Current Status of Port Development Investment - Considered by Investment Content


In terms of maritime geography, there is no better and more convenient seaport in Vietnam than Van Phong port to build an international transit port. With a 400m wide sea channel, a depth of 22 - 27m, many sections with a depth of 41m, located in a sheltered bay, the bay shore is 30.7km long, which can build ports, warehouses, and container yards. In addition, the bay's water surface is an ideal place for fuel tankers with a tonnage of up to 250,000 DWT to safely transport fuel. It is estimated that if 20 million tons are approved each year, the state budget will collect over 10,000 billion VND.

Van Phong International Terminal will include 3 important areas: First , Dam Mon wharf area for international container transit, serving mainly large and very large ships with a capacity of 9,000 TEU or more. This is a hub for import and export goods by container operating on transoceanic routes of Vietnam and neighboring countries in the region. Second , Van Phong Bay South wharf area (receiving ships with a capacity of 400,000 DWT) for crude oil and oil product transit, with a bonded warehouse in Hon My Giang, combined with a specialized wharf for the oil refinery to be built here. Third , is a specialized wharf area for thermal power plants, shipbuilding and repair, other industries receiving ships of 50,000 - 100,000 DWT and a satellite local wharf for ships of 2 - 10,000 DWT in the Southwest of Van Phong Bay (Ninh Thuy - Doc Let - Hon Khoi).

The idea of ​​building Van Phong into an international transit port was proposed in the early 1990s. However, it was not until 2005 that it was officially approved and in October 2008 the project was handed over to Vietnam National Shipping Lines (Vinalines) for implementation.

In October 2009, Vinaline started construction of phase 1 including 2 wharves.

6,000 TEU and 9,000 TEU. After 2 years of construction, the project had only driven 145/1729 piles when it encountered a geological problem and had to stop construction. Furthermore, due to the rapid progress of science and technology, ships with a capacity of up to 14,000 TEU - 18,000 TEU have appeared, so the design of the 6,000 TEU and 9,000 TEU piers is no longer suitable, forcing the port to stop construction to change the design. Vinaline has proposed to the Government to adjust the design to receive ships of 12,000 TEU and 15,000 TEU. Currently, the new designer is conducting a survey and redoing the project and it is expected that when the project restarts, there will be cooperation between Vinaline and the Rotterdam Port Corporation (Netherlands) in the construction of Van Phong port.


Thus, the delay in the construction of Van Phong port (phase 1) is due to 3 main reasons: due to geological problems, due to lack of capital because this phase requires 185 million USD and Vinaline has to balance it by itself, due to lack of vision right from the start of the design. The delay in Van Phong port not only causes economic losses but also the opportunity for Van Phong to compete with other transit ports in the region will gradually be limited.

2.3.3. Current status of investment in seaport development - considered by investment content

Investment activities in seaport development, if considered in terms of investment content, include investment in the construction of wharves, breakwaters, etc., investment in equipment for loading and unloading goods at the port, and investment in human resource development. Investment costs for each of the above contents are very different, depending on the needs of each seaport project, depending on the geographical location, natural conditions, scale, and nature of each port (refer to appendix 2.1, 2.2, 2.3), but usually fluctuate within the following range:

1.5%

2.0%

18.0%


26.5%



52.0%


Construction of protective works (reves, breakwaters...) and dredging of the port channel Construction of port access roads

Construction of port bridges and electrical, water, cooling equipment... Cargo handling equipment

Human resources


Chart 2.1: Investment capital for seaports by investment category, period 2005 - 2011

Source: Calculated based on data from the Department of Infrastructure and Urban Structure - Ministry of Planning and Investment, Department of Transport Infrastructure - Ministry of Transport and records of seaport projects.

2.3.3.1. Construction investment

a. Investment in construction of port infrastructure

Investment in port infrastructure can be carried out by the state or port enterprises.


