Cai Mep delay is floated

This striking proposal was aired by Vietnam Business Forum 2012’s Infrastructure Working Group and representatives from some foreign-invested businesses providing port services in a bid to tackle capacity redundancy at seaport group 5 covering Ho Chi Minh City and southern Ba Ria-Vung Tau province.

Cai Mep-Thi Vai reports a huge investment capital of VND13.9 trillion ($660 million), much of it ODA funds, and up to 90 per cent of construction is reportedly finalised.

The proposal was viewed as a stopgap solution, while the Infrastructure Working Group’s Ports Sub-group suggested ‘immediately ceasing the licencing of all container terminal building projects in Ho Chi Minh City’s inner parts.’

“Southern container terminals’ financial picture will see critical hardships if no suitable remedies are in place,” said Maersk Vietnam chief executive officer Peter Smidt Nielsen.

According to Vietnam Maritime Administration (VMA) deputy chief Bui Thien Thu, it would be a great waste if the launching of the Cai Mep-Thi Vai port was delayed until market rebound.

“The Ministry of Transport is still urging VMA to continue bidding procedures associated with the port leasing slated for completion in June 2013,” said Thu.

With annual capacity of around one million throughput 20-foot equivalent units (TEU) and two million bulk cargoes and proposed launching from June 2013 this would exaggerate capacity redundancy-cargo deficiency dilemma in southern deep-water container ports.

In reality, rampant development of Vietnamese seaports is put at an alarming level.
Vietnam Seaports Association figures show that actual capacity at port group 5 has doubled market scope, whereas construction of new ports is now underway.

That was why most state-of-the art joint venture container terminals in Cai Mep-Thi Vai area whose total investment amounted $740 million, in which the Vietnamese partners- Vietnam National Shipping Lines and Saigon Port Authority hold 51 per cent of chartered capital, incurred heavy losses.

“Several port operators are on the brink of going bankrupt and since the Vietnamese government is the main shareholder at these port joint ventures the risk to the national budget would be significant,” according to the Ports Sub-group.

Apart from the fact that the shipping market is in a depression globally, serious capacity redundancy at port group 5 came on the back of less effective cooperation among relevant state authorities and local governments when too many licenses on port investment were granted in the past years without taking into account the consequences.