Your SlideShare is downloading. ×
Q2 2010                                                   www.businessmonitor.comVietnaMinfrastructure reportINCLUDES 5-YE...
Vietnam Infrastructure                         Report Q2 2010                         Including 5-year industry forecasts ...
Vietnam Infrastructure Report Q2 2010© Business Monitor International Ltd                                           Page 2
Vietnam Infrastructure Report Q2 2010CONTENTSExecutive Summary ..............................................................
Vietnam Infrastructure Report Q2 2010Project Finance Ratings ................................................................
Vietnam Infrastructure Report Q2 2010 Executive Summary             Vietnam’s infrastructure sector shows strong signs of ...
Vietnam Infrastructure Report Q2 2010SWOT AnalysisVietnam Infrastructure SWOTStrengths               There are several pro...
Vietnam Infrastructure Report Q2 2010Vietnam Infrastructure Project Finance SWOTStrengths                Strong fundamenta...
Vietnam Infrastructure Report Q2 2010Vietnam Economic SWOTStrengths               Vietnam has been one of the fastest-grow...
Vietnam Infrastructure Report Q2 2010Vietnam Political SWOTStrengths                The Communist Party government appears...
Vietnam Infrastructure Report Q2 2010Market OverviewVietnam             Vietnams emergence as one of the most promising ec...
Vietnam Infrastructure Report Q2 2010             change their plans. The weakness in infrastructure that has impeded the ...
Vietnam Infrastructure Report Q2 2010             leaves 50% of financing needs unmet by public finances, which at the mom...
Vietnam Infrastructure Report Q2 2010Industry Forecast ScenarioTable: Construction and Infrastructure Industry Data       ...
Vietnam Infrastructure Report Q2 2010Construction and Infrastructure Forecast Scenario             According to our foreca...
Vietnam Infrastructure Report Q2 2010Transport InfrastructureTable: Transport Infrastructure Industry Data                ...
Vietnam Infrastructure Report Q2 2010Table: Transport Infrastructure Industry Data                                 2007   ...
Vietnam Infrastructure Report Q2 2010Table: Transport Infrastructure Industry Data                                   2007 ...
Vietnam Infrastructure Report Q2 2010Transport Infrastructure Overview             Road and bridge building has stepped up...
Vietnam Infrastructure Report Q2 2010               Maersk and France’s Compagnie Maritime dAffrètement-Compagnie Générale...
Vietnam Infrastructure Report Q2 2010Table: Vietnam Railway Corporation’s Main TargetsUpgrading north-south railway route ...
Vietnam Infrastructure Report Q2 2010                                                            Airports                 ...
Vietnam Infrastructure Report Q2 2010          In October 2009, Indian developer and operator of Mundra Port, Mundra Port ...
Vietnam Infrastructure Report Q2 2010                                                         Ports                  Joint...
Vietnam Infrastructure Report Q2 2010          section of the expressway. BEDC will invest US$1.8bn in constructing the 82...
Vietnam Infrastructure Report Q2 2010                                                            Roads                    ...
Vietnam Infrastructure Report Q2 2010          railway line in Ho Chi Minh city in Vietnam. The project, with an estimated...
Vietnam Infrastructure Report Q2 2010Major Projects Table - TransportTable: Vietnam – Major Transport Infrastructure Proje...
Vietnam Infrastructure Report Q2 2010Table: Vietnam – Major Transport Infrastructure Projects                             ...
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Vietnam infrastructurereportq22010 18052010
Upcoming SlideShare
Loading in...5
×

Vietnam infrastructurereportq22010 18052010

1,747

Published on

Published in: Travel, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,747
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
77
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Vietnam infrastructurereportq22010 18052010"

  1. 1. Q2 2010 www.businessmonitor.comVietnaMinfrastructure reportINCLUDES 5-YEAR FORECASTS TO 2014issn 1750-5593published by Business Monitor international Ltd.
  2. 2. Vietnam Infrastructure Report Q2 2010 Including 5-year industry forecasts by BMIPart of BMIs Industry Report & Forecasts SeriesPublished by: Business Monitor InternationalPublication Date: February 2010 Business Monitor International © 2010 Business Monitor International. Mermaid House, All rights reserved. 2 Puddle Dock, London, EC4V 3DS, All information contained in this publication is UK copyrighted in the name of Business Monitor Tel: +44 (0) 20 7248 0468 International, and as such no part of this publication Fax: +44 (0) 20 7248 0467 may be reproduced, repackaged, redistributed, resold in Email: subs@businessmonitor.com whole or in any part, or used in any form or by any Web: http://www.businessmonitor.com means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher. DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.
  3. 3. Vietnam Infrastructure Report Q2 2010© Business Monitor International Ltd Page 2
  4. 4. Vietnam Infrastructure Report Q2 2010CONTENTSExecutive Summary .........................................................................................................................................5SWOT Analysis.................................................................................................................................................6 Vietnam Infrastructure SWOT ............................................................................................................................................................................... 6 Vietnam Infrastructure Project Finance SWOT ..................................................................................................................................................... 7 Vietnam Economic SWOT...................................................................................................................................................................................... 8 Vietnam Political SWOT ........................................................................................................................................................................................ 9Market Overview.............................................................................................................................................10 Vietnam..................................................................................................................................................................................................................... 10Industry Forecast Scenario ...........................................................................................................................13 Table: Construction and Infrastructure Industry Data ........................................................................................................................................ 13 Construction and Infrastructure Forecast Scenario.................................................................................................................................................. 14Transport Infrastructure ................................................................................................................................15 Table: Transport Infrastructure Industry Data .................................................................................................................................................... 15 Transport Infrastructure Forecast Scenario ............................................................................................................................................................. 17 Transport Infrastructure Overview ........................................................................................................................................................................... 18 Table: Ports Are The Weakest Link: Quality Of Infrastructure Global Ranking Out Of 134 Countries............................................................... 19 Table: Vietnam Railway Corporation’s Main Targets ......................................................................................................................................... 20 Major Projects – New and Ongoing Projects ........................................................................................................................................................... 20 Airports................................................................................................................................................................................................................ 20 Ports .................................................................................................................................................................................................................... 21 Roads................................................................................................................................................................................................................... 23 Railways .............................................................................................................................................................................................................. 