New partnership to boost logistics in Southeast Asia

February 19, 2022 | 11:23
Southeast Asia’s logistics sector is set to receive a significant boost following a new agreement between the International Finance Corporation (IFC), Singapore's YCH Group, and Vietnam's T&T Group, which will work together to develop an international logistics superport in Vietnam.

Located 60km from Hanoi in the northern province of Vinh Phuc, the Vinh Phuc Inland Container Depot (ICD) SuperPort will be developed by T&Y Superport Vinh Phuc JSC, a joint venture between Singaporean logistics company YCH Group and Vietnamese conglomerate T&T Group.

New partnership to boost logistics in Southeast Asia

Scheduled to go live in 2024, the project will be one of the country’s first ICDs, including an international distribution centreand an inland port for rail connectivity and air transportation. The establishment of such a facility in the north of Vietnam will significantly improve the processing of domestic and international trade, reducing costs and improving the country’s trade competitiveness as it aims to become a new regional supply-chain hub.

By February 2023, IFC will help YCH Group and T&T Group develop a bankable and sustainable project by providing technical expertise, helping the developers mitigate risk, and strengthening environmental and social standards.

IFC will also support the sponsors in making the infrastructure green and sustainable, supporting Vietnam in its efforts to reach its net zerotargets by 2050. IFC has the right to act as the lead arranger of long-term financing for the Vietnam SuperPort. Total investment capital for the project is expected to be around $200 million.

“The signing ceremony with IFC is yet another significant milestonefor the entire connectivity initiatives of which YCH Group intends to invest more than $2 billion in the next five years to enhance connectivity to improve both intra-ASEAN and global trade,” said Dr. Robert Yap, executive chairman of YCH Group.

“The partnership with IFC ensures bankable financial solutions to keep pace with the development of the ASEAN Smart Logistics Network (ASLN) and Smart Growth Connect. With the unwavering support of the key leaders and colleagues, we are confident that the establishment of ASLN and many more innovative initiatives will drive positive economic and social improvements in the ASEAN economy so that communities will continue to thrive. This is the beginning of a sustainable partnership with IFC for infrastructure across the region, developing smart logistics and beyond.”

Do Quang Hien, chairman of T&T Group said, “We are confident that Vietnam SuperPort’s multimodal logistics hub, built with cutting edge technologies, will reduce costs and improve time to market. These improvements will aid connectivity to the world, boosting our economy and contributing to the symbiotic and sustainable growth of Vietnam.”

The facility is strategically located near local ports, Noi Bai International Airport, and border posts with China and Laos. It is also situated within reach of 20 industrial parks, enabling it to become a supply chain hub for local manufacturing operations.

The Vietnam SuperPort is expected to capture roughly 10 per cent of the total container traffic generated in the country’s northern provinces once it comes into operation.

It will help improve the efficiency of Vietnam’s logistics sector and reduce the cost of related services, which remain high. These expenses accounted for 21 per cent of its GDP in 2019, compared to less than 10 per cent in the Organisation for Economic Co-operation and Development countries.

“We are delighted to partner with YCH Group and T&T Group to support the development of the Vietnam SuperPort, leveraging our substantial knowledge of the global ports and logistics sectors and strong project structuring track record,” said Alfonso Garcia Mora, IFC’s regional vice president for Asia-Pacific.

“Our early engagement in the project will help make sure it will be developed with the highest environmental and social governance and climate-friendly international standards to help attract international investors. The project will help strengthen Vietnam’s logistics and freight sector to support the growth of the country’s manufacturing industry and bolster economic development. It could also serve as a model for YCH Group to replicate in other regional markets, which will eventually help improve logistics performance in the ASEAN region.”

By IFC

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