same period, according to the General Statistics Office.
Trade developments
These impressive figures are contributed to the development of the country’s ports and international trade. For example Vietnam is working towards improving its trade process with a single window customs pilot project backed by the US Trade and Development Agency. “This pilot project will help to increase revenue, enforce trade compliance regulations and reduce the cost of cargo movement into Vietnam, an increasingly important partner for the United States in Southeast Asia,” US Ambassador Michael W Michalak said when the USD718,600 grant was signed back in September. The project aims to effectively cut down customs clearance processing time in the country and develop trade and transit. Moreover, if the project is successful, it may serve as the model for a possible Association of Southeast Asian Nations single window trading and customs processing system to be launched in 2012. It will consist of a feasibility study and pilot project for the new system to determine trade and custom needs and recommend new systems.
New port developments
Another contributing factor is the creation of a new port infrastructure with joint ventures from major international terminal operators and local businesses. In the Ho Chi Minh City port area alone a total of four new container terminals are planned to open between 2011 and 2013, including the Cai Mep International Terminal (CMIT). CMIT Chief Commercial Officer, Malcolm Gregory, observed that the increasing need for deep-water facilities will be a significant factor in utilisation forecasts for Southern Vietnam container traffic in the years ahead. “Growth in trade and corresponding container traffic at Southern Vietnam’s gateway Ho Chi Minh City port complex is jumping, and in response there has been tremendous activity in terminal investment,” said Gregory, noting the 1.1 million TEU annual capacity of the Cai Mep International Terminal, part of the APM Terminals Global Port and Terminal Network, and scheduled to open in January 2011. “Sufficient access channel depth will be one of the primary determining factors of which facilities cater to which segments of Vietnam’s container trade,” Gregory added. Water depth of 14m is required for non-tide restricted access for vessels up to 8,000 TEU-capacity which are expected to be entering the Vietnam trade. A lack of modern road and rail infrastructure keep much of Vietnam’s container transportation inland by barge service, which is projected to account for almost 50% of deep water terminal traffic in 2010, adding to capacity requirements. “Long-haul Transpacific and Europe trades, representing nearly 30% of Ho Chi Minh City port traffic, will continue to migrate to the new deep-water terminals as newer, larger vessels come into service, so there is a very real need for capacity and capability expansion, but new project completion dates need to be aligned with expected market need,” said Gregory.
Running in to trouble
Container volume at the Ho Chi Minh City and Cai Mep port, which handle approximately two out of every three TEU in Vietnam, surged by 16% in the first half of 2010 leading to a full year 2010 estimated throughput of close to 4.2million TEU. But there might be a sting in the tail for those who are calling at these ports. Vietnam’s Ministry of Finance has promised to lower port fees in response to letters received from the European Chamber of Commerce (EuroCham) in Ho Chi Minh City in April and August of this year. The EuroCham letters pointed out that fees for the Cai Mep–Thi Vai port are as much as two to four times more expensive compared to other ports in the region, particularly Singapore and Malaysia. Local authorities are considering port fee adjustment policies that would be applicable to all ports in the country according to the letter sent by the Ministry of Finance. Moreover, the ministry is putting together a proposal that will cut port and maritime fees for vessels with more than 50,000 tonnes capacity docking at the Cai Mep–Thi Vai port. A letter sent by EuroCham to authorities dated April 5 detailed costs, in USD, for a 93,496 GRT vessel in different ports in South East Asia as a total for Cai Mep (Vietnam) of USD 36,389 (including pilotage, 12 hours dockage and port dues) compared to Tanjung Pelapas (Malaysia) of USD 8,552, PSA (Singapore) of USD 8,547, Port Klang (Malaysia) of USD 9,035 and Laem Chabang (Thailand) of USD 18,573. This huge price difference for port calls in the Cai Mep–Thi Vai area affects the country’s trade competitiveness compared to other similar ports in the region according to EuroCham. The Cai Mep–Thi Vai port in Ba Ria-Vung Tau Province opened in 2009 and is becoming the largest deep-water port in South Vietnam. Currently, only a limited number of vessels go to the port regularly because of the higher charges. The ministry says the price difference between the Cai Mep–Thi Vai port and other ports in the region are due to various levels of port development, location and management.
Some good news
Despite these charges there might be some good news for Cai Mep Ports as it will function as a major hub for goods coming from Cambodia. The Saigon Newport Corporation has recently signed an agreement to ship goods to and from Phnom Penh Autonomous Port. Bui Van Quy, General Director of Saigon Newport Corporation (SNC), stated that the additional link to both Cat Lai and Cai Mep ports in Vietnam would enable reduced goods transfer times. The new service is set to run two times a week, loading 128 twenty-foot equivalent units (TEU) per boat, with transfer times of around 34 hours. “We commit to provide a shipping service with confidence, short times and quality to our customers,” he said. Van Quy said the decision to connect shipping services between his company and the Phnom Penh port was made in response to growing demand for Cambodia freight routes. SNC is a leading operator in Vietnamese shipment and operates 22 subsidiaries, specialising in port processing, stock control and construction.
Hy Pavy, General Director of the Phnom Penh Autonomous Port, said the link would help Cambodian goods be transported to an international environment, as Cai Mep acts as a link between the Kingdom and United States and European markets. According to figures obtained from Phnom Penh Autonomous Port, 53,011 TEU of goods were shipped in the first 10 months of 2010, a 49% increase on the 35,648 TEU transported last year.
In search for investors
The Dong Thap Province in southern Vietnam is seeking VND21 trillion (USD1.07 billion) in investments to upgrade its road and port systems by 2020. The province is known for its agriculture-based economy, but is working towards shifting to more industry and trade-oriented businesses. It wants to expand trade capacity by developing ports IDI, Bao Mai, Sa Dec, Trang Quoc and others in the Hong Ngu commune. The Dong Thap Province is also looking for investors for its planned USD30 million automobile, bike and tractor spare-part production facilities and its USD20million agricultural machinery and equipment production plant. From January to July, Dong Thap authorities spent VND1.12 trillion to upgrade infrastructure facilities and attract more foreign investment.