Deep-water Ports Attract Japanese Investors

The Japanese-based Itochu Corporation officially asked the Ministry of Transport for a permit to cooperate with the Vietnam National Shipping Lines (Vinalines) to build Lach Huyen international port, Hai Phong City (in inception stage). Accordingly, the Japanese investor and Vinalines investment will invest US$165 million in the Component B, which includes building two container terminals, in the public private partnership (PPP) form.

 

This proposal was put forth at a working meeting on seaport development cooperation attended by the Ministry of Transport of Vietnam and the Ministry of Land, Infrastructure, Transport and Tourism of Japan (MLIT) in early March 2010. Top shipping firms attended the event, including Vinalines, Vinawaco, Itochu, IHI, Penta-Ocean, Toa, Toyo Construction Co., Mitsui and Kamigumi.

 

The Lach Huyen international port, assigned to Vinalines as the investor by the Ministry of Transport, includes two components, A and B. In particular, Component A consists of building infrastructural works outside the port, with a total investment capital of US$260 million sourced from ODA loans provided by the Japan International Cooperation Agency (JICA) and reciprocal capital of the Vietnamese Government.

 

As planned, once completed, the Lach Huyen international port will be the largest transhipment port in northern Vietnam, which consists of four container terminals, two bulk cargo terminals and five grocery terminals, capable of handling 35 million tonnes of goods per year. “If cooperation between Vinalines and Itochu is made, this is the first seaport Japan will take part in as an investor,” said Mr Ngo Thinh Duc, Deputy Minister of Transport.

 

Mr Fujita Takehito, Deputy Minister of MLIT, confirmed, MLIT will coordinate with JICA to become a bridge to link companies from the two countries. Before that, Japan is already the country's largest ODA provider for Vietnam to upgrade and build large sea ports such as Cai Lan (Quang Ninh province) and Hai Phong port, Tien Sa seaport (Da Nang), Sai Gon port, Cai Mep - Thi Vai port.

 

Apart from Lach Huyen port, Vinalines is calling on Japanese investors to invest in building or participating in operating Van Phong international transhipment port in Khanh Hoa province. This is the largest deep-water transit port in Southeast Asia, including 25 terminals for container ships with loading capacity of 15,000 TEUs and 17 bulk cargo piers capable of handling 17 million TEUs a year.

 

“The biggest gain that Vinalines makes is effective deep-water port exploiting and operating experience when it shakes hands with Japanese investors which have been ahead of Vietnam for centuries,” said Mr Duong Chi Dung, President and General Director of Vinalines.

 

Apart from the partner of Vinalines, according to the Ministry of Transport, several large-scaled Japanese shipping firms like Mitsui O.S.K Lines, have requested to lease Cai Mep - Thi Vai International Port when the Japanese ODA-funded project is completed in 2012.

 

According to Nguyen Ngoc Hue, Deputy Director of Vietnam Maritime Administration, in order to handle an estimated volume of 1,580 million TEUs of goods via seaports by 2030 and develop Vietnam into a powerful maritime economy, Vietnam needs at least US$56 billion to build seaport infrastructure systems and upgrade passageways.

 

“As the State Budget is expected to meet from 12 % to 15 % of the capital demand, the involvement of investors with financial strengths and governance experience is considered one way out for the socialisation of building seaports in Vietnam,” Mr Hue concluded.