Shipping news: Foreign Firms Invited into Domestic Shipping
Foreign enterprises are to be permitted to directly invest in Vietnam's shipping market, the Ministry of Transport and Communications has announced. Although the market is not going to be opened up until 2006 - unless the government brings forward its current plans - the investment liberalization announcement has already led foreign shipping entities into readjusting their medium-term Vietnam business development plans. On the other hand, domestic shipping companies are scrambling to bolster their business capabilities before they are exposed to tough competition, for fear of being wiped out by big-time foreign rivals. To date, they have been protected by laws which limit foreign shipping enterprises to representative office status in Vietnam. This status gives a foreign firm no rights to do direct business. However, with Ministry of Transport and Communication (MoTC) permission, they can take on contracts for work which their domestic counterparts are not capable of undertaking, such as shipping super-heavy cargo. After the liberalization move is put in place, the foreign firms should be able to compete for shipping business across the board. They should pay the same harbor-anchoring charges as domestic firms, and they should be able to offer services in navigation, marine brokering and shipbuilding, amongst many things. MoTC rebutted domestic firms' criticism of the opening-up by saying that it was in harmony with international integration commitments. It would also provide badly-needed investment for development of the country's shipping infrastructure, MoTC officials wasted no time in pointing out. As news of the announcement spread, domestic shipping representatives were certainly not all doom and gloom. One pointed out that Vietnamese shipping concerns were already involved in building ships as heavy as 6.500 tons. But others lobbied officials by reminding that China, the Philippines and Malaysia were part of a group of countries that gave strong support to their domestic shipping companies in the face of tough international competition.
( Source: Vietnam Investment Review, No. 461/14, Aug. 20, 2000).
Port Infrastructure Developments:
1. Cai Lan: Trading in Deep Water
Hai Phong Port, the biggest of its kind in north Vietnam, only docks ships with weights under 10,000 tons. Plans to develop the northern economy as well as the economic triangle including Hanoi, Haiphong and Quangninh call for a deep-water port than can receive ships up to 50,000 tons. Cai Lan (Quangninh) is the sole location satisfying the conditions for such a deep-water port.
Preparation
In fact, the project to construct a deep-water port in Cai Lan was
suggested by French experts in the 1940s and the former Soviet Union's
specialists during the 1970s. Vietnam's own research on transportation
conducted in the early 1990s identified Cai Lan as the most suitable place
for the construction of a deep-water port for the north. The project was
not yet a reality until 1994, when the Japan International Co-operation
Agency helped fund a feasibility study. To raise capital for the project,
the Government assigned the Ministry of Transport (MoT) to seek investment.
However, according to Deputy of Transport Nguyen Viet Tien, Vietnam had
little opportunity to do so until 1996, when the country signed an official
development assistance (ODA) agreement with Japan for JPY10.27 billion.
Soon thereafter, the investor of the Cai Lan Deep-water Port project,
the Vietnam Maritime Department, immediately organized bidding to find
technical consultants for designing the project. Winners are the Japan's
Nippon Koei, the Netherlands' Nedeco and the Transport Engineering Design
Incorporation (TEDI). According to the designs, the project is divided
into four bidding packages. The first package, worth JPY7.5 billion (around
US $67 million), the most important part of the work, is scheduled to
be carried out first. Tien reports: "The first bidding package includes
the construction of three deep docks, 5, 6 and 7, and upgrade of dock
1. Other infrastructure such as warehouses, workshops, and stevedoring
equipment will be brought to the same levels as modern ports in the region."
The Penta Ocean Company from Japan has been approved by the Prime Minister
as the winning contractor for the first bidding package.
Obstacles
The Cai Lan Deep-water Port is said to be environmentally sound.
