Vietnam Overseas

All the industrial zones are located on the National Road 51 and closely linked to the system of deepwater port Thi Vai- Vung Tau.

The National Road 51 connecting Ho Chi Minh City, Bien Hoa and Vung Tau City has been upgraded to the standard of grade-one roads with the designed speed capability of 120 km/h, 24 meter width, four car-lanes and a central dividing strip.

The system of Thi Vai Deep Water Ports being 10 kilometres long which can accommodate ships up to 60,000 – 70,000DWT is now under construction to facilitate activities in the industrial zones. Ba Ria-Serece Port is operating with the loading/ unloading capacity of 8,000 tones per day.

The Ministry of Communication and Transport is completing its formalities to ask for Government’s approval on the project of Ho Chi Minh City Dong Nai- Vung Tau Railway Route which will be an integrate part of the Trans-Asian Railway System. The exploitation speed for the passenger train will be 120 km per hour and for cargo train 80 km per hour ( to be widened in future to the standard width of 1,435 mm). This project will transport 3.1 million tones of cargoes and 9.5 million passengers a year (accounting for 20 to 25 percent of the total transported by all regional transporting means). According to projections two cargo rail stations and one passenger station will be located at Phu My for the benefit of the industrial zones of My Xuan, Phu My and Cai Mep.

The associated pipeline from the Bach Ho Oil Field is supplying Ba Ria and Phu My power stations with two million cubic metres of gas per day. The projected exploitation from the Lan Tay and Lan Do gas fields in the year 2000 will provide 6 million cubic metres of gas per day for industrial zones.

The Phu My Power station with the production capacity of 3,600 MW is the largest energy center of the city.

The My Xuan Underground water Factory is operating at 20,000 m per day. In future the supply clean water will benefit from the Toc Tien Water Plant with the capacity of 20,000 cubic metres per day. From the year 2000 on the water supply will be put through between Bien Hoa and Vung Tau with the Thien Tan – De Den system of over 100.000 m3 – De Den system of over 100.000 m3 day.

New Phu My Town has been planed to the year 2010 with about one million inhabitants to provide labor force for the industrial zones of Phu My, My Xuan and Cai Mep.

The development of industrial zones has importance significance toward the industry growth in particular and the economy growth in general. Therefore, according to the master plan of the social economical development until 2010, the province has planned to build 09 industrial zones with an area of about 3,046ha.

The feasibility study of the Lach Huyen deep water port in the north of Hai Phong city has been approved by the Ministry of Transport.

Minister of Transport Ho Nghia Dung said that the study would be submitted to the Government in some days.

The Lach Huyen deep water port project, invested in by the Vietnam Shipping Lines (Vinalines), has the total investment capital of VND27tril, or $1.6bil. It is expected to become the gate to the world and the big transit port in the northern part of the country.

According to the pre-feasibility study, the deep water port will be able to receive 60-80,000 tons vessels. Once operational, the port is expected to see 50-60mil tones of goods going through every year.

Hai Phong city authorities are calling for both domestic and foreign investment into the very important project.

According to Duong Chi Dung, Chief Executive Officer of Vinalines, the operation of the Lach Huyen port will help Hai Phong become an important place for goods transition. Goods from the western areas of China to other places would have the itinerary which is 800 km shorter if they are transited at Lach Huyen port rather than at the nearest Chinese port.

In related news, the Government has released the list of very important investment projects on infrastructure and transport. In the coming time, a series of projects will be kicked off.

These include the building of several stretches of road on the north-south highway (Hanoi – HCM City – Can Tho), and stretches of roads belonging to the Belt No 1 and Vietnam – China economic belt, upgrading the stretches of road on Highway No 1 in order to improve circulation capacity and minimize traffic jams.

Regarding railway projects, it is expected that the current north-south railway will be modernized, the Yen Vien – Lao Cai route will be upgraded. Meanwhile, the projects on building the international transit ports in Van Phong bay in the central province of Khanh Hoa and Lach Huyen port in the northern province of Hai Phong will be the top priority projects to serve sea transports.

As for air transport projects, Vietnam will build a modern terminal at Da Nang international airport and T2 terminal at Noi Bai airport in Hanoi, and build Duong To and Phu Quoc airports.

