US$2 billion Needed to Modernise Vietnam's Aging Fleet
05 May 2015: Viet Nam will need at least US$2 billion until 2020 to modernise its fleet of vessels, Deputy Head of Viet Nam Maritime Administration Bui Thien Thu has said.
The fund is expected to increase the fleet's market share; however, it cannot depend on the state budget, which is in a difficult situation, Thu noted.
The maritime restructuring project 2020, which has been approved by the Ministry of Transport, considers sea transport as the key part of maritime services, as it can offer low-cost, high-quality services.
"The government has allowed "socialisation," [which mobilises capital from various economic sectors], for developing the maritime sector.
"We can invite foreign organisations, businesses, and individuals to make capital investments," Thu remarked.
"If we allow foreign investors to contribute capital rate up to 49 per cent, we will attract many sources of foreign capital to take part in the country's sea transport operation," he added.
Thu pointed out that businesses should strengthen coordination with producers, exporters and importers to seek transport contracts and regularly create closed logistics services.
"Our domestic fleet is weak. We have more than 1,800 vessels; however, most of them are small-tonnage vessels and the number of cargo ships and oil tankers is minimal," Thu observed.
The sector has some 600 businesses operating in the field of sea transport, of which, more than 500 are private and operating on a small scale, which account for one-fourth of the businesses' total capacity.
One of the disadvantages of the domestic fleet is its average age, which is high at nearly 18 years. A foreign fleet's average age is around 10.
In 2014, the Vietnamese fleets carried 98.5 million tonnes of goods, a slight increase of 0.13 per cent from the previous year. However, marine trade activities still face numerous difficulties and fierce competition. Domestic ships can currently undertake only 10-12 per cent of the import-export seaway transport market share.
Most of the ships are operating in Southeast Asia and Northeast Asia, while they have yet to set routes to countries in the EU and the US, the two major importers of goods from Viet Nam.
According to Deputy General Secretary of the Viet Nam Seafood Exporters and Producers (VASEP) Nguyen Hoai Nam, the seafood sector's products are mostly frozen, and therefore, they are exported by cold cargo ship and mainly by sea.
However, Nam noted, the country's cargo freight is rather high, as the domestic logistics fee is higher than that of countries such as Thailand, China, and Singapore. This has been posing difficulties for domestic export businesses.
As Viet Nam joins the ASEAN Economic Community as well as fulfills its commitments as a member of the World Trade Organisation, it will create more opportunities and challenges for domestic sea transport businesses.
The domestic sea transport business will need to make all efforts to develop its operations, especially in studying international regulations and normal transport practices in the region.
Long seaways face fierce competition in the market. It's necessary to restructure and maintain fleets in order to develop services when the world's sea transport market recovers.