Port projects in Vietnam, Cambodia, and Myanmar-

The Southeast Asian region is witnessing a substantial increase in port traffic, particularly in the case of Vietnam, Cambodia, and Myanmar, the current port capacities of which have prevented these countries from realising their full potential. Overall, these three economies had a combined GDP of $188 billion in 2011 with significant contributions from the maritime sector. For instance, in the case of Vietnam, the maritime sector’s contribution to its GDP is currently around 30 per cent; it is expected to increase to over 50 per cent by 2020, with several capacity augmentation plans on the anvil. However, the port infrastructure in these countries will need to be expanded rapidly in order to ensure the targeted growth of their economies. In recognition of this need, the governments of these three countries have launched projects worth over $60 billion to expand their port capacities.

Vietnam

Vietnam has been experiencing rapid growth since the implementation of economic reforms in 1986. In fact, it is one of the fastest growing economies among the 10 ASEAN countries. Over the past few years, Vietnam has been spending 9–10 per cent of its GDP on the transport, energy, telecommunications, water, and sanitation sectors.

Located in Southeast Asia, bordering China, Laos, and Cambodia, Vietnam has over 3,400 km of coastline along the Gulf of Thailand, the Gulf of Tonkin, and the South China Sea. During the 2000–11 period, containerised and non-containerised traffic at Vietnamese ports increased at a compound annual growth rate (CAGR) of 19 per cent and 12 per cent, respectively (see Fig.1). At present, around 70 per cent of the country’s container throughput passes through the ports of Ho Chi Minh City, namely, Cat Lai, VICT, Saigon port, Ben Nghe port, and SPTC. However, several of the ports in Vietnam are old and lack modern cargo handling equipment, hence leading to low productivity. Further, most big ports such as Hai Phong and Ho Chi Minh City are estuarine ports located at a considerable distance from the sea which means only smaller ships can access these ports.

To ease traffic congestion at Ho Chi Minh City, five terminals have been constructed at the Cai Mep-Thi Vai area in Ba Ria-Vung Tau province, which include the Cai Mep International Terminal, SP-PSA International Port and SP-SSA International Container Terminal, Saigon New Port’s Tan Cang-CaiMep Container Terminal, and the Hutchison Port Holdings’ Saigon International Terminal. However, with the rest of the infrastructure such as roads not having kept up pace, cargo is still handled mostly at Ho Chi Minh City.

The lack of adequate port infrastructure in Vietnam puts it at a competitive disadvantage compared with long-established global trade hubs such as Singapore, Shanghai, and Hong Kong. The Vietnam government recognises that port congestion is undermining Vietnam’s export growth. Thus, it has taken steps to increase port capacity, as well as improve the quality of infrastructure. However, various capacity augmentation projects, as described below, have been marred by delays.

The Ministry of Transport has assigned Vietnam National Shipping Lines (Vinalines) to develop a deepwater port at Lach Huyen, located in northern Vietnam near Hai Phong. The port will be the largest transshipment port in northern Vietnam, which can accommodate vessels of 60,000–80,000 twentyfoot equivalent units (TEUs). Though Vinalines had signed a deal in November 2011 with Japan’s Itochu, MOL, and NYK to develop the port, the project has yet to commence.

Another project – Van Phong port at Van Phong Bay, north of NhaTrang, in Khanh Hoa province – which was planned as an international transhipment port with a 9,000 TEU capacity, has been stalled with no firm date for resumption. Vinalines was licensed as the main investor for this project but has been unsuccessful in raising finances for it. As per reports, the project has now been temporarily transferred to the Vietnam Maritime Bureau which is expected to restructure it for raising capital from the market.

Myanmar

Myanmar has nearly 2,000 km of coastline along the Bay of Bengal and the Andaman Sea, comprising primarily the Rakhine, Ayeyarwady Delta and Tanintharyi regions. During the 2000–11 period, traffic at Myanmar’s ports grew at a CAGR of 7.75 per cent. Of the total traffic handled in 2011, containerised and non-containerised cargo accounted for 22 per cent and 78 per cent of the total cargo handled, respectively (see Fig. 2). The Port of Yangon handles about 90 per cent of the country’s exports and imports. The port has 18 pontoon bridges that transport containers, edible oil, and general cargo.

