After $2b investment, Vung Tau ports operating at low capacity

Monday, Sep 21, 2015 10:18

A corner of port in the southern Ba Ria - Vung Tau Province. — Photo

Compiled by Le Hung Vong

Seven deep-water seaports have been built by the Cai Mep – Thi Vai Port Group in the southern province of Ba Ria – Vung Tau in the past few years at a total cost of VND40 trillion (nearly US$1.8 billion).

However, Saigon International Terminals Vietnam (SITV), SP-PSA International Port, Tan Cang - Cai Mep Container Terminal (TCCT), Tan Cang - Cai Mep International Terminal (TCIT), Cai Mep International Terminal (CMIT), Tan Cang - Cai Mep ODA Terminal (TCOT), and SSIT, a Joint Venture of SSA Holdings International - Vietnam, Saigon Port, and Vinalines operate at less than 20 per cent of capacity even after cargo volumes rose by 15-20 per cent annually to 1.16 million TEUs last year.

In the first year after they became operational, each port saw 16 large vessels leave with cargo for European and American ports every week. However, after those exploratory trips, shipping lines had to reduce the number of direct trips because of a shortage of cargo for transport.

In 2012 they reduced the number to eight vessels per week.

Now, following agreements between local firms and international shipping lines, the number of direct trips transporting goods from Ba Ria – Vung Tau to European and American ports has increased again.

A spokesman for CMIT Port said three vessels sail directly to the US each week, and a new route to Europe is expected to be established later this year.

Tan Cang (New Port) Corp. said its vessels make 13 trips a week to American, European and Asian ports.

Tran Van Danh, head of Ba Ria – Vung Tau customs, said, "Only a few of these ports have received containers for handling; other items such as farm produce and steel are sent by bulk cargo."

Some of the ports have not seen any container ships berth yet, he said.

The manager of a shipping line said only 10-20 per cent of the cargo destined for the US and Europe are transported directly from Ba Ria – Vung Tau, while the others are transported from a transit port abroad. This means cargo is carried from HCM City ports to Singapore, Taiwan, Hong Kong or Shanghai before being loaded on bigger vessels destined for the US and Europe.

Nguyen Xuan Ky, deputy manager of CMIT, was quoted by Tuoi Tre (Youth) newspaper as saying that cargo is not handled at Cai Mep but at ports in other countries before transporting to Europe and America. Shortage of cargo is the main reason for the losses suffered by ports in Ba Ria – Vung Tau. The head of a port external relations department in the region said all ports in the province suffer losses after huge investments of hundreds of millions of dollars each.

Wage hike hits apparel firms

Restructuring of product lines at urban factories, expanding only rural factories and cutting some expenses like allowances and bonuses for workers, are the measures planned by the labour-intensive textile and garment industry to cope with a proposed wage hike early next year.

The National Wage Council has proposed a 12.4 per cent increase in minimum wages in 2016, subject to Government approval.

Speaking at a conference held in HCM City on 12 September 2015 to introduce the Viet Nam International Fashion Fair, Vu Duc Giang, chairman of the Viet Nam Textile and Apparel Association, said the 12.4 per cent salary hike proposed by the National Wage Council would pose a huge challenge for companies in the sector.

Enterprises in categories 1 (Ha Noi and HCM City) and 2 (Can Tho, Da Nang, Hai Phong) are likely to face big difficulties. Viet Tien Garment Corp., for instance, will see its payroll increase by VND86 billion (US$3.8 million) next year.

"I support a wage hike but its timing should be in a way that helps companies survive the current tough economic situation," Giang, also a member of the council, said.

The sector has already felt the impact of the upcoming wage hike. Businesses are struggling to cope while foreign importers have shifted their orders to other countries like Myanmar and Bangladesh due to a possible rise in production costs in Viet Nam.

In the long term foreign investment flows into the local textile and garment industry could slow down since the Government would again raise wages in 2018 to ensure that workers can live on their salaries, Giang said.

If the Government approves the current hike, the monthly minimum wages would be VND3.5 million in region one (up VND400,000), VND3.1 million in region two (up VND350,000), VND2.7 million in region three (up VND300,000) and VND2.4 million in region four (up VND250,000).

According to Giang, textile and garment exports rose 10 per cent rise year-on-year in January-August to US$17.8 billion, and the full year target is $27.5-28 billion.

Foreign ownership uncertainty

Two months after the laws were changed to allow foreigners and Viet kieu (overseas Vietnamese) to buy houses in Viet Nam, real estate companies do not know how many have actually taken up the offer.

Speaking at a seminar on "Loosening the bottlenecks to help foreigners and overseas Vietnamese buy houses in Viet Nam" held in HCM City last week, Su Ngoc Khuong, CEO of real estate consulting firm Savills Viet Nam, said, "No one knows how many foreigners [living in Viet Nam] have obtained house ownership certificates."

It is only known that this year 59 foreigners have been issued the certificates.

It takes time for a new Government policy to have an impact on the market, Nguyen Manh Khoi, deputy head of the Ministry of Construction's house and property market management department, said.

Normally it takes four to five months, he added.

However, buying houses now is very difficult due to the complex procedures involved.

Le Hoang Chau, chairman of the HCM City Real Estate Association, said concerns about formalities prevent foreigners from buying property, with many potential buyers limiting their action to fact finding instead of going on to complete transactions.

There appears to be demand among overseas Vietnamese for buying property for their own use in Viet Nam, according to Le Ngoc Lam, an overseas Vietnamese from Japan, was quoted by Vietnam Economic Times as saying.

He said most Vietnamese living abroad expect to come back home, adding that nine out of 10 aged over 50 living in Japan wants to return for investment or business.

However, delays in announcing related policies have caused Viet Nam to miss out on opportunities to attract house buyers, he said.

He said Vietnamese expats' hopes of living at home in their old age and the low property prices in Viet Nam (compared with other countries in the neighbourhood) are good opportunities for the development of the country's property estate market.

Most participants at the last week's seminar agreed that though housing policies have become more liberal than in the past, there should be greater efforts to remove the "bottlenecks" in house buying such as making it mandatory for foreigners to pay through banks.

They also called for quickly issuing decrees to guide implementation of the amendments to the 2014 Housing Law. — VNS

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