Japan bets on Vietnam port business
An artist's rendering of the Lach Huyen port project.
Japan
is providing Vietnam with new loans totaling more than 85 billion yen
($781 million) for the development of port and road infrastructure in
the rapidly growing Asian nation.
The
loans are for the development of a major deep-sea port at Lach Huyen to
the east of Haiphong, the country’s third-largest city, and
for supporting hinterland road and bridge links. The port is scheduled
to be operational by May 2018, a delay of five months from the
original plan.
The Japan International Cooperation
Agency said it signed an agreement with the government of Vietnam last
month to provide the new round of funding for the projects. JICA
coordinates official development assistance for the Japanese government.
Vietnam’s
northeastern coastal area, extending from Haiphong and Hạ Long City to
Hanoi, is home to numerous factories and facilities backed by Japanese
and international investors. The region’s seaborne trade is currently
served by Hai Phong Port and Cai Lan Port.
As well as
addressing increasing demand for containers in northern Vietnam,
development of the new port will reinforce the international
competitiveness of the entire northern region, JICA said.
“Since
the international freight shipping market has seen an increasing trend
towards large container vessels in recent years, developing ports that
are deep enough to handle large container ships is imperative to ensure
that the northern area of Vietnam functions properly as an international
distribution base.”
Industry experts questioned whether
there will be enough demand for a project of this scale and warned the
region could be embarking on yet another white elephant mega-port
project.
“The big mainline vessels won’t call. The local
market is too small and the deviation from the main shipping channel to
Haiphong is too far. It is 500 nautical miles, which equates an extra
29 hours of extra sailing time in and out, on top of which you have port
stay time,” said Andy Lane, a partner with CTI Consultancy in
Singapore.
“For intra-Asia
trades, 4,500 TEUs (20-foot-equivalent units) is about as big as the
ships are going to get for the foreseeable future,” Lane said.
This
is the third tranche of funds for the project after 21 billion yen was
provided in November 2011 and a further 38 billion yen in March 2013.
The new funds will be spent on engineering works, material and equipment
procurement and consulting services required for the development of the
port and surrounding infrastructure.
JICA said it also
provided a new loan for the Da Nang to Quang Ngai section of a major
north-south expressway currently under development in the country.
The
largest city in central Vietnam, Da Nang, together with the neighboring
provinces of Quang Nam and Quang Ngai, make a well-developed industrial
and export processing zone, and Japanese manufacturing companies are
invested heavily in the area. Da Nang is a key distribution point at the
east end of the East-West Economic Corridor that runs through Laos,
Thailand and Myanmar.
“Successful completion of this
project will provide a major expressway for international distribution
to connect Vietnam with the north, south, east and west of the Mekong
region,” JICA said.
The expressway is expected to be completed in June 2018.
“These
Japanese ODA loans will provide support for building the economic
infrastructure essential to strengthening Vietnam’s competitiveness, and
for promoting environmental improvements to overcome the country’s
vulnerabilities,” JICA said.
Japan is heavily invested in Vietnam and JICA has 114 ongoing projects in more than 20 provinces and cities across the country
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