- Investing in wharves

Most of Vietnam's seaports today have a port structure of gravity type, steel sheet pile wall or high pile base. The surface load of the wharf is usually from 2 to 10 tons/m2 . Some wharves are of the type of shore-mounted wharf or caisson. The process of building wharfs has applied the world's advanced seaport construction technology. The port construction model is quite diverse: there are traditional ports; there are sea-encroaching ports (such as Dinh Vu port, Lach Huyen - Hai Phong...); there are ports dug deep into the mainland (such as My Thuy port - Quang Tri). Depending on natural conditions, investors will choose a suitable port construction model that still ensures functionality with low cost.

Reasonable construction and operating costs.

Due to the technical complexity, the construction of wharf projects often involves the participation of many international and domestic consultants and construction contractors. For example, when implementing the 5B package to build 6 export wharfs of Dung Quat port, the design part was undertaken by Tedi South - Portcoast, the construction part was undertaken by Cienco 6, Cienco 1, PTSC and foreign subcontractors from Singapore, Malaysia... [38].

In fact, investment in the construction of ports and wharves in Vietnam is very flexible, many port projects are even ahead of planning to anticipate the requirements of the world transport market. Many port projects have applied for and been approved to design wharves capable of receiving ships with a tonnage larger than the planned size, such as Gemadept Terminal Link port designed for ships with a tonnage of up to 200,000 DWT, CMIT, SSIT wharves... designed for ships with a tonnage of up to 160,000 DWT while the planning is only 100,000 DWT. It is also thanks to this flexibility that Cai Mep port cluster

- Thi Vai is planned to be an international gateway port, but for the past 2 years it has been operating as an international container transit port.

- Investing in warehouse systems in the port

Most ports have warehouse systems to store and classify goods at the port. However, as the volume of goods passing through the port has increased rapidly in recent years, the warehouse systems at many ports have not been able to meet the demand. For example, at Vietnam Maritime Corporation, the warehouse area of ​​its member units is 411 hectares [84]. Compared to Shenzhen Port (China) with a similar wharf length, they have a much larger warehouse area of ​​590 hectares [12].

The biggest difficulty that investors encounter when building a warehouse system


In the port, the majority of Vietnamese seaports have very narrow rear areas. Especially the main ports are often limited by narrow urban areas, land area for warehouses and port development is limited, there is no land fund for further construction or modernization. This has led to the backwardness of the Vietnamese seaport warehouse system.

To overcome the above situation, when the rear land fund is no longer available for expansion, ports can only develop towards the sea (such as Dinh Vu port, Lach Huyen - Hai Phong), or rent warehouses outside (such as Chua Ve Hai Phong container port), or open more ICD ports (such as Saigon port...), or rationalize loading and unloading technology to make the most of the existing warehouse area. The last measure that can be mentioned is to move the port to another location with a more spacious and convenient area.

- Investing in port infrastructure systems

The port infrastructure system is first of all the transport network in the port, electricity, water, communications..., then the commercial - financial services, banking and other social infrastructure associated with the port. In general, if Vietnamese seaports are located near urban centers, the electricity and water systems are good and meet the requirements. However, when the ports are concentrated in the same area (such as Cai Mep Thi Vai port cluster - Ba Ria Vung Tau) or the ports are located far from the urban center, the power shortage still occurs, affecting the operation of the port, the operation of the warehouse for storing goods and cold containers, forcing investors to spend up to 50 - 60 million USD for a generator serving the port, which is very expensive. Meanwhile, the commercial - financial services in most Vietnamese seaports are currently very weak.

b. Investment in construction of public infrastructure of seaports

In addition to serving the public and maintaining the development of the seaport system, public port infrastructure also serves to ensure security and national defense, so investment is entirely from the state budget and ODA capital.

If considering each item separately, the infrastructure outside the port can be divided into maritime traffic systems and maritime safety assurance.

- Regarding Maritime Safety Assurance : Including the lighthouse system, signal beacons... are entirely invested and managed by "Maritime Safety Assurance" - under the Vietnam Maritime Administration - which is the unit that directly invests and manages the exploitation process. This unit is a member of the International Association of Lighthouse Associations (IALA).

