Infrastructure vital to call for investors

The four-lane $1.2 billion highway connecting Hanoi to Lao Cai plays a vital role in the region’s growth

In 2013, Sun Group began construction of the Fansipan-Sapa cable car system in the tourist town of Sapa in Lao Cai province. Upon completion later this year, the three-wire cable car system will stretch seven kilometres from Sapa town to the peak of Fansipan Mountain – the highest mountain in Indochina.

It will be the world’s longest cable car system, and will be capable of carrying a maximum of 2,000 people per hour. This system reduces what was once a dramatic two-day trek to a mere 15-minute ride. This investment marked an important milestone for Sun Group, and particularly for the northwestern region, where there is huge untapped potential within the tourism industry.

Donaco International, an ASX-listed company, also opened a new five-star hotel and casino in the region last year. The Aristo Hotel – in Lao Cai city – follows on from the company’s three-star hotel which the company has been running since 2003. The hotel has 400 rooms, as well as a health spa and nightclub. Like Sun Group, Donaco International is expecting the growing demand in the tourism and entertainment sector of Vietnam’s northwestern region.

Joey Lim, managing director and CEO of Donaco, said the company was aiming to capture the increasing demand for gaming and leisure entertainment from the Chinese target market.

Home to about 30 ethnic groups and long mountain ranges, the northwestern region is also a huge draw for tourists coming to Vietnam. Asides from its tourism potential, the region also boasts a lucrative mining industry, with private investors pledging at least $4 billion in committed investment capital since 2008.

The mountainous northwestern region is a place of strategic importance where a co-operative project is being implemented by both Vietnam and China. Lao Cai Cast Iron and Steel Plant, a joint venture between Vietnam Steel Corporation, Lao Cai Mineral Joint Stock Company and China’s Kunming Iron and Steel Group, opened doors of its steel factory in September. The plant can produce 500,000 tonnes of billets per year from iron ore exploited in the region.

Also, in the region’s Hoa Binh province last December, Czech BTG Holdings began construction of its $116-million brewery, which has the capacity of 190 million litres a year. The factory will mainly produce Budweiser Budvar beer which will be exported to neighboring countries including Korea, Japan, and China, and will also be available for local customers.

In addition, BTG Holdings plans to build a $136-million biomass-fired power plant with the generation capacity of 50 megawatts, which will ensure a stable power supply for local factories which include an electronic chip manufacturing facility, a milk processing plant and a solar cell producer.

Although it boasts many avenues for new investment projects, the northwestern region’s poor infrastructure development has still held region back. Since 2008, many investors have pledged billions of dollars in investment to this region. However, because of the slow pace of infrastructure improvement, disbursement has been modest over the years.

Until now there has been a greater hope in recent years with the Vietnam Expressway Corporation officially opening Vietnam’s longest highway in September, linking Hanoi with the northern border province of Lao Cai.

The 245-kilometre four-lane highway cost $1.2 billion, most of which was covered by official development assistance provided by the Asia Development Bank.

The highway stretches through five cities and provinces of Hanoi, Vinh Phuc, Phu Tho, Yen Bai and Lao Cai. This major route has shortened travel times from Hanoi to Lao Cai down from 10 hours to 3.5 and has established a reliable transport link between Vietnam’s northern provinces and the Chinese city of Kunming.