25 Major Projects Table - Transport ........................................................................................................................................................................ 27 Table: Vietnam – Major Transport Infrastructure Projects ................................................................................................................................. 27Energy and Utilities Infrastructure ...............................................................................................................30 Table: Energy & Utilities Infrastructure Industry Data....................................................................................................................................... 30 Energy and Utilities Infrastructure Forecast Scenario ............................................................................................................................................. 31 Energy and Utilities Infrastructure Overview ........................................................................................................................................................... 32 Table: The Three Levels Of Liberalising Vietnam’s Electricity Market ............................................................................................................... 34 Major Projects – New and Ongoing Projects ........................................................................................................................................................... 35 Power Plants........................................................................................................................................................................................................ 35 Pipelines .............................................................................................................................................................................................................. 39 Water ................................................................................................................................................................................................................... 39 Major Projects Table – Energy and Utilities ....................................................................................................................................................... 40 Table: Vietnam – Major Energy and Utilities Infrastructure Projects................................................................................................................. 40Business Environment ..................................................................................................................................42 Vietnam Business Environment................................................................................................................................................................................. 42 Limits Of Potential Returns.................................................................................................................................................................................. 42 Risk To Realisation Of Potential Returns............................................................................................................................................................. 42 Regional Overview.................................................................................................................................................................................................... 43 Asia Pacific Infrastructure Business Environment Ratings.................................................................................................................................. 43 Table: Asia Pacific Infrastructure Business Environment Ratings....................................................................................................................... 46© Business Monitor International Ltd Page 3
  5. 5. Vietnam Infrastructure Report Q2 2010Project Finance Ratings ................................................................................................................................47 Vietnam Project Finance Ratings ............................................................................................................................................................................. 47 Design and Construction ..................................................................................................................................................................................... 47 Commissioning and Operating ............................................................................................................................................................................ 47 Overall Project Finance Rating ........................................................................................................................................................................... 47 Regional Overview.................................................................................................................................................................................................... 47 Project Finance Ratings: Outlook For Asia Pacific............................................................................................................................................. 47 Table: Design and Construction Rating............................................................................................................................................................... 51 Table: Commissioning and Operating Rating...................................................................................................................................................... 52 Table: Overall Project Finance Rating, Asia Pacific........................................................................................................................................... 53Macroeconomic Outlook ...............................................................................................................................54 Table: Vietnam - Economic Activity..................................................................................................................................................................... 56Political Outlook .............................................................................................................................................57Company Monitor...........................................................................................................................................60 Cavico Corporation ............................................................................................................................................................................................. 60 Song Da Construction Corporation ..................................................................................................................................................................... 63 Vietnam Construction and Machinery Installation, Corporation (Lilama) ......................................................................................................... 65Global Overview .............................................................................................................................................67 Global Infrastructure Forecasts Revisited ........................................................................................................................................................... 67Methodology ...................................................................................................................................................71 New Infrastructure Data Sub-sectors: Methodology................................................................................................................................................. 71 Infrastructure Forecasts: Methodology ............................................................................................................................................................... 72 Sources ................................................................................................................................................................................................................ 74 Industry Forecasts .................................................................................................................................................................................................... 74 Construction Industry .......................................................................................................................................................................................... 75 Data Methodology .................................................................................................................................................................................................... 75 Construction ........................................................................................................................................................................................................ 75 Capital Investment ............................................................................................................................................................................................... 