Right after MoT submitted the results of bidding for the first package
to the Prime Minister, at the end of January 2000, several voices were
raised on the impact of undersea explosions breaking stone sea shelves
on Ha Long Bay, a world cultural heritage. In accordance with the plan
of the first bidding package, an underwater shelf located at the sites
for docks 6 and 7 will be dug by explosion of mines. "This is the
sole underwater stone shelf that will be broken," says Tien. The
Prime Minister has assigned the Ministry of Science, Technology and Environment
(MoSTE) in co-operation with MoT, the People's Committee of Quangninh
Province, and related bodies to conduct reseach on the influences of the
mine explosions on Ha Long Bay's eco-systems. The project's donor - the
Japan Bank for International Co-operation (JBIC) - also required that
Vietnam send the United Nations Educational, Scientific and Cultural Organization
(UNESCO) and JBIC its Plan for protecting the Ha Long Bay environment
and an approved report on the project's environmental impacts, before
the project is carried out. A meeting was held to analyze measures to
diminish the impact of the mine explosions on the environment of Ha Long
Bay. The participants agreed that the method of controlled mine explosions
would create an acceptable level of damage. Moreover, Cai Lan Port is
located within the Cua Luc Bay, part of the area adjacent to Ha Long Bay.
It is 3 km from the boundary between the adjacent zone and the middle
zone, 6 km from the boundary between the adjacent zone and the absolute
protected zone and 10.5 km from the nearest cave. According to MoSTE's
Circular 2891/TT-KCM, dated December 1996, on the protection of the Ha
Long Bay environment, mine explosions are permitted at the adjacent and
buffer zones as long as environmental damage is at acceptable levels.
Thus, the method to explode mines has been approved. Deputy Minister of
Transport Nguyen Viet Tien affirms: "MoT will closely co-ordinate
with related ministries and branches to set up a council to supervise
the testing of mine explosions to evaluate and limit its influences to
the environment as well as speed up the pace of the project."
( Source: Vietnam Economic News, No. 32, Aug. 8-14, 2000).
2. Work on Cai Lan Port to Begin Next Month
The Transport Minister has asserted determination to start next month the construction of Cai Lan deep-water seaport in Ha Long Bay in the northern province of Quang Ninh. Bui Ngoc Chau, head of the Maritime Department under the Ministry of Communications and Transport, said all preparations for the ground-breaking had now been completed. "We have sent all relevant documents to Japan, which will fund the project, and will start construction as soon as we receive a response," Chau told the Daily, adding the answer from Japan was expected to arrive next month. The CaiLan Port project has captured public attention due to problems with the tender for the first package of the project and concerns over a possible negative impact on the environment of Ha Long Bay, a recognized world's heritage site. However, officials at the Transport Ministry said they have joined the Ministry of Science, Technology and Environment in appraising the project's possible impacts on the surrounding environment. According to them, work on the port will not seriously affect the bay. According to the officials, bidding for Package 1 was held and results were submitted to the transport ministry and the Government after Vietnam signed with Japan an ODA loan agreement for the project. However, when some newspapers raised problems with the first package bidding and the project's environmental impacts, the project was re-appraised. Early last month, the Prime Minister approved the Package 1 bidding results, which allow the Japanese contractor Penta Ocean to Implement the contract over 28 months. Package 1 is the biggest out of the four packages of the project. It will include upgrading the current dock and developing three new ones together with some auxiliary works. The Cai Lan Port project's feasibility study was approved by the Government in 1996, comprising seven docks capable of handling 2.8 million tons of cargo a year and accommodating vessels of 40,000 tons, estimated to cost VND1,409 billion.
(Source: Saigon Times Daily, No. 1237, Aug. 11, 2000).
Shipbuilding Industry: Vanashin to Export Specialized Boats
The Vietnam National
Shipbuilding Industry Corporation (Vinashin) has signed a contract to
build specialized ships worth US $50 million for foreign customers, the
corporation's biggest such contract so far. A Vinashin official said currently
factories of the corporation were preparing to build the first products
as ordered. According to the contract, Vinashin will supply self-operated
mud-dredgers with a capacity of 1,000 to 1,500 cubic maters/hour, passage-breaking
boats and emergency boats. Vinashin is one of Vietnam's biggest shipbuilders.
Over past years the corporation has supplied shipping companies in Vietnam
oil tankers of up to 3,500 tons, liquefied petroleum gas tankers of up
to 2,500 cubic maters, container ships of more than 1,000 TEUs and cargo
ships of 6,500 tons. Vinashin is upgrading shipyards in Haiphong City
and Quang Ninh Province so they can build oil tankers and cargo ships
of up to 20,000 tons.
(Source: Saigon Times Daily, No. 1237, Aug. 11, 2000).