Up to now, Vietnam's lighthouse system has 92 lights, some of which are


built during the French period, the rest were mostly built from the 1960s onwards with 49 lights arranged based on 3,260 km of coastline, 32 lights arranged on islands near and far from shore; 11 lights arranged on Truong Sa archipelago. The equipment of the lights, due to being invested in many periods, has many different types, causing difficulties and complications for management, operation and repair.

The signal system to control the navigation into the seaports is relatively modern, meeting international standards with 775 maritime signals operating well. However, the installation of Rancom equipment (a device that reflects radar beams) on buoy No. 0 to support ships entering the channel more accurately and quickly has been recommended for quite a long time but has not yet been invested in.

- For maritime traffic system:According to current regulations, the maritime traffic system is divided into two types: public maritime traffic and specialized maritime traffic.

Public waterways are used for public purposes and are directly managed by the Vietnam Maritime Safety Authority. Investment in construction, maintenance and dredging of waterways is carried out according to state orders or through bidding. Investment in construction of waterways is funded by the state budget, while funding for restoration of public waterways is used from maritime safety fee revenue.

Dedicated waterways, also known as seaport branch waterways, are used exclusively for one port and are invested in, built and managed by that port enterprise. The investment capital for waterway development can be greatly supported by the state. The budget for maintenance of dedicated waterways is deducted according to a percentage from the Maritime Safety Assurance fee - the percentage is decided by the state.

Most of Vietnam's seaports are built on the shore or river mouths, so they are greatly affected by tides and sedimentation, so the channels are long and the depth is limited, especially ports in the North and South. To ensure the design depth, every year the entire channel system into Vietnam's ports must be dredged about 6.5 million m3 of sedimented sand and mud, with a budget of tens of thousands of billions of VND. However, due to limited funding, only about 50% of the volume required for dredging can be done every year. For example, in the case of Hai Phong port, to maintain the channel depth into the port at -7.2m,

Every year the state budget needs to spend about 200 billion VND to dredge sediment.


(once every 3 months). However, due to insufficient budget funds, the depth of the channel into Hai Phong port is not maintained stably. In many cases, ships entering Hai Phong port have to reduce their load, causing businesses to incur additional costs. The increased costs have caused some large tonnage ships to leave Hai Phong port, causing the state to lose revenue.

The shipping channel is narrow, the depth is limited, while the tonnage of ships going to/from the port is increasing, so ensuring the shipping channel is a challenge for the Vietnamese maritime industry. Therefore, in addition to the annual dredging costs, in recent years the Government has invested in many projects to develop public shipping channels as shown in Table 2.9.

Table 2.9: Committed/ongoing maritime channel development projects (as of 2011)

STT

Project

Total investment

private

Agency

perform

Capital

1

Renovating shipping channel for Cam Pha port

(Quang Ninh)

7 million USD

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

2

Upgrading the shipping channel for Dinh Vu wharf

(Hai Phong port)

-

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

3

Upgrading shipping channel for Nghi Son port

4 million USD

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

4

Upgrading shipping channels for Cua Lo seaport

4 million USD

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

5

Upgrading the shipping channel into Cua port

Vietnamese (Quang Tri)

221 billion VND

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

6

Upgrading the shipping channel into the general port

Dung Quat complex

70,141 billion VND

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

7

Renovating the shipping channel into Quy Nhon port

4 million USD

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

8

Upgrading the flow for the wharves in Cai area

Mep - Thi Vai at Vung Tau seaport

16 million USD

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

9

Upgrading Soai Rap canal - port access channel

Hiep Phuoc (Ho Chi Minh City)

33 million USD

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

10

Quan Chanh Bo Canal Development Project

198 million USD

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

11

Dredging Bo De channel for exploitation

Nam Can Port Waterfall (Ca Mau)