76 Construction Sector Employment......................................................................................................................................................................... 76 Infrastructure Business Environment Ratings........................................................................................................................................................... 77 Ratings Overview................................................................................................................................................................................................. 77 Table: Infrastructure Business Environment Indicators ...................................................................................................................................... 78 Project Finance Ratings ........................................................................................................................................................................................... 79 Table: Design And Construction Phase ............................................................................................................................................................... 80 Table: Commissioning And Operating Phase – Commercial Construction ......................................................................................................... 81 Table: Commissioning And Operating Phase – Energy And Utilities .................................................................................................................. 82 Table: Commissioning And Operating Phase – Transport................................................................................................................................... 83 Sources ................................................................................................................................................................................................................ 85© Business Monitor International Ltd Page 4
  6. 6. Vietnam Infrastructure Report Q2 2010 Executive Summary Vietnam’s infrastructure sector shows strong signs of recovery for 2010 after a disappointing 2009 where construction industry value fell by 8% to US$5.3 bn from US$5.84bn in 2008. This was almost exclusively due to world market conditions throughout 2009, as underlying growth is forecast to be high over the remainder of the forecast period. Growth is expected to peak in 2010 with a year on year increase of 23.9% and continue till the end of the period when the industry is estimated to be worth VND260bn (US$15.12bn) in 2014. Infrastructure projects covered a wide variety of projects in the past quarter. Road and bridge building was especially strong. One of the major investments was from the Bidv Expressway Development Company (BEDC) which will invest US$1.8bn in constructing the 82km-long Trung Luong-My Thuan- Can Tho expressway project. In the power sector a variety of power plant projects were announced including hydro, thermal and coal power stations. The largest of these was a multi-billion-dollar coal- fired power plant to be completed by Sumitomo Corp. The plant will have a capacity of 1,320 megawatts (MW) and the estimated cost is JPY200bn (US$2.5bn). In terms of BMI’s Business Environment Ratings, Vietnam tied with the Philippines and Pakistan in the penultimate place for market risks, with a score of 35 out of 100. The country suffers from issues regarding the tendering process, which has come under much scrutiny. Vietnam has been keen to revamp its image and refine the tendering process, and is increasingly attracting large international companies. Overall Vietnam scored 50.7 for its Business Environment placing it in 7th place within the region. For BMI’s Overall Project Finance Ratings Vietnam also scored poorly. Along with other weak public private partnership (PPP) regulatory regimes it faced issues such as corruption and overtaxing government intervention in some industries. Vietnams rating presents some upside risk because of declining levels of inflation, but the risk rating also encompasses some deep structural problems in the countrys overall business environment. Overall the country scored 46.4. Despite poor scores for the country in terms of market risk, Vietnam is forecast to be one of the strongest performers in the Asian market over the coming years. A combination of cheap labour and ambitious government projects mean that there are numerous opportunities for international construction in the country. The government’s commitment to improving the business environment also weighs well for investors.© Business Monitor International Ltd Page 5
  7. 7. Vietnam Infrastructure Report Q2 2010SWOT AnalysisVietnam Infrastructure SWOTStrengths There are several projects in the pipeline, particularly in the energy and transport infrastructure sectors. The current poor state of infrastructure in the country provides easy wins for foreign investors and construction companies. Government is keen to boost macroeconomic growth through demand-side policies that include infrastructure spending initiatives. Rapid growth has attracted investment from many of the world’s largest infrastructure companies.Weaknesses State-owned companies dominate the infrastructure market. This is especially so in the utilities sector, where Electricity of Vietnam (EVN)’s dominant position has deterred investments in the sector. The EU does not predict Vietnam will become a true market economy until 2018. Vietnam relies heavily on foreign imports: it is estimated that Vietnam needs to import 2mn tonnes of steel billets per year, adding up to 80% of the country’s annual demand. Low scores in BMI’s new Project Finance Ratings indicate a risky environment for major infrastructure projects and conducting project finance operations.Opportunities Strong growth forecast for 2010 will attract further investors. Demand for urban infrastructure projects in transport and sanitation will rise in tandem with urbanisation in coming years.Threats Global macroeconomic downturn and limited availability of finance could threaten capital expenditure plans for infrastructure projects, in both the public and the private sectors. Uncertainty and downside risks in business environment could have negative impact should any significant events occur to highlight Vietnam’s structural difficulties.© Business Monitor International Ltd Page 6
  8. 8. Vietnam Infrastructure Report Q2 2010Vietnam Infrastructure Project Finance SWOTStrengths Strong fundamentals in Vietnam will sustain the long-term growth of the infrastructure sector, reducing long term demand risk. Large scale road building projects backed by government commitments, have created a thriving infrastructure sector. Location offers upside as transport hub with strong port sector as well as extensive demand for road and rail.Weaknesses High corruption and poor legal and regulatory frameworks limit project development. Poor existing infrastructure can hamper completion of projects.Opportunities As one of the fast growing countries in the region, Vietnam offers attractive return on investment for foreign firms. The government has a commitment to improving market risks promises to reduce negative effects of corruption.Threats The instability of business environment presents downside risk over the long term. Continued financial uncertainty may convince funding to move towards safer investments.© Business Monitor International Ltd Page 7
  9. 9. Vietnam Infrastructure Report Q2 2010Vietnam Economic SWOTStrengths Vietnam has been one of the fastest-growing economies in Asia in recent years, with GDP growth averaging 7.6% annually between 2000 and 2007. The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 58% in 1993 to 20% in 2004.Weaknesses Vietnam still suffers from substantial trade, current account and fiscal deficits, leaving the economy vulnerable as the global economy continues to suffer in 2010. The fiscal picture is clouded by considerable off-the-books spending. The heavily-managed and weak dong currency reduces incentives to improve quality of exports, and also serves to keep import costs high, thus contributing to inflationary pressures.Opportunities WTO membership has given Vietnam access to both foreign markets and capital, while making Vietnamese enterprises stronger through increased competition. The government will, in spite of the current macroeconomic woes, continue to move forward with market reforms, including privatisation of state-owned enterprises, and liberalising the banking sector. Urbanisation will continue to be a long-term growth driver. The UN forecasts the urban population to rise from 29% of the population to more than 50% by the early 2040s.Threats Inflation and deficit concerns have caused some investors to re-assess their hitherto upbeat view of Vietnam. If the government focuses too much on stimulating growth and fails to root out inflationary pressure, it risks prolonging macroeconomic instability, which could lead to a potential crisis. Prolonged macroeconomic instability could prompt the authorities to put reforms on hold, as they struggle to stabilise the economy.© Business Monitor International Ltd Page 8
