Vietnam - 2009 - Improve port infrastructure in Ho Chi Minh City

Improve port infrastructure in Ho Chi Minh City

 

Start of the project:2008 – Proparco financing: 2009
Financing:15 M$ loan
Promoter:SP - SSA
 
Context
 
Vietnam has known a continuous and significant growth of its export/import shipping flows since 2000 (+ 19% per year in average), until the slowdown of this year. The country needs to face the congestion of its existing port infrastructure, among all in Ho Chi Minh City’s region, which represents 70% of the national GDP. It also needs to modernise the existing infrastructure network to keep on satisfying the foreign companies expectations, that have massively invested in the country (6.7 billions US dollars in 2007).
In such context, the local authorities have implemented a large program to update their terminal infrastructure, along with urban restructuring plans to improve the environmental conditions of the centre of Vietnamese cities.
The priority is granted to HCMC ports: the restructuring plans the closure of the sites which are the closest to the town and the construction of six container terminals, on the Cai Mep and Thi Vai rivers, plus one additional terminal in Hiep Phuc. Those investments will be made by private companies, majority owned by Vietnamese interests. The company SSIT (SP-SSA International Container Services Joint Venture Company) has obtained a license to develop the construction of one of those terminals.
 
Project purpose:
 
The project aims to strongly improve on a sustainable basis the capacities offered by the Vietnamese port infrastructure.
 
Project description:
 
The project consists in building and operating a container yard and supporting infrastructure, located at Cai Mep, 85km South-East of Ho Chi Minh City, in Ba Ria Vung Tau Province. The terminal will have a draft of 14.5 meters, in order to welcome up to 8,000 TEU vessels. With a handling capacity of more than 1.2 million TEUs, the SSIT terminal would be one of the largest container facilities developed in HCMC area and a primary import/export gateway to Vietnam.
On top of the main quay, the terminal will be complimented with two barge quays, dedicated to the transhipment of goods to HCMC.
The project is developed by Carrix, a US company ranking at the 8th largest international terminal operator, which entered into a joint venture agreement with two Vietnamese companies, Saigon Port and Vinalines, who are engaged in terminal operations and shipping activities.
The global cost of the terminal amounts to 240 M$. By granting a loan of 15 Million US dollars, PROPARCO, participates to a global financing of 155 million US dollars, arranged by the International Finance Corporation, along with FMO, KfW and the Infrastructure Crisis Fund.
The start of the operating phase is planed for early 2011. The terminal should therefore be one of the first implemented in the area.
 
Impacts
 
The construction of SSIT terminal at Cai Mep will have first an economical impact. Along with the other terminals developed in HCMC area, it will increase the export/import capacities available in the city, whilst reducing the shipping transportation costs, through its ability to accommodate the largest container vessels.
In addition, it should capture part of the regional traffic going through the congested ports of Singapore, Hong Kong and Malaysian.
On top of the key impacts in terms of economical development for Vietnam, the project will contribute to bring significant revenues to the country as a result of the derived taxes, dividends and rents of the Cai Mep land leased for the project on a long term basis.  
Finally, it would allow the creation of 500 direct local recruitments during the construction phase, followed by 340 new direct and sustainable jobs during the operating phase as well as 2000 indirect employments.
 
 

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