Seeking Mechanisms to Draw Investment Funds in Seaports

9:28:05 AM | 6/30/2022

The investment fund for seaport development by 2030 is expected to be more than VND300 trillion (US$13 billion), which will mainly come from private sources, corporate capital and other capital sources. This tough difficulty needs to be carefully solved to have a clear and effective investment attraction policy.

More socialization of investment funds

In the past years, Vietnam's seaport system has been developed more synchronously and modernly. Basically, the seaport system has served import and export flows and enhanced regional interconnectivity, thus facilitating economic growth and initially meeting integration.

According to the Vietnam Maritime Administration, in the 2011 - 2020 period, as much as VND202 trillion (US$8.8 billion) went to the maritime sector, of which non-State sources accounted for 86% or VND173 trillion and the State budget was over VND28,000 billion or 14%.

The maritime industry has utilized ODA capital to complete port investments across the nation, such as Cai Lan (Quang Ninh), Tien Sa (Da Nang) and Cai Mep - Thi Vai (Ba Ria - Vung Tau).

Besides domestic private investment and ODA funds, the maritime industry has received foreign investment capital. Many of the world's leading shipping lines and port operators have arrived in Vietnam to set up investment joint ventures to build and operate seaports, including Hutchison, PSA, DP World, SSA, Maersk A/S and CMA-CGM. This is a very favorable foundation for Vietnam's seaports to develop and become an important link in the global supply chain.

To develop the seaport infrastructure system one step ahead, the Government signed Decision 1579/QD-TTg approving the Master Plan for Vietnam Seaport System Development in the 2021-2030 period, with a vision to 2050.

Seaport development is estimated to cost VND313 trillion (US$13.6 billion) by 2030, which will be largely raised from non-budget sources, corporate capital and other capital sources. Mobilizing socialized investment capital sources for maritime infrastructure is an urgent task in order to share budget burdens and facilitate socioeconomic development.

Removing barriers

Currently, many domestic and foreign-invested enterprises are looking to invest in Vietnamese seaport projects as this is a potential industry.

In the past years, the Government, ministries and central agencies have introduced many investment attraction policies and incentives for seaport investment and operation. Typical regulations include Decree 108/2009/ND-CP on investment in the form of BOT, BTO and BT contracts and Decision 71/2010/QD-TTg on investment pilots in the form of Public-Private Partnership (PPP). These legal documents provide a new approach for socialized investment for transport infrastructure construction, including maritime infrastructure.

Regarding the Master Plan for Vietnam Seaport System Development in 2021-2030, Mr. Hoang Hong Giang, Deputy Director of the Vietnam Maritime Administration, said, to attract development resources for seaports, the plan clearly defines the priority of land and water surface for port development, continue to study and perfect policies on prices and fees to enhance the efficiency of seaport investment and increase attractiveness for investors.

In the coming time, localities should continue to coordinate with the Ministry of Transport to build seaports to boost their socioeconomic development breakthroughs and draw investors.

Concurring with this view, Mr. Ho Kim Lan, General Secretary of the Vietnam Seaports Association, added that, when calling for investors, localities should ensure the land fund and traffic connectivity for them to successfully implement their port investment and operation plans. In addition, it is necessary to create a help desk to support them to handle administrative procedures.

Furthermore, it is important to issue specific regulations on investment forms in order to encourage and facilitate enterprises to invest in and develop planned projects. When choosing an investor, localities need to review its financial capacity, experience and regulatory compliance.

Localities should prioritize investment in upgrading existing seaports for more effective operation; enlist the support of international organizations and major partners such as South Korea and Japan in seaport and transport infrastructure development.

Some port projects are attracting the special interest of domestic and foreign investors such as Lach Huyen Port - Hai Phong, Tran De Port - Soc Trang, Nghi Son Port - Thanh Hoa, Cai Mep Ha and inland clearance depots.

For potential projects that require huge capital, competent agencies should be responsible for supporting and ensuring long-term, sustainable benefits and a healthy competitive environment for investors.

In recent years, the shipping and logistics industries have tended to develop rapidly. In the coming time, when the wave of FDI moves more strongly into Vietnam and free trade agreements are enforced, the demand for production, import and export trade will skyrocket as a result. This requires that seaport systems need to be further developed and invested in, including upgrading, expansion and construction.

To catch this wave, Vietnam's maritime industry is preparing to accommodate big potential investors.

By Ha Linh, Vietnam Business Forum