  10. 10. Vietnam Infrastructure Report Q2 2010Vietnam Political SWOTStrengths The Communist Party government appears committed to market-oriented reforms, although specific economic policies will undoubtedly be discussed at the 2011 National Congress. The one-party system is generally conducive to short-term political stability. Relations with the US are generally improving, and Washington sees Hanoi as a potential geopolitical ally in South East Asia.Weaknesses Corruption among government officials poses a major threat to the legitimacy of the ruling Communist Party. There is increasing (albeit still limited) public dissatisfaction with the leaderships tight control over political dissent.Opportunities The government recognises the threat that corruption poses to its legitimacy, and has acted to clamp down on graft among party officials. Vietnam has allowed legislators to become more vocal in criticising government policies. This is opening up opportunities for more checks and balances within the one-party system.Threats The slowdown in growth in 2009 and 2010 is likely to weigh on public acceptance of the one-party system, and street demonstrations to protest economic conditions could develop into a full-on challenge of undemocractic rule. Although strong domestic control will ensure little change to Vietnams political scene in the next few years, over the longer term, the one-party-state will probably be unsustainable. Relations with China have deteriorated over the past year due to Beijings more assertive stance over disputed islands in the South China Sea and domestic criticism of a large Chinese investment into a bauxite mining project in the central highlands, which could potentially cause widescale environmental damage.© Business Monitor International Ltd Page 9
  11. 11. Vietnam Infrastructure Report Q2 2010Market OverviewVietnam Vietnams emergence as one of the most promising economies in Asia, if not the world, stems largely from the Communist Party of Vietnams (CPV) adoption of the Doi Moi market reform policies in 1986. The gradual but steady shift from a largely agrarian country with a high degree of state ownership and government intervention to a market economy has stimulated the flow of foreign investment and domestic entrepreneurship, which are now the prime drivers of growth. Foreign direct investment (FDI) reached US$6.7bn in 2007, of which a quarter went towards fixed capital formation, according to data from UNCTAD. Vietnam’s poor infrastructure is putting a damper on the country’s growth as the industry is highly dependent on sound infrastructure (especially power and road) to operate. Vietnam’s planning and investment deputy minister, Cao Viet Sinh, said in August 2008 that weaknesses in infrastructure are slowing down the absorption rate of FDI in the country. PricewaterhouseCoopers (PWC)’s executive director for south east Asian infrastructure is quoted in the Saigon Times saying, Vietnam will need to increase the levels of infrastructure investment at twice the growth rate of GDP to increase its overall national competitiveness. According to VietNamNet, citing the Japan Bank for International Co-operations (JBIC) survey in 2008, Japanese investors continue to be concerned about undersized infrastructure in Vietnam, especially its roads, ports and power systems. A total of 78% of Japanese businesses responded with the opinion that roads in Vietnam needed to be upgraded, 60% cited power supply and 45% cited seaports. This message appears to be heeded as 2010 has seen a stream of road building projects boost the infrastructure market. Foreign investment pledges for the port sector, also increased over the third quarter of 2009. Taiwans Formosa Plastics Group – which is rapidly emerging as one of the largest, if not the largest, foreign investors in Vietnam – confirmed its commitment to the government to build a deep-sea port in Son Duong, next to the Vung Ang Economic Zone, where it is investing US$19.2bn in petrochemical, steel and oil refinery projects. According to the latest figures announced by Vietnam’s Foreign Investment Agency, it is anticipating US$50bn in newly pledged funds for 2008, while US$45bn were already pledged from January to July of that year. Of those, US$6bn was disbursed for investments. It is to be expected that in any market the majority of the pledged funds may not materialise into investments as projects get cancelled or investors© Business Monitor International Ltd Page 10
  12. 12. Vietnam Infrastructure Report Q2 2010 change their plans. The weakness in infrastructure that has impeded the process poses a key constraint, but it is a matter that the government of Vietnam can tackle. Vietnam, however, has been making noteworthy efforts to attract investments, and the government has made infrastructure a priority investment area. The urbanisation pressures and the population figures, however, indicate that the pressure on urban infrastructure will increase in the coming years. According to BMI forecasts, between 2009 and 2016, Vietnam’s population will increase by 10%. Vietnam’s Ministry of Planning and Investments has released a list of 60 urban infrastructure projects to be implemented between 2009 and 2016. The total estimated investment required for the projects is US$12bn. The projects range from new water and sanitation infrastructure to new roads and traffic systems, and will take place in 15 provinces around the country. Around 18 of the proposed projects on the list will be funded by official development assistance (ODA) from Europe, Japan and the Asian Development Bank, while the ministry said that the rest will come from the private sector, through public private partnerships (PPPs). Infrastructure bonds are another option, but this idea has not gained much support from the government thus far. However, as the capital requirements for projects in energy, utilities and transport increase, infrastructure-specific bonds may become more popular. Investors are showing keen interest in acquiring concessions in Vietnam’s transport sector, and thus establishing a long-term presence in the country. However, we also warn against the obstacles and challenges that still characterise Vietnam’s business environment, including corruption (the country ranks 121 in the ‘2008 Corruption Perception Index’ of Transparency International) and the fact that in spite of the commendable strides the government has been taking in opening up, the EU stresses that the country will not be considered a market economy until 2018. A regulatory and legal framework to nurture the development of concessions is also largely absent, though there are regulatory frameworks under construction. In a conference organised by the Asian Development Bank in February 2009 called Strengthening Public Private Partnerships For Infrastructure Investments In Vietnam, a core theme among the participants was the absence of an enabling institutional and regulatory/legal environment, which hinders the proliferation of PPPs. Law firm Duane Morris identified four main obstacles for the limited participation of the private sector in infrastructure in Vietnam. These are: the weak governance structures of the state-owned companies that dominate the construction and utilities sectors, difficulty in accessing domestic capital, projects can experience delays due to the weak regulatory environment that can prove to be costly, and finally the support of the government is often uncertain. In the long run, these problems could become a major obstacle for economic growth. Duane Morris noted in their presentation at the ADB conference that the government is able to meet a quarter of financing needs for infrastructure, and official development assistance (mainly from the JBIC) another quarter. This© Business Monitor International Ltd Page 11
  13. 13. Vietnam Infrastructure Report Q2 2010 leaves 50% of financing needs unmet by public finances, which at the moment make up the main source of financing. The challenges in the investment climate for Vietnam are reflected in the country’s weak standing on the Project Finance table. Risks appear to be slightly higher during the initial stages of a project’s lifecycle, though the difference compared with the second stage is negligible in the face of overall risks, which appear to be quite formidable, giving the country an overall score of 49.5 out of 100. Although Vietnams rating presents some upside risk due to the declining levels of inflation, the risk rating also encompasses some deep structural problems in the countrys overall business environment, such as corruption and overtaxing government control and intervention in some industries, one of which is the energy and utilities sector. Taisei Corp. and Kajima Corp. have been banned from participating in road and bridge construction projects in Vietnam for one year because of their involvement with the Can Tho Bridge, which collapsed in September 2007, killing 52 people. Bloomberg quotes Tran Quoc Viet, the director of quality control at the Ministry of Transport, who said that this is punishment for the Japanese companies. According to Bloomberg, the bridge collapsed owing to unforeseen weaknesses of the two concrete supports on either side that collapsed causing the bridge to fall. Taisei and Kajima spokespeople have confirmed that they received notice of their temporary suspension on June 20 2009. In a related development, Vietnams Ministry of Transport also announced that it has banned 34 local contractors from participating in World Bank-funded projects for three years, and from Ministry of Transport projects for a year, citing violations in bidding regulations, Thanhnien News reported. The newspaper notes that 16 of the contractors are from Quang Ngai Province, eight from Lao Cai, four from Hanoi, four from Nam Dinh, and two from Ha Giang.© Business Monitor International Ltd Page 12