193.9 billion VND

Department of Natural Resources and Environment

Vietnam

Government

Vietnam

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Current Status of Port Development Investment - Considered by Investment Content

Source: Ministry of Transport and Report on overall investment monitoring and evaluation (first 6 months of 2011) of Vietnam Maritime Administration


c. Investing in the transportation system connecting to the port

In the past, Vietnam's seaport planning only considered the construction of wharves and investment in loading and unloading equipment, without paying much attention to the development of peripheral infrastructure such as road networks for cargo transportation, leading to many shortcomings and lack of uniformity in the transportation network connecting Vietnam's 200 ports with the rear. The reason for this situation is that the ports are licensed for construction by localities, but the connecting roads can be invested by the Central Government or by localities, while the budget for investing in roads is limited. Therefore, the investment projects in seaports and connecting roads are related to each other and do not match the implementation progress and the time of putting into operation. In chart 2.1, the ratio of 2% of the total investment capital for building roads to ports is only for building short sections of roads connecting existing local roads with the port.

- For road

Although most of Vietnam's seaports have a system of highways connecting to national roads, these routes often face traffic congestion. Some ports are located in urban and residential areas, so traffic is stagnant and can only operate at night, greatly limiting the productivity of the ports. Moreover, 4-lane highways are very rare. The road system in general (both road level and road gauge) and the urban traffic system connecting to ports in localities with large seaports such as Quang Ninh, Hai Phong, Ho Chi Minh City... are either degraded and cannot keep up with the rapid growth of goods traffic through seaports, or are slow to deploy, greatly affecting investment activities, construction and capacity development of seaports. In the Central region alone, the road system connecting the Central seaports with industrial parks, urban areas, and the Central Highlands is still very limited, with narrow road gauges and many bends that do not ensure container traffic.


Table 2.10: Road routes in need of upgrading or slow implementation


TT

Road name

Connecting line

Note

1

Highway 18

Quang Ninh - Hai Duong North

Ninh

Overload

2

Dinh Vu Industrial Park Connection Route

Chua Ve - Nguyen Van intersection

Linh - Dinh Vu Industrial Park

Overload

3

National Highway 19

Quy Nhon Seaport - West

Original

No guarantee

4

National Highway 20, 27

Ba Ngoi Port - Lam Dong, Dak Nong

Many routes are not suitable for transportation.

container transfer

5

National Highway 965

QL 51 - Cai Mep Port - Town

Fabric

Slow construction

6

Expressway

Ho Chi Minh City - Long Thanh - Vung Tau

Ship

Slow construction

7

Inter-port route (Dong Nai)

Cat Lai Ferry - Ong Keo Industrial Park

No construction capital

8

Route connecting Dong Nai port with the national transport network

Bien Hoa 2 - Dong Nai port route

Not yet implemented due to lack of presence

equal

9

Port connection route

Saigon Hiep Phuoc Port Project Phase 1 - Industrial Park

Hiep Phuoc Industrial Park Phase 1 (including 1.5 km of road and 02 bridges)

Slow construction

10

Interprovincial Road 25B

Connecting to Cat Lai port

Delay due to absence

by construction

11

Expressway connection

Cai Lan Port - Hai Phong Port

New construction

Source: Department of Planning Management - Ministry of Planning and Investment [99]

- For railways

Although railway routes to ports are more convenient than roads, currently the only ports with direct railway access to the wharf are Hai Phong port at the main Hoang Dieu wharf warehouse. Even in the central seaports, the ports are located near the main cargo stations on the North-South railway line, but there are almost no branch lines connecting directly to the wharf, except for Ba Ngoi wharf (belonging to Nha Trang - Ba Ngoi port) with 3.2 km of railway, which is now degraded and unusable due to lack of maintenance and repair. This reality leads to goods being transported by rail having to use an additional step of using cars, thus increasing transportation costs and limiting transportation productivity. Currently, railways only meet about 10-15% of the demand for transporting goods through ports.

- Inland waterways

The inland waterway transport system in our country has many advantages for development.

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