An artist's rendering of the Lach Huyen port project.Japan is providing Vietnam with new loans totaling more than 85 billion yen ($781 million) for the development of port and road infrastructure in the rapidly growing Asian nation.
The loans are for the development of a major deep-sea port at Lach Huyen to the east of Haiphong, the country’s third-largest city, and for supporting hinterland road and bridge links. The port is scheduled to be operational by May 2018, a delay of five months from the original plan.
The Japan International Cooperation Agency said it signed an agreement with the government of Vietnam last month to provide the new round of funding for the projects. JICA coordinates official development assistance for the Japanese government.
Vietnam’s northeastern coastal area, extending from Haiphong and Hạ Long City to Hanoi, is home to numerous factories and facilities backed by Japanese and international investors. The region’s seaborne trade is currently served by Hai Phong Port and Cai Lan Port.
As well as addressing increasing demand for containers in northern Vietnam, development of the new port will reinforce the international competitiveness of the entire northern region, JICA said.
“Since the international freight shipping market has seen an increasing trend towards large container vessels in recent years, developing ports that are deep enough to handle large container ships is imperative to ensure that the northern area of Vietnam functions properly as an international distribution base.”
Industry experts questioned whether there will be enough demand for a project of this scale and warned the region could be embarking on yet another white elephant mega-port project.
“The big mainline vessels won’t call. The local market is too small and the deviation from the main shipping channel to Haiphong is too far. It is 500 nautical miles, which equates an extra 29 hours of extra sailing time in and out, on top of which you have port stay time,” said Andy Lane, a partner with CTI Consultancy in Singapore.
“For intra-Asia trades, 4,500 TEUs (20-foot-equivalent units) is about as big as the ships are going to get for the foreseeable future,” Lane said.
This is the third tranche of funds for the project after 21 billion yen was provided in November 2011 and a further 38 billion yen in March 2013. The new funds will be spent on engineering works, material and equipment procurement and consulting services required for the development of the port and surrounding infrastructure.
JICA said it also provided a new loan for the Da Nang to Quang Ngai section of a major north-south expressway currently under development in the country.
The largest city in central Vietnam, Da Nang, together with the neighboring provinces of Quang Nam and Quang Ngai, make a well-developed industrial and export processing zone, and Japanese manufacturing companies are invested heavily in the area. Da Nang is a key distribution point at the east end of the East-West Economic Corridor that runs through Laos, Thailand and Myanmar.
“Successful completion of this project will provide a major expressway for international distribution to connect Vietnam with the north, south, east and west of the Mekong region,” JICA said.
The expressway is expected to be completed in June 2018.
“These Japanese ODA loans will provide support for building the economic infrastructure essential to strengthening Vietnam’s competitiveness, and for promoting environmental improvements to overcome the country’s vulnerabilities,” JICA said.
Japan is heavily invested in Vietnam and JICA has 114 ongoing projects in more than 20 provinces and cities across the country
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