  14. 14. Vietnam Infrastructure Report Q2 2010Industry Forecast ScenarioTable: Construction and Infrastructure Industry Data 2007 2008 2009f 2010f 2011f 2012f 2013f 2014fConstruction IndustryValue, VNDbn 79,617 95,969 94,877 126,115 157,745 189,959 224,542 260,829Construction industry value,US$bn 4.95 5.84 5.34 6.73 8.41 10.41 12.7 15.1Construction industry, realgrowth, % y-o-y 12.01 0.37 -8.14 23.93 18.58 14.42 12.2 10.7Construction industry, % ofGDP 6.96 6.49 5.77 6.84 7.60 8.22 8.7 9.0Total capital investment,VNDbn 437,702 531,987 564,432 624,392 696,406 776,326 863,210 954,133Total capital investment,US$bn 27.2 32.4 31.7 33.3 37.1 42.5 49 55Total capital investment, %of GDP 38.3 36.0 34.3 33.9 33.6 33.6 33.3 33.1Capital investment percapita, US$ 318.1 373.0 360.8 373.7 410.8 464.3 524 588Real capital investmentgrowth, % y-o-y 24.2 3.8 1.0 3.0 4.5 6.0 6.0 6.0Construction sectoremployment, 000 2,268 2,378 2,408 2,499 2,639 2,834 3,040 3,259Construction industryemployment, % y-o-y 6.14 4.87 1.26 3.76 5.60 7.39 7.29 7.21Total workforce, 000 45,462.8 46,563.1 47,690.0 48,844.1 50,026.2 51,236.9 52,476.9 53,746.9Construction industryemployees, as % of totallabour force 4.99 5.11 5.05 5.12 5.27 5.53 5.79 6.06Infrastructure industry value,as % of total construction 42.48 45.71 44.87 47.26 48.89 49.98 50.81 51.45Infrastructure industry value,VNDbn 33825 43865 42574 59604 77115 94951 114100 134193Infrastructure industry value,US$bn 2.10 2.67 2.39 3.18 4.11 5.20 6.43 7.78Infrastructure industry valuereal growth (%) 15.40 6.68 -9.94 31.00 22.88 17.13 14.17 12.11Infrastructure industry value,as % of GDP 2.96 2.97 2.59 3.23 3.72 4.11 4.41 4.65f=forecast. Source: Vietnam General Statistics Office, IMF, ILO, BMI© Business Monitor International Ltd Page 13
  15. 15. Vietnam Infrastructure Report Q2 2010Construction and Infrastructure Forecast Scenario According to our forecasts, infrastructure will make up on average 49.7% of total Robust Rebound Construction Industry Value, VNDbn construction industry on average between 2010 and 2014, indicating that 300,000 52 250,000 50 investments in infrastructure in Vietnam 200,000 48 will continue to dominate the 150,000 46 construction sector. This is above the 100,000 44 global average of 36.4%, which 50,000 42 0 40 highlights that Vietnam is indeed one of 2008e 2009f 2010f 2011f 2012f 2013f 2014f the most dynamic infrastructure markets Construction Industry V alue, V NDbn globally. (LHS) Inf rastructure Industry V alue A s % of Total Construction (RHS) In terms of value, however, Vietnam is e=estimate, f=forecast. Source:Vietnam General Statistics Office, found wanting. According to the national BMI statistics database, industry value added in 2008 was almost VND96trn (US$5.8bn). New preliminary estimates from the national statistics agency further indicate that construction industry value real growth for 2008 was a mere 0.4%. According to our forecasts, the construction industry will see real growth of 23.1% in 2010 taking the industry value to US$6.73bn. Of that, infrastructure will contribute 47.3%, or VND59trn (US$3.8bn). By the end of our forecast period, the infrastructure industry value is forecast to reachUS$7.8bn. Recovery will be swift and robust according to our forecasts, both for the construction and infrastructure sector. The annual average construction sector real growth between 2010 and 2014 is forecast to be 8.1%. For infrastructure, the figure is even higher, at 19.5%. There are several projects in the pipeline for Vietnam’s infrastructure, especially in the transport sector, that we believe will sustain the momentum for the country’s construction sector, even though private investments may subside. The strength of Vietnam’s infrastructure sector is evident by the fact that while the overall construction industry value is projected to show a very healthy real growth of 24% in 2010. The infrastructure sector is expected to far exceed it with growth of 31%.© Business Monitor International Ltd Page 14
  16. 16. Vietnam Infrastructure Report Q2 2010Transport InfrastructureTable: Transport Infrastructure Industry Data 2007 2008 2009f 2010f 2011f 2012f 2013f 2014fTransport InfrastructureIndustry Value As % OfTotal Infrastructure 59.50 63.64 62.78 67.12 69.66 71.28 72.46 73.34Transport InfrastructureIndustry Value, VND bn 20,126.0 27,916.0 26729.4 40006.2 53718.2 67684.2 82678.5 98412.3Transport InfrastructureIndustry Value, US$bn 1.25 1.70 1.50 2.14 2.86 3.71 4.66 5.71Transport InfrastructureIndustry Value RealGrowth (%) 24.72 15.71 -11.25 40.67 27.77 20.00 16.15 13.53Transport InfrastructureIndustry Value AsPercent Of TotalConstruction (%) 25.28 29.09 28.17 31.72 34.05 35.63 36.82 37.73Roads and BridgesInfrastructure IndustryValue, As % Of TransportInfrastructure 29.90 21.21 19.86 12.55 9.31 7.36 6.00 5.02Roads and BridgesInfrastructure IndustryValue, VNDbn 6017.66 5921.43 5307.64 5021.69 5001.12 4980.55 4959.98 4939.41Roads and BridgesInfrastructure IndustryValue, US$bn 0.37 0.36 0.30 0.27 0.27 0.27 0.28 0.29Roads and BridgesInfrastructure IndustryValue Real Growth (%) -17.70 -24.60 -17.37 -14.39 -6.91 -6.41 -6.41 -5.91Roads and BridgesInfrastructure Industry,As % Of TotalInfrastructure 17.79 13.50 12.47 8.43 6.49 5.25 4.35 3.68Roads and BridgesInfrastructure Industry,As % Of TotalConstruction 7.56 6.17 5.59 3.98 3.17 2.62 2.21 1.89Railways InfrastructureIndustry Value, As % OfTransport Infrastructure 37.99 42.80 43.38 48.33 50.58 51.93 52.88 53.56Railways InfrastructureIndustry Value, VND bn 7645.85 11948.6 11596.3 19334.5 27169.6 35149.7 43716.4 52705.1Railways Infrastructure 0.48 0.73 0.65 1.03 1.45 1.93 2.46 3.06© Business Monitor International Ltd Page 15
  17. 17. Vietnam Infrastructure Report Q2 2010Table: Transport Infrastructure Industry Data 2007 2008 2009f 2010f 2011f 2012f 2013f 2014fIndustry Value, US$bnRailways InfrastructureIndustry Value RealGrowth (%) 75.46 33.28 -9.95 57.73 34.02 23.37 18.37 15.06Railways InfrastructureIndustry, As % Of TotalInfrastructure 22.60 27.24 27.24 32.44 35.23 37.02 38.31 39.28Railways InfrastructureIndustry, As % Of TotalConstruction 9.60 12.45 12.22 15.33 17.22 18.50 19.47 20.21Airports InfrastructureIndustry Value, As % OfTransport Infrastructure 26.30 25.96 26.63 25.92 25.43 25.14 24.94 24.79Airports InfrastructureIndustry Value, VNDbn 5293.13 7246.03 7117.20 10369.7 13662.8 17016.9 20617.6 24395.7Airports InfrastructureIndustry Value, US$bn 0.33 0.44 0.40 0.55 0.73 0.93 1.16 1.41Airports InfrastructureIndustry Value RealGrowth (%) 23.72 13.90 -8.78 36.70 25.26 18.55 15.16 12.82Airports InfrastructureIndustry, As % Of TotalInfrastructure 15.65 16.52 16.72 17.40 17.72 17.92 18.07 18.18Airports InfrastructureIndustry, As % Of TotalConstruction 6.65 7.55 7.50 8.22 8.66 8.96 9.18 9.35Ports Harbours andWaterways InfrastructureIndustry Value, As % OfTransport Infrastructure 5.81 10.03 10.13 13.20 14.68 15.57 16.19 16.64Ports Harbours andWaterways InfrastructureIndustry Value, VND bn 1168.31 2799.92 2708.26 5280.32 7884.58 10537.0 13384.4 16372.1Ports Harbours andWaterways InfrastructureIndustry Value, US$bn 0.07 0.17 0.15 0.28 0.42 0.58 0.75 0.95Ports Harbours andWaterways InfrastructureIndustry Value RealGrowth (%) 259.41 116.66 -10.27 85.97 42.82 27.64 21.02 16.82Ports Harbours andWaterways InfrastructureIndustry As % Of Total 3.45 6.38 6.36 8.86 10.22 11.10 11.73 12.20© Business Monitor International Ltd Page 16
  18. 18. Vietnam Infrastructure Report Q2 2010Table: Transport Infrastructure Industry Data 2007 2008 2009f 2010f 2011f 2012f 2013f 2014fInfrastructurePorts Harbours andWaterways InfrastructureIndustry As % Of TotalConstruction 1.47 2.92 2.85 4.19 5.00 5.55 5.96 6.28e/f= BMI estimate/forecast. Source: BMI CalculationTransport Infrastructure Forecast Scenario Transport infrastructure remains the predominant sector accounting for Transport Infrastructure Industry Value By Sub-Sector, VNDbn 67.1% of total infrastructure value in 120,000 2010. This is set to rise to 73.3% by Ports 2014. Within this sector, railway 100,000 A irports Railw ays Roads and Bridges infrastructure is the clear winner 80,000 accounting for 48.3% of transport 60,000 infrastructure value in 2010. This equates to a massive year on year real growth rate 40,000 of 57.7% for 2010. Over the course of the 20,000 forecast period, railway infrastructure 0 value will more than quadruple from 2008e 2009f 2010f 2011f 2012f 2013f 2014f US$0.65bn in 2009 to US$3.1bn by e=estimate, f=forecast. Source: BMI Research 2014. According to our new data series, the ports sector will increase the most in terms of percentage of total transport infrastructure value. Its contribution to the total transport infrastructure value will climb from an estimated 10.03% in 2008 to 16.6% in 2014. The contribution that roads make to the total transport industry value will steadily decline over the forecast period, mainly because investments in other underdeveloped transport modes (railways, ports, airports) are expected to be of larger value in the years to come. Airports will steadily contribute around a quarter of transport infrastructure’s industry value throughout the forecast period. Airports will be the second largest contributor to transport infrastructure industry value after railways.© Business Monitor International Ltd Page 17