The Kaladan river and Dawei ports are the vital projects under implementation in Myanmar to enhance economic cooperation and regional integration. The Kaladan Multi-Modal Transit Transport Project aims to facilitate cargo transport to Mizoram through Rakhine state and the Myanmar–India border.

The Dawei Port and Industrial Complex Project has immense potential to bring economic prosperity to not just Myanmar but to the rest of the ASEAN region. The project, being implemented by Italian Thai Development Public Company Limited, aims to provide a much-needed alternative to the overcrowded Strait of Malacca for Bangkok-bound cargo. The Dawei port and accompanying logistics infrastructure promise to reduce the travel time of goods bound for Thailand, China, Cambodia, Vietnam, and Lao PDR by approximately 10 days. However, the project, still in its infancy, has been clouded with both financial and environmental risks.

Another key project under implementation is the upgradation of Yangon port. The port authorities have awarded the contract to Pearl Land Company on a 15-year land lease.

Cambodia

Cambodia has two large international ports, at Phnom Penh and Sihanoukville, two coastal ports, at Kampot and Koh Kong, and four river ports, at Kompong Cham, Kratie, Prey Veng, and Kompong Chhnang in the Tonle Sap. Apart from the ports in Phnom Penh and Sihanoukville, there are also other ports that are equipped only with small pontoons and simple piers.

Earlier, in January, Phnom Penh Autonomous Port’s (PPAP) new container terminal was officially opened to handle the rising traffic volumes: in 2008, the port processed 47,507 TEUs, which increased to 95,333 TEUs in 2012. Undertaken by the Shanghai Construction (Group) General Company with a soft loan of $28.2 million from the Chinese government, the construction of the 10 hectare terminal started in March 2011. Covering 10 hectares in the Kien Svay district of Kandal province, this port will be able to handle 120,000 TEUs annually during the first stage of development. The terminal will not only connect Phnom Penh Autonomous Port (PPAP) to Vietnam’s Cai Map port, but also help goods to be shipped directly to Singapore, Malaysia, Hong Kong, and Shanghai, as well as other neighbouring countries and regions without the need for ship transfer.

Meanwhile, PPAP is in the process of seeking private partners to assemble high-tech facilities including cranes and warehouses for the port’s second phase of development. The objective is to enable the port to handle 300,000 TEUs annually. Furthermore, the Japan International Corporation Agency is currently conducting a feasibility study on the construction of a new Phnom Penh Autonomous Port special economic zone on 600–1,000 hectares of land surrounding the new port.

Inadequate infrastructure

The lack of adequate port infrastructure has played a major role in undermining the economic growth of Vietnam, Myanmar, and Cambodia. The problem has been further compounded by the slow implementation of capacity augmentation projects. Consequently, these countries have low rankings in the World Bank Logistics Performance Index (LPI). According to the LPI 2012 (see Table 1), Vietnam, Myanmar, and Cambodia were ranked 53rd, 129th, and 101st, in contrast to their neighbours, Singapore and Malaysia, placed 2nd and 25th, respectively. However, the logistics performance of these three countries is likely to improve once they are able to expand their port facilities successfully.

Conclusion

Port traffic in Vietnam, Cambodia, and Myanmar is growing rapidly, in tandem with their economies. By virtue of their favourable geographical locations and long coastlines, these economies have tremendous potential for rapid economic growth if they are able to monetise their maritime assets, as the neighbouring countries of Singapore and Malaysia have done. However, achieving this objective will require a massive infusion of capital, seamless infrastructure connectivity to other transport modes, and better leveraging of technology. Investments in these areas will help the countries to improve their performance rankings on the LPI and increase their competitiveness. The effective execution of capacity augmentation projects within the budget and planned time frame will be a true test of their success.