Coastal Shipping in Vietnam | ANT Consulting

1.Coastal shipping competition

According Maritime Bureau, in 2015, although business activities of coastal shipping enterprise still had some difficulty, the total output reached 118.7 million tons, increasing 9.5% compared to 2014.

A Deputy Director of Vietnam Maritime Bureau, Mr Bui Thien Thu said that domestic shipping had taken charge of 100% of the domestic demand of coastal shipping. The domestic container ships has increased to 39 ships, a total increase of freight load is 200% from 2013 to 2015. The coastal shipping routes has transported 6.1 million tons of cargo including coal, slag, stone, rock, metal, fertilizers, cement, ore, fuel oil …

In 2015, output of goods in Vietnam’s seaport system continues an impressive growth, estimated at 427.3 million tons, rising 14.6%, in which the container reached 12 million TEUs, rising 15.5% compared to 2014.

According to Deputy Director of Bureau Bui Thien Thu, cargo volumes through Vietnam’s seaport system in 2015 in accordance with the approved plan in Decision No. 1037 of the Prime Minister in 2014 was 410 million tons. Thus, the volume outperformed 4.1% in 2015 compared with the initial plan.

However, the goods have been misallocated between different domestic seaports. To resolve this situation, there is a need to improve connectivity transport infrastructure and supporting services to relocate goods in different seaports, while speeding up the relocation of the port on the Saigon River and Ba Son shipyard.

During the year, Vietnam Maritime Bureau has completed the review and adjustment of detailed planning of port group 1, 2, 3, 4 and 6, thus managing the system more effectively. The Ministry of Transportation approved this plan.

By 2016, the total output of goods through the port system is estimated to reach 470 million tons (increasing 10% compared to 2015), in which each container is expected to reach 13.3 million, increasing 11% TEUs.

2.Vietnam Government published policy on Coastal Shipping, particular container services

In late May 3/2013, the Ministry of Transport has issued Document No. 128 / TB – BGTVT decision to terminate the operation of foreign fleets in terms of container shipping service in domestic routes, consisting of 20 units with a total tonnage of 500,000 DWT.

The foreign ship owners are not able to disapprove this decision since prioritising domestic fleets is compatible with the Law of the customs, as well as commitments to the world Trade Organization (WTO) on the protection of the members.

From 2013 to 2015, the fleets of Vietnam were given good opportunity to win back market share in terms of the domestic container shipping, which used to belong to the foreign shipping companies (with an estimated value of 1,000 billion / year). There are various container shipping companies gaining loyal leads which ground stable roots for domestic fleets.

Also Vietnam Maritime Bureau in collaboration with Ministry of Transport, Vinalines, Vietnam Ship Owners Association and Vietnamese ship owners operating on domestic routes ensure the limitation of congestion at seaport.

Average freight rates of Vietnamese fleet are offering customer around 5.2 million / 20-foot container for the north – south journey. This price is equivalent to the unit price of the foreign shipping company in 2012.

There have been more Vietnamese fleet being able to operate on domestic routes such as Hai Phong and Cai Lan to HCMC, Ba Ria – Vung Tau and vice again.

3.Vietnam regulations establishing who can and who cannot provide coastal shipping services, particular containers.

To ensure sufficient capacity to meet the demand for domestic container market, in addition to 30 domestic container shipping companies, Vietnam Maritime Bureau has also allowed 8 foreign fleets owned by Vietnamese enterprises to operate on domestic routes.

The biggest difficulty for domestic container shipping companies is that market has not completely recovered. Currently the container shipping companies from the South to the North reach approximately 80% of capacity, while the reverse route only reaches 50% capacity.

In long term, this policy has enabled the Vietnamese fleet to gradually recover from difficult period when all the domestic container shipping belonged to foreign companies.

Why Asian Investors Prefer Vietnam Real Estate Market? | ANT Consulting

Profitability of high-end real estate in Vietnam surpasses that of ASEAN countries.

According to Mr Pham Lam, General Director of DKRA Vietnam, in the past 3 – 5 years, Asian investors from Korea, Hong Kong, Japan, Malaysia and China have been active in the Vietnam real estate market. They prefer golden land funds, specializing in high-end and luxury real estate development.

Also according to leaders of DKRA Vietnam, the investment wave of Asian investors will increase in the next few years. The expert also outlines the 7 causes of the trend that Asian investors hunting for golden land to develop high-end real estate projects.

Firstly, Vietnam is a developing real estate market. In emerging markets, there are more investment opportunities than markets that have grown too long (saturation of opportunity). Real estate in many Asian countries are too expensive and the investment at the present time is not attractive in the native country has urged Asian investors poured capital into Vietnam market.

Secondly, Vietnam is a country with political stability, which is considered as the most important factor that is of international concern before entering a new market. The stable political background brings safety for investment yields in the context of global geopolitical fluctuation is increasingly unpredictable.

Third, high-end and luxury real estate in Vietnam, especially Ho Chi Minh City (HCMC), is more profitable than ASEAN countries. According to a recent report of some surveyors in the country, high-end real estate in districts 1 and 3 of HCMC have a profitability ratio of more than 4%. In District 2, especially Thao Dien, An Phu and Thu Thiem areas, luxury apartments achieved a profitability rate of 5 – 6.5%.

Meanwhile, the profitability rate of investment in luxury apartments in ASEAN is fluctuating in the range of 3.7 to 5.2% and in Asia, it also has the same threshold. Therefore, luxury real estate in HCMC is considered quite competitive while the price is lower.

Fourth, Vietnam has Asian culture in accordance with the culture of other countries in the area. The similarity or proximity in culture is a very effective bridge in the process of investment promotion, investment cooperation, helping the Asian real estate owners easily access and penetrate the real estate market in Vietnam.

Fifth, Vietnam has a young population and is experiencing a spurt in income, so the demand for housing has increased sharply. The middle class, even the rich and the super-rich, are among the fastest growing groups in the world. This is a remarkable advantage of Vietnam.

With the flagship product of Asian investors, which is high-end real estate, they target rich consumers who are willing to pay for high-value assets with outstanding quality to assert their position.

Sixth, interest rates in the developed real estate markets in the Asia is very low. Interest rate in Japan is 1%, Singapore is 3%, Korea is below 2% and other regions such as Taiwan, Hong Kong is also at a modest level compared to Vietnam. This is the factor attracting the attention of investment funds and major real estate companies in Asia coming to Vietnam. In addition to developing projects with committed profit margin, they also carry out loan deals with better interest rates than in their hometowns.

Seventh, due to the same region, the moving distance between Vietnam and their home country of Asian investors is considered to be faster, more convenient than other continents. Close geography distance helps Asian investors have more opportunities to monitor, check the new market and make important decisions in time, making the most effective investment.