  19. 19. Vietnam Infrastructure Report Q2 2010Transport Infrastructure Overview Road and bridge building has stepped up a gear moving into 2010 with several high profile projects already underway. The Hanoi-Hai Phong highway construction project received approval from the Vietnam Development Bank (VDB) for a project involving construction of a 105.5km-long expressway, six lanes and road surfacing. Along the highway, two sudden-stop lanes, six intersections, nine large bridges, 21 medium bridges and 22 overhead bridges will also be built. The Bidv Expressway Development Company (BEDC) separately received approval for the construction of the Trung Luong-My Thuan section of the expressway. BEDC will invest US$1.8bn in constructing the 82km-long Trung Luong-My Thuan-Can Tho expressway project. The increased traffic levels in Vietnam’s urban areas and the country’s general fast-paced economic development have increased the volume of exports and imports to and from the country, thus creating a pressing need for better infrastructure between ports and inland. Vietnam has a total road network of 222,000km – the 20th largest globally – although only 19% of it is paved, indicating the poor condition of road infrastructure in the country. It should be noted the 10 years preceding 2010, large-scale projects have been implemented and more are under way or in the pipeline; therefore, the ratio of paved to unpaved is improving. Vietnam’s Ministry of Transport and Communications has disclosed estimates that it will require close to US$60bn in the period up to 2020, to fund road infrastructure projects. The ports sector is also seeing a good deal of activity in transport infrastructure. A.P Moller-Maersk Terminals (APM Terminals), a global port operator, signed a new joint venture (JV) agreement in late- September 2009 with Vinalines, a unit of Vietnams shipping line and terminal operator Vietnamese National Shipping Lines, to develop ports in the country. The JV will work on the development of general cargo, container terminals and transhipment hubs in Vietnam. The government has ambitious plans to modernise and expand the country’s airport infrastructure, though some, like the Long Thanh international airport, have been in the pipeline for years with little progress being made. However, the government’s willingness to get projects off the ground provides grounds for optimism. The Ministry of Transport announced in early May 2009 that it will upgrade and expand Vietnam’s main airports. Plans include a new international airport in Phu Quoc, Long Thanh, Cam Ranh, Chu Lai, Danang, and Hue. The Noi Bai airport in Hanoi will be expanded, as will the Cat Bi airport in Haiphong. In the maritime sector, activity has mainly been concentrated on boosting the capacity of the southern economic zone, especially in the Thi Vai River area. Major global port operators with interests in the region include Hutchison Port Holdings, Singapore’s PSA International, Saigon Port, Denmark’s© Business Monitor International Ltd Page 18
  20. 20. Vietnam Infrastructure Report Q2 2010 Maersk and France’s Compagnie Maritime dAffrètement-Compagnie Générale Maritime (CMA CGM), all of which have been involved in the operations and development of major Vietnamese ports in the Thi Vai River, in an effort to enter one of Asia’s most promising markets. Americanshipper.com estimates that the amount invested in Vietnamese ports is close to US$4.5bn, and that up to eight new terminals are under development at Vung Tau along an S-shaped channel, most of which are expected to open in 2011. The river ports near Ho Chi Minh City, handle more than 70% of Vietnams total maritime container volume. These investments are essential. The rankings of the ‘Global Competitiveness Report’ published by the World Economic Forum annually highlight the weakness of the port sector infrastructure in Vietnam.Table: Ports Are The Weakest Link: Quality Of Infrastructure Global Ranking Out Of 134 CountriesOverall Infrastructure Rank 97Quality of roads 102Quality of railroads 66Quality of port infrastructure 112Quality of air transport infrastructure 92Quality of electricity supply 104Source: The Global Competitiveness Report 2008-2009. Rank above 90 denotes disadvantage for the country Though the country has 266 ports, the majority of maritime infrastructure is outdated and has barely any support infrastructure to transport goods from the port to the rest of the country. The Vietnam Japan Consulting joint venture (VJC), the company responsible for conducting the feasibility studies for Vietnams high-speed railway, has said that final estimated costs for the project are US$55.8bn. This is an astronomical amount for one project and for the government’s coffers. The Saigon Times cited estimates from the VJC that of the total required funding, US$35bn would come directly from the state budget and government loans for the construction of the infrastructure, while the remainder would come from the VJC and other developers and would pertain to costs relating to the acquisition of land and setting up of facilities. The final plan will be submitted to the annual National Assembly meeting in December 2009.© Business Monitor International Ltd Page 19
  21. 21. Vietnam Infrastructure Report Q2 2010Table: Vietnam Railway Corporation’s Main TargetsUpgrading north-south railway route and improving the running speed of passenger trains and freight trains to 100-120kph and 100kph respectively.Upgrading west-east railway corridor so that the maximum speed of passenger trains and freight trains is 80-100kphand 60-80kph respectively.Paying more attention to the development of new routes between Ho Chi Minh city-Vung Tau, H Chi Minh city-CanTho, Thap Cham-DaLat, Yen Bai-Tuyen Quang-Bac Thai, Lien Chieu-Dung Quat, etc.Carrying out surveys and preparing to link the railway network to Singapore-Kunming route aimed at fulfilling missinglinks such as Ho Chi Minh city-Phnompenh city and Cambodia-VietnamSource: Vietnam Railways The two major urban centres, Hanoi and Ho Chi Minh (HCM) City are also seeking increased investments in their infrastructure sectors. HCM City officials estimate that the city will need a massive US$15bn of investments in the transport infrastructure sector to 2020. Construction of the urban railway project in Hanoi is due to start in early 2009. At the same time, HCM City has announced plans for a US$2bn injection into transport projects in the same year in order to stimulate the construction industry and in turn boost economic growth.Major Projects – New and Ongoing ProjectsAirports In December 2010, US-based Rockingham Asset Management submitted construction plans for the Van Don international airport. The US$1.2bn project will be carried out on a build-operate-transfer (BOT) basis, and the airport is expected to become operational in 2014. Its control will be transferred to Vietnamese authorities in 2048. In November 2010, the Quang Nam province in Vietnam sought a new investor for its delayed Chu Lai international airport project. Spanish project management and consulting firm Garuda Group had signed a memorandum of understanding (MoU) in April 2009, for carrying out a feasibility study for the airport, which it has failed to complete. US-based Airis International Holdings (Airis) has expressed its interest in developing the airport. Airis has also recently submitted a new investment plan for the development of Chu Lai airport. AirportsQ1 2010 In September 2009, the deputy prime minister of Vietnam, Hoang Trung Hai, instructed Southern Airports Corporation to come up with a plan for constructing the Long Thanh international airport, in© Business Monitor International Ltd Page 20
  22. 22. Vietnam Infrastructure Report Q2 2010 Airports 2 Dong Nai Province, according to a report in Intellasia. The airport will be built on a 50km area. The airport will have the capacity to handle nearly 100mn passengers annually. According to previous estimates, cost could reach US$6bn. In July 2009, the Prime Minister of Vietnam, Nguyễn Tấn Dũng, gave the go-ahead for the planned VND10.52trn (US$590mn) upgrade for Cam Ranh International Airport, reported Intellasia. The upgrade will enable the airport to handle 27 aircraft during peak hours, and to receive 5.5mn passengers and nearly 100,000 tonnes of cargo per year by 2020.Q2 2009 Following the opening of a new regional office in Vietnam in early April 2009, the Spanish project management and consulting firm Garuda Asea Co. signed a memorandum of understanding with US- based Airis International Holdings and the regional government of the Quang Nam Province, to conduct a feasibility study for the construction of the Chu Lai International Airport. Estimated costs are US$1bn.Ports In January 2010, the Vietnam Seaport Development Master Plan was approved. The project will require a total investment of VND360-440trn (US$19.5-23.8bn) by 2020. The plan aims to increase the transportation capacity of the country by 500-600mn tonnes of goods by 2015, 900-1,000mn tonnes by 2020 and 2,100mn tonnes by 2030. The primary focus of the plan will be the international transit port Van Phong in Khanh Hoa Province, development of a Lach Huyen seaport complex in Hai Phong, and a seaport at the Nghi Son oil refinery from now to 2015. In November 2009, Vietnam started building the Van Phong port in the province of Khanh Hoa. The international container port, costing US$3.6bn, is intended to accelerate economic development in the region. The port, which will have 42 wharves, will have an annual capacity to handle up to 200mn tonnes of cargo. The port is expected to be operational in 2020. In November 2009, Vietnam National Shipping Lines (Vinalines) started work on the development of an international transhipment port complex in Van Phong Bay in the Khanh Hoa Province in Vietnam. Vinalines has started the construction of the first two wharves as part of the first phase of construction, involving an investment of VND4trn (US$250mn). The wharves, with a total length of 650m are scheduled to be completed by 2013. The first phase will be carried out from 2010 to 2015. In October 2009, Japans largest shipping company, Mitsui OSK Line (MOL) announced it would set up a terminal operation company to build and manage a new container terminal at Cai Mep in Vietnams Vung Tau Province.© Business Monitor International Ltd Page 21
