Fresh opportunities abound for US transport investors

May 12, 2022 | 08:00
As Vietnam strongly promotes private investment in transport infrastructure with a number of potential initiatives in the pipeline, more openings may become available for American investors.
Fresh opportunities abound for US transport investors
Vietnam wants to emulate the United States with its well-developed transport infrastructure, Le Toan

At the end of last month, Minister of Transport Nguyen Van The hosted a special reception for US Ambassador to Vietnam Marc Evans Knapper, expecting closer cooperation between the two parties in the months to come.

US businesses are very interested in transport infrastructure projects in Vietnam, including aviation and maritime projects such as airports and seaports, Knapper said, proposing to the Ministry of Transport (MoT) to create favourable conditions for US businesses and contractors to join airport upgrade and construction projects.

Relations between Vietnam and the United States have been continuously strengthened, especially in aviation and seaport development. Recent important highlights were the opening of direct flights between Ho Chi Minh City and San Francisco by Vietnam Airlines, the supply of aircraft and engines, and the cooperation between Vietnam and the US Trade and Development Agency in the organisation of conferences on cooperation opportunities in aviation and maritime infrastructure.

Great potential

Leading US groups such as Boeing, Collins, Aerospace, Haskell, Autodesk and many others are keen on the opportunities to boost the Vietnam-US collaboration.

Besides Vietnam Airlines, Bamboo Airways has also been licensed by the US Department of Transportation to carry passengers and cargo between Vietnam and the US. It will use the wide-body Boeing 787-9 Dreamliner to fly directly from Hanoi and Ho Chi Minh City to international airports in the US.

A 20-year roadmap on opening a Vietnam-US flight route has finally been realised, with such a route by Vietnam Airlines becoming one of the hot topics in meetings of the Vietnamese-American community of California, especially after the Vietnamese government removed obligatory medical quarantine procedures in February.

“After years of getting onboard airlines from Japan, Taiwan, and South Korea, many overseas Vietnamese want to come home onboard our own airlines, not only because of convenience but also national pride,” said Anthony Tran, an overseas Vietnamese who lives in San Jose.

Experts are evaluating the market potential between the two countries at about 700,000 passengers per year, while only 30,000-60,000 passengers per year are needed to open direct flights.

Ambassador Knapper hopes that the two sides will continue to boost ties in aviation, such as through an increase in the purchases of Boeing aircraft, equipment, and direct flights between the two. US enterprises are also interested in Vietnam’s transport infrastructure development, focusing on projects that reduce greenhouse gas emissions.

In the seaport segment, the Cai Mep Ha project and others have been attracting attention from US investors.

Minister The emphasised that the country encourages domestic and foreign investors to meet the huge demand for transport infrastructure development amid the country’s state budget constraints. Therefore, Vietnam expects close cooperation deals with the US in the development of transport infrastructure and supporting Vietnamese air carriers in expanding more direct flights.

He added that Vietnam is developing a system of about 5,000km of expressways connecting the country by 2030. Vietnam also plans to upgrade and develop modern seaports with high-quality services to meet the rising trade demand.

In aviation, investment priority will be given to a number of key projects, such as Noi Bai, Long Thanh, and Tan Son Nhat international airports, while upgrading 22 existing airports and building six new ones, aiming to increase airport capacity to over 280 million passengers by 2030.

With the ambition to reduce emissions in the transport sector before 2050, the MoT is planning to promote the use of electricity and bio-fuel and develop a green and environmentally-friendly transport infrastructure.

“The MoT will create favourable conditions for US investors who are interested in the local transport sector. I believe that with the cooperation and support of the US embassy in Vietnam, the bilateral transport ties will be strongly strengthened,” Minister The noted.

Lessons to learn

Over the past 20 years, Vietnam has developed over 1,100km of expressways. Vietnam’s legal framework for expressways and roads is now favourable thanks to the Law on Public-Private Partnership Investment.

According to the World Bank, public-private partnerships (PPP) can be an effective way to build and implement new infrastructure and renovate, operate, and manage existing transport infrastructure facilities. They provide a useful avenue for governments to access additional capital as well as technical expertise in the private sector to meet the very substantial demand from their populations for new and expanded transportation infrastructure.

The US is one of the successful countries with expressway development, driven by effective planning and investment scale with a long-term vision of 30 years. The US built its first highway in 1923 and, by 2019, the country had almost 108,000km of highways. To finance the US Interstate Highway System and other roads, the Highway Trust Fund was established in 1956, which receives money from a federal fuel tax and related excise taxes.

The US government owns and takes responsibility for investing in the development of highway transport infrastructure. The federal government hosts bidding for the private sector to partake in the maintenance, toll collection, and operation of its highways via concession cooperation models with flexible periods of up to 15 years.

By Bich Thuy

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