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Investment

Last updated: Thursday, August 17, 2017

 

North Vietnam’s Mega Infrastructure Cluster Attractive to Investors

Posted: Monday, April 17, 2017

With the construction of the Haiphong International Gateway Port at Lach Huyen (-14m, 100,000DWT) and its related infrastructure, the Haiphong area in North Vietnam is in fast industrial growth, catching up rapidly with the already further developed South of Vietnam.

Many industries have decided to set up new factories in the nearby industrial zones, where prime industrial land is available adjacent to the new developments, benefiting from the highly improved maritime access and other trump cards of the region, such as the economic zone tax package, abundance of competitive cost labour and reliable power. Among the nearly 500 projects are several major international companies such as Bridgestone, LG, Knauf and Flat Glass Group.

Several years ago, authorities realised that in order to attract more FDI, the infrastructure in the Red River Delta had to be developed further. The master-plan consisted of a five modal hub (road/rail/air/river/deep sea) that will bring the region to entire new level. A redundant airport system (Noi Bai – Hanoi and Cat Bi – Haiphong) was established and proves to be working. A new highway between Haiphong and Hanoi was taken in operation in 2015, while highway connections between Haiphong – Ha Long – China (Q4-2017) and Haiphong-coastal provinces are under construction. Last but not least, a new deep sea port is currently nearing completion and will become operational no later than Q2 2018. Main difference compared to the developments in southern region of Vietnam is the availability of prime industrial land in the middle of the spider web of new infrastructure developments, truly unlocking the potential of the north.

Announced as the "Gateway to North Vietnam", the new deep water port will have, upon full completion in 2030, more than 14km of quays and will handle more than 95 MIO tonnes of cargo. The country’s economic growth is expected to increase the demand for container shipping in the northern area of Vietnam to 42 million tonnes in 2015 and 59 million tonnes in 2020.

With the new port, post-panamax vessels can make calls to North Vietnam. This will avoid transshipment via other ports in the region and will allow for direct shipment to the Americas and Europe, shortening lead times and increasing competitiveness.

The existing port of Haiphong has a draft of only 6m to 7m and ships are limited to 20,000 DWT. The new port will have a draft of 14m allowing vessels up to 100,000DWT to berth, which will be a major game changer for the entire region and will boost the development and investments in the surrounding industrial zones and will bring opportunities to the service industries such as supply chain. The first two container terminals are foreseen to be operational by Q1 2018 and will be followed by one or more general cargo and bulk terminals.

Since construction started on the port and the highway as well as other important infrastructure projects in Haiphong, foreign direct investment (FDI) in north Vietnam has been increasing remarkably. Not only has the north attracted more FDI than the south over the last 5 year (US$59.19 billion vs US$50.8 billion), 2016 was a record year for Haiphong in FDI attraction as the city attracted almost US$3 billion, ranking first among all cities and provinces in Vietnam. In the first quarter of 2017, the coastal city attracted more than US$208.5 million of FDI, up 16 per cent against the same period last year.

The economic zone tax package, the advantageous location and proximity to China are only some of the reasons why companies decide to invest in the northern region.

Beluxcham, together with various authorities, Deep C Industrial Zones and KPMG will be hosting ‘North Vietnam: how can you benefit from this mega infrastructure cluster’ on the 26th of April in HCMC. (more info via www.beluxcham.com or info@beluxcham.com)

PV

 








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