  23. 23. Vietnam Infrastructure Report Q2 2010 In October 2009, Indian developer and operator of Mundra Port, Mundra Port and Special Economic Zone, was in discussions with the Vietnamese government to construct a port in Vietnam. The port will cater for iron ore and coal shipments. Mundra Port director, Rajeeva Sinha, has said that the company is planning to set up at least one port in the region in the next three to four years. PortsQ1 2010 In September 2009, Taiwans Formosa Plastics Group said it is hoping the port of Son Duong will become the largest deep-sea port in Southeast Asia. The company is planning the construction of the port, which has an estimated cost of US$1.2bn, and it is designed to accommodate vessels with a capacity of between 200,000 and 400,000 deadweight tonnes (DWT). In August 2009, the general director of Vietnam-based company Gemadept Joint Stock (GMD) said that the company will start work on two port projects – Cai Mep deep-water port and Le Loi Plaza – in Q110, reported Intellasia. In line with its plans, GMD has established Gemadept-Terminal Link Joint Stock Company – a joint venture between GMD and its Egypt-based partner Terminal Link, a unit of shipping group CMA CGM – to carry out the work on the projects. GMD has contributed US$39.5mn in the form of land for the Cai Mep port project. The project will be funded by local banks. In August 2009, the Japanese International Cooperation Agency and Vietnams Ministry of Transportation decided to apply the PPP model to the Hai Phong International gateway port. The first phase of the project will be financed by official development assistance (ODA) loans of US$260mn from the Japanese government. US$165mn will be invested by Vietnam-based shipping company Vietnam National Shipping Lines (Vinalines) in the construction of two container harbours. The second phase of the Cai Cui seaport project in Can Tho city in Vietnam started on July 11 2009. The second stage construction will include 500m-long wharves, modern handling facilities and a logistic area worth VND600bn (US$34.3mn), and is scheduled to be complete by 2015. The Prime Minister, Nguyen Tan Dung, stated that the port will help in reducing transportation costs in the Mekong delta and ease overloading at Saigon port.Q2 2009 Phase one of Tan Cang Cai Mep deep water port commenced operations on June 3 2009 in Vietnams Ba Ria-Vung Tau province. This is Vietnam’s first deep-water port, and is being developed in a joint venture between Saigon Port and PSA International. The port has the capacity to handle 1.1mn twenty-foot equivalent units (TEUs) annually and can accommodate vessels of up to 80,000dwt. The first phase of the project cost a total of US$240mn. In May 2009, construction started on the Saigon-Hiep Phuoc port, in HCM City. The total estimated cost of the new port is US$337mn. It should be noted that according to local press sources, there is still not a road leading to the port. In April 2009, HCM City-based company Trai Thien Sea Transport Investment and Development© Business Monitor International Ltd Page 22
  24. 24. Vietnam Infrastructure Report Q2 2010 Ports Joint Stock Company acquired a licence to construct a deep-water international transhipment port in Con Dao island, situated in Ba Ria Vung Tau province. The total cost for the port project is estimated at US$300mn. The new Con Dao port will be extended to 300 hectares (ha) to expand its capacity to handle heavy tonnage ships. The total load capacity will be 10mn tonnes every year. In April 2009, Deputy Director Duong Van Hoa announced that Vietnam National Coal-Mineral Industries Group (Vinacomin) will build a US$250mn deepwater port at Khe Ga Cape, in Binh Thuan province. Khe Ga Seaport will be utilised to import coal and export aluminium and minerals. The port will be able to handle ships up to 80,000DWT.Roads In December 2009, bidding began for the A7 section of the Noi Bai-Lao Cai expressway project. The first phase of the bidding package includes construction work on a road with total length of 26.7km. The winning bidder for the package was China-based Guangxi Road and Bridge Construction, with a contract price of VND1.6trn (US$86.6mn). Construction is expected to take 38 months. In December 2009 Netherlands-based engineering firm DHV was awarded a US$100mn contract for work on a 250km stretch of Vietnams Mekong River. The project will involve deepening and widening the river as well as constructing 18 bridges and a new lock to ease transport. In December 2009, Czech Republic-based Komerční Banka (KB Bank) moved forward with loans for the Hanoi-Hai Phong highway construction project in Vietnam and approval for Vietnam Development Bank (VDB) to secure 10-year loans from KB Bank for the project. The highway project involves construction of a 105.5km-long expressway, six lanes and road surfacing. Along the highway, two sudden-stop lanes, six intersections, nine large bridges, 21 medium bridges and 22 overhead bridges will also be built. In November 2009, the Vietnamese Transport Ministry started work on a 61.3km-long four-lane expressway that will connect Thai Nguyen, Bac Ninh and Hanoi,. The expressway is expected to ease the traffic on National Highway 3 and facilitate the growth of trade between Hanoi and other northern parts of the country. The project also includes construction of six junctions, 29 bridges and other facilities. The Japan International Cooperation Agency (JICA) will provide a VND6.1trn (US$338.89mn) loan for the VND8.1trn (US$450mn) project, which is scheduled to be completed by 2013. In November 2009, Vietnamese expressway development company Bidv Expressway Development Company (BEDC) received approval from the Tine Giang provincial Peoples Committee for the construction of an expressway in the country. This will enable BEDC to begin construction of the Trung Luong-My Thuan© Business Monitor International Ltd Page 23
  25. 25. Vietnam Infrastructure Report Q2 2010 section of the expressway. BEDC will invest US$1.8bn in constructing the 82km-long Trung Luong-My Thuan-Can Tho expressway project. In November 2009, the Vietnamese road authority signed a build-operate-transfer (BOT) contract with local company Bien Hoa-Vung Tau Expressway Development (BVEC) for the expansion of National Highway 51. The national highway, linking the provinces of Dong Nai and Ba Ria-Vung Tau, will be expanded to 32.9m in width. The project also includes expansion of 10 bridges and construction of 12 new bridges. The project will require an investment of VND3.31trn (US$185.36mn), out of which 10% will be provided by investors, with the rest to be contributed by commercial loans. In November 2009, Thang Long project management unit (PMU) launched a tender inviting bids for the second phase of the Hanoi Ringroad 3 project. The project, which will require an estimated investment of VND5.6trn (US$313.64mn), involves construction of the first double-decker road in Vietnam. The winner of the tender will be responsible for construction of an 8.9km urban expressway from Thanh Xuan to northern Linh Dam Lake. RoadsQ1 2010 In October 2009, construction started on the first 55km stretch of the North South Highway. This section will begin in HCMC, and go via the still-in-planning Long Thanh international airport to Dau Giay. The section will be completed in 2013. In August 2009, the vice-chairman of the southern Vietnamese province of Ba Ria-Vung approved a plan for the construction of a major road artery that will link the ports and industrial zones in the area. According to the plan, the road will be built in two phases. The first phase pertains to the construction of an 8.3km road and five bridges, but no specific route has been announced. Construction will start during the fourth quarter of 2009 and be completed by 2012. The second phase will start construction in 2012 and be completed in 2015 and pertains to the construction of a 3.2km road and a bridge. The total estimated cost of the project is VND6.3trn (US$350mn). The Department of Transport will own the new road. Initial plans called for the construction of an inter-port road system to begin from the lower Cai Mep container port, pass through the Tan Thanh District and finish at the Phuoc An Port, the Saigon Times reports. In August 2009, Danish construction firm MT Højgaard was awarded a contract to construct a road bridge in Haiphong city, in Vietnam. The 240m long cable-suspended bridge will have six lanes. The construction of the bridge is expected to start in September 2009 and is likely to be completed in the next 21 months. The project will be funded by the Finnish government. In August 2009, Japanese construction companies Ishikawajima-Harima Heavy Industries (IHI) and Mitsubishi Construction jointly won an order for the construction of a bridge worth JPY40bn (US$423mn) from the government of Vietnam, reports Nikkei English News. The two companies will© Business Monitor International Ltd Page 24
