Vietnam to Invest in Water-Related Infrastructure

March 31, 2011 Posted by Vietnam Briefing Reading Time: 2 minutes

Mar. 31 – Vietnam’s government aims to boost the nation’s shipping volume by more than 400 percent over the next 10 years by investing heavily in its ports.

The emergent Southeast Asian economy is channeling billions of dollars into building ports for container ships in a move to draw export-oriented industry from China.

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The investment may send Ho Chi Minh City’s port complex into the top 15 ports within the next few years, said Malcolm Gregory, chief commercial officer at Cai Mep International Terminal Company.

Companies such as Nokia and Intel also are considering shifting production to Vietnam, lured by cheap labor and deeper ports for container vessels. Exports make up roughly 75 percent of Vietnam’s GDP per year, and the government’s chief policy aim has been to encourage it.

“Vietnam is so heavily dependent on external demand that getting the entire system to work, not just ports, but roads and railways too, and making customs work faster, is a big part of the story,” said Jonathan Pincus, the dean of the Harvard Kennedy School’s Fulbright Economics Teaching Program in Ho Chi Minh City.

Port manager Vietnam Container Shipping Joint-Stock Company is an under-valued buy, said Cha Kyung Jin of Golden Bridge Asset Management Co. He pointed to the under-utilized potential in a nation that last year exported less than half as much as Thailand, a nation whose population is about a fourth the size of Vietnam’s.

“We want to increase our investment in Vietnamese companies, including Vietnam Container Shipping,” he said. “Their port industry offers a lot of potential as their international trade is growing.”

“You’ve got all these wonderful exports, but you can’t get them to the market,” said David Creighton, chief executive officer of Cordiant Capital Inc. in Montreal. It invested US$27 million in the Cai Lan International Container Terminal, LLC in the northern province of Quang Ninh.

Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, email vietnam@dezshira.com or visit www.dezshira.com.