Abstract
According to reports in early June, foreign investors have once again raised
concerns about Vietnam' s
infrastructure. Rapid economic growth is placing
a heavy burden on existing infrastructure, and
investments, tangled in red
tape and regulatory obstacles, have not been able to keep pace. The latest
concerns were raised during a conference in Ho Chi Minh City, organised by the
International Finance
Corporation and the Vietnamese Planning and
Investment Agency. The country' s port infrastructure was
once again in the
spotlight, with foreign investors urging the government to invest not just in
creating
maritime hubs, but also in creating a better intermodal transport
system to move cargo to and from the
ports. The chairman of the American
Chamber of Commerce said that delays in construction of
supporting
infrastructure for ports was also a key issue that hindered operations and
raised costs,
IntellAsia reported. One example of the latter point is the
delay in the development of roads around ports
in Ba Ria-Vung Tau province
in South Vietnam. This has in turn caused delays in the construction and
commencement of operations of the country' s new ports. Vietnam still has a
cost advantage against China
when it comes to manufacturing wages, but
much FDI flow is still diverted to southern China because it is
much
easier to get input goods to factories and finished goods out owing to China' s
superior
infrastructure.
Taking this and other developments such as
the downturn in the global economy into consideration,
BMI’s newly
released Vietnam Freight Transport Report concludes that shipping traffic will
increase by
an annual average of 4.2% in 2009-2013, measured in tonnes per
km. A number of factors underpin this
forecast. One is sharpness of the
contraction in international trade this year: Vietnam’s trade will fall
by
13.9%. Pulling in the opposite direction however is the still-realistic
prospect of a long, export-led boom
in Vietnam. Annual GDP growth is
likely to average 6.5% in 2009-2013, only a little slower than the
7.8%
rate achieved in the preceding five-year period.
Our overall outlook for
the nascent freight transport industry across the different modes is bullish
despite
the recession. Although the next two years will be tough, air
freight will grow by an annual average of
7.9% over the next five years.
In road haulage, we have trimmed our forecast to take account of the
economic slowdown, but we still see turnover running ahead of the general rate
of economic expansion in
Vietnam. We see road freight growing by an annual
average of 7.9% over the next five years, followed
closely by pipeline
throughput (7.5%), rail (7.0%), and maritime freight (4.2%, as already
mentioned).
Full World Trade Organization (WTO) membership, achieved in
early 2007, can be seen as supportive of
greater freight transport
turnover relative to GDP across all modes, particularly so for shipping. We
now
expect total freight carried growth across all modes, measured in
million tonne-km (mntkm), to average
5.0% per annum in 2009-2013.
Under BMI’s freight transport rating system, Vietnam achieves a
composite score of 54.3 out of a
potential maximum of 100. Vietnam’s
stronger points are freight growth, transport infrastructure growth
and
the transport intensity index, which measures the dynamism of the
country’s foreign trade. BMI
views Vietnam as being weaker in the
other four categories: economic and political long-term risks, and
the
country’s regulatory and competitive environment (corruption is a
particular problem).
According to our latest estimates, the total value of
transport and communications GDP will rise to
US$6.7bn in nominal terms by
2013, representing 4.5% of Vietnam’s GDP.
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