  26. 26. Vietnam Infrastructure Report Q2 2010 Roads be responsible for the construction of a section of the Nhat Tan bridge in Hanoi, Vietnam. In August 2009, Vietnamese joint stock company Becamex IDC Corporation started construction work on the My Phuoc-Tan Van Expressway project in Binh Duong province in partnership with the provincial government. The cost of the project is VND3.5trn (US$196.6mn), out of which VND1.7trn (US$95.5mn) was contributed by the provincial government. The work includes construction of a 30km expressway with six lanes and 18 bridges. The expressway will link industrial areas in Ben Cat, Thuan An and Di An communes; Thu Dau Mot town; Dong Nai and Binh Duong to HCM City container port and Long Thanh international port. The project is scheduled to be completed in 2013.Q3 2009 In early July 2009, the Ministry of Transport disclosed that the second phase of the ring road number three project in Hanoi will be launched by the end of 2009. Total cost for the second phase, that will see the ring road extend for 9km, will be VND5trn (US$280mn). Construction is due to commence in July on a 21km highway linking Hanoi to Van Giang, in neighbouring Hung Yen province. The total estimated cost of the project is VND380bn (US$22.5mn). The contract is a build and transfer contract and was awarded to Construction Machinery Corp. and Thanh Nam Construction and Investment Joint Stock Company. Once the project is completed in two years’ time, the companies will transfer ownership to Hanoi’s government.Q2 2009 Vietnams Ministry of Transport began work on a 121km-long expressway connecting Ninh Binh province to Nghi Son on June 16. The construction of the expressway is part of a programme to upgrade the north-south national road. Total investment in the project is forecast to be VND32trn (US$1.9bn). In June 2009, the Hanoi city Peoples Committee announced plans to invest VND881.6bn (US$50.9mn) in a project to upgrade the 1A National Highway, from Ngoc Hoi to Cau Gie, in Thuong Tin district and Phu Xuyen district. The Hanoi Department of Transportation has been given the responsibility to carry out the project as part of its mandate to develop the transportation network, and upgrade the route capacity. In April, the Asian Development Bank (ADB) and the French Development Agency (AFD) offered a financial grant of almost US$7mn to assist Vietnam in upgrading infrastructure facilities in three districts. The fund will be utilised to construct 41km of rural road and for irrigation projects. The projects are anticipated to commence in Q409.Railways In November 2009, a consortium formed from French construction company VINCI Construction Grands Projets and French manufacturer LOHR Industrie signed an agreement for the construction of the first light© Business Monitor International Ltd Page 25
  27. 27. Vietnam Infrastructure Report Q2 2010 railway line in Ho Chi Minh city in Vietnam. The project, with an estimated cost of EUR200mn (US$297.77), involves design and construction of 12km railway line that will have a total of 23 stations. In October 2009, the Ministry of Traffic and Transportation of Vietnam announced that seven Korean investors, in association with the Transport Investment & Construction Consultant Joint Stock Company (TRICC), will invest in and construct the 33.5km Hanoi urban metro line 5 and Nha Trang-Saigon section of North-South high speed railway in Vietnam. The companies selected include Samsung, Daewoo, Ska, Kumho and Kangnam. RailwaysQ1 2010 In October 2009, the Ministry of Traffic and Transportation of Vietnam announced that seven Korean investors, in association Vietnam Railways, have been awarded a build, operate and transfer contract for the construct of the 33.5km Hanoi urban metro line five and Nha Trang-Saigon section of North- South high-speed railway in Vietnam. The contract is valued at US$1.2bn. The companies have agreed to invest US$574mn for the first phase and US$653mn for the second phase. The companies selected include Samsung, Daewoo, Ska, Kumho and Kangnam.Q2 2009 The Railroad Management Board Region 2 in Vietnam announced in late June 2009 that the project for upgrading the railroad between Vinh-Nha and Trang will be officially launched in Q309. The upgrade on the railroad, with a total length of 700km, is expected to cost VND4trn (US$231.8mn). In May 2009, the Vietnam Railways Administration and a Chinese railway corporation signed a contract for an urban railway project in Hanoi worth more than US$350mn. Under the terms of the agreement, the Chinese company will be responsible for the survey and design of the project as well as providing equipment. The total investment in the project will be US$552.86mn, with China lending 85% of the amount, and the rest being contributed by the project owner, Vietnam Railways. The Cat Linh-Ha Dong urban rail project in Hanoi is expected to be operational in 2014. The 13.5km route will have a capacity of 28,500 passengers per hour in each direction. Construction was due to begin in 2009, but this has been pushed back. In April 2009, the Vietnamese finance ministry approved VND499bn (US$30mn) to Vietnam Railway Corp. to accelerate work on five of its vital projects, valued at VND11.6trn (US$670mn), in 2009. The corporation plans to invest in the Hanoi-Lao Cai railway, the signal information system of Hanoi-Vinh railway phase two, Vinh-Nha Trang railway line, Thong Nhat railway, and 44 bridges along with Thong Nhat railway.© Business Monitor International Ltd Page 26
  28. 28. Vietnam Infrastructure Report Q2 2010Major Projects Table - TransportTable: Vietnam – Major Transport Infrastructure Projects Project ValueProject (US$mn) Company name(s) Timeframe StatusAirportsCam Ranh InternationalAirport 590 na na Project approved Garuda Asea, Airis MoU for feasibiltyChu Lai International Airport 1000 International na study app Southern AirportsPhu Quoc Airport 970 Corporation 2009-2012 Under Construction Approved inGio Linh District Airport 21.5 na 2009-2015 February 2009Noi Bai International Airportextension 852 (initial stage) na 2009-2020 At planning stage Louis Berger Group, Airport ConsultantsDanang Airport passenger B.V.and Nationalterminal 160 Construction Consultants 2006-2010 Under ConstructionNew international airport inLong Thanh, Dong Nai Southern Airports Geological surveyprovince 6,000 Corporation 2009-2020 underwayPorts Trai Thien Sea Transport Investment and Development Joint StockCon Dao transhipment port 300 Company na Licence awarded Construciton of the second phaseCai Cui port project na na 2009-2015 underwayHai Phong International port 425 Vinalines na At planning stageSon Duong deep water port 1200 Formosa Plastics Group na At planning stageSaigon- Hiep Phuoc port 337 na 2009- Under ConstructionDedicated box facility in BaRia-Vung Tau, in Cai Mep Mitsui OSK Lines (MOL), SPV pendingPort na Hanjin and Wan Hai 2009-2011 creationDeep water Port at Khe GaCape, Binh Thuan Province 250 Vinacomin 2009- At planning stageSaigon InternationalTerminal, Phu My 1 China HarbourIndustrial Park 163 Engineering Company 2009-2011 Under Construction Marine Consultant Co. and Approved inMy Thuy deep water port 1,100 Quang Tri province na October 2008 Civil EngineeringCai Mep-Thi Vai Construction Joint Stock Phase I inInternational Port 700 Co. No.6 and Truong Son na operation/© Business Monitor International Ltd Page 27
  29. 29. Vietnam Infrastructure Report Q2 2010Table: Vietnam – Major Transport Infrastructure Projects Project ValueProject (US$mn) Company name(s) Timeframe Status CorpVan Phong InternationalEntreport 550 Vinalines na Seeking investorsRoadsMy Phuoc- Tan VanExpressway 196.6 Becamex IDC Corporation 2009-2013 Under Construction Construction due toRing Road No.3, Hanoi, begin by the end ofPhase II 280 na 2009- 2009 Construction of theHighway to link Cai Mep and first phase due toPhuoc An ports 350 na 2009-2015 commence in Q409Ninh Binh- Nghi SonHighway na na 2009- Under construction Construction Machinery Construction due to Corp., Thanh Nam 2009- commence in JulyHanoi- Van Ginag Highway 22.5 Construction 2011/12 2009Da Nang- Quanf Ngai Governmentexressway 2,480 na na seeking financeNhat Tan Bridge, package IHI, Mitsubishi Contract awarded inNo.3 423 Construction na August 2009Tran Thi Ly- Nguyen Van Approved inTroi bridge 86 na na January 2009 GS Engineering & Contract awarded inNew Highway (unspecified) 174.3 Construction na December 2008 Vietnam Road BOT contractBypass of National Road Department and BOT Ninh agreed inNo.1A extension 3.19 Thuan na DecemberHo Chi Minh City- National ADB loan approvedHighway 1 Expressway 932 na 2009-2014 in March 20091A National Highway (NgocHoi - Cau Gie section) 50.9 na At planning stage PSJ Holdings, Cienco 1 Company and Infrastructure Partnership 420 (Czech Development and Finance agreement finalisedHanoi- Hai Phong Republic loan) Investment Company na in November 2008 VN Express, POSCo Engineering and ADB loan approvedNoi Bai- Lao Cai highway 1,100 Construction (for part of it) na in October 2008 2009- Project approved inMu Loi Bridge 88 na 2011/2012 September Construction due toSong Bung 4 access road 1.15 Cavico Corp. 2009- 2010 begin in 2009© Business Monitor International Ltd Page 28

×