The Government has also urged the acceleration of the preparation work for the investment in the international airport in Long Thanh in the southern province of Dong Nai, which is hoped will replace current Tan Son Nhat airport in the future.

The Prime Minister has determined that the total capital needed to develop the groups of infrastructure projects is $67.570bil, of which, the sum of $4.418bil has been arranged.

Posted TBKTSG, April 19, 2007, VietNamNet Bridge

Most logistics services providers in Vietnam have been operating for just five years, with limited capital of 1.5 billion Vietnamese Dong (US$93,700) each, local newspaper Vietnam News reported, without naming any source.

Many logistics firms have not established representative offices abroad, were short of professionals and had limited understanding of international laws, particularly those relating to logistics services.

There are nearly 900 companies involved in logistics services, of which 97 are members of the Vietnam Freight Forwarders’ Association.

Vietnam’s long border and coastline are two comparative advantages, allowing the local logistics industry to use various forms of transport and set up chains of logistics services supply. The country’s expected robust growth in import and export in the next decade will also help further develop the industry, said the report.

Uncertainty continues over the exact timing envisaged for Vietnam to enter the WTO, with trade minister Truong Dinh Tuyen indicating, in public statements, that 2007 is more likely than next month as previously expected, when the APEC Summit meets in Hanoi.

But even with entry in 2007, local and foreign shippers have concerns over just how competitive the country will be, given huge challenges to its logistics industry.

Similar warnings of great hurdles ahead come from manufacturers, importers and exporters, forwarders, airlines, operators and insurers - as well as logistics operators themselves.

There may be clear opportunities for Hong Kong-based companies involved in many of these disciplines, able to offer direct investment, joint venture capabilities or consultancy services.

The biggest factor hampering the Vietnam logistics industry is said to be poor infrastructure development compared to other regional centers, accompanied by inconsistent regulations. These regulatory provisions cover customs, quarantine, terminal operators and ground handling organizations.

Such problems particularly concern freight forwarders, which could be penalized for late overseas deliveries, and therefore lose contractual business in the future unless the position is rapidly reformed.

Presently, logistics providers meet around a quarter of the local demand, while the sector is expected to become a key spearhead of the country’s export and import industries, representing about 15% of national GDP as Vietnam develops traction as a producer and opens its domestic markets.

These are tall orders, given that Vietnam’s logistics service providers have multiplied to nearly 600 businesses from just two a decade ago. Local companies face problems such as minimal modern logistical experience (mainly of applying IT solutions), poor or insufficient facilities, inadequate management expertise and financial constraints.

The Ministry of Transport and Communications released figures recently showing that there are over 1,000 ships engaged in maritime logistics, but most are below 20,000 dead weight tones (dwt). Additionally, this sector is able to provide a maximum capacity of just 3.5 million tones, while only 300 vessels meet the stringent standards required to operate on international routes.

Larger Vietnam companies include Vietnam Ocean Shipping Co (Vosco), Vinaship and Falcon Shipping Co - which have managed to develop their own brands and gradually adapt to help from reliable foreign partners. But most local companies appear unable to compete with bigger shipping lines, observers say.

Several of the local maritime operators are reported to use antiquated craft and so have ignored international business opportunities, especially in larger markets such as the EU. That is not surprising, since locally-owned or leased ships are unable to meet international safety, capacity or labor conditions.

Opportunities may already be too late for many local operators, given that the sector has opened to major foreign players such as Mitsui OSK Lines, Nippon Yusen Kaisha (NYK Lines and K Line (Japan) Ltd. A number of foreign companies have received (or are in the process of applying for) 100% foreign-owned licenses, which will further increase competitive pressure.

Moreover, the boundaries between the operations of freight forwarders, warehouse traders, shippers and aviation operators - as well as multi-form transport companies - are not clear. Logistics and freight forwarders don’t necessarily work with one another, while warehouse systems and infrastructure capacity are demonstrably small and outdated.

Once Vietnam enters the WTO, pressure will certainly be on the local logistics sector to perform. Yet, operational methods employed by Vietnam logistics firms, such as cost insurance freight (CIF) and free-on-board (FOB) look likely to be insufficient of themselves to deal with increasingly sophisticated supply chain requirements.

Posted 10 Oct 2006 by Tina Phan, Ho Chi Minh City Office