The following extract, compiled by China Intelligence Online, is a brief overview of the main trade indicators and port industry. For more information on trade or logistics industry performance in Vietnam please contact: info@chinaintelligenceonline.com

1. The following are extracts from a report compiled by CIO last year on Vietnam logistics industry
development:
In recent years Vietnam’s economic growth has stood second only to China in part, many
believe, because Vietnam benefits in numerous ways from its similarity to its old adversary.
Educational levels are among the highest in South-East Asia, a vestige perhaps of its
traditional Confucian veneration of education. Society is well managed and crime and
lawlessness low. All very attractive attributes for companies looking for stable destinations
for FDI.
Accession to the WTO in January 2007 has added additional momentum to both growth
and market oriented reforms creating an environment that has stoked domestic demand.
In 2007 investment levels rose 16% reaching 40.4% of GDP, one of the highest rates in Asia.
Much of this expansion of investment came from the domestic private sector, rising to 40%
of the overall investment figure in 2007. FDI approvals rose, during the same year, to about
USD20.3bn (over 60% higher than in 2006). Domestic consumption in recent years has
been bolstered dramatically by cash remittance from overseas ethnic Vietnamese and
wage rises as the economy has grown leading to a rise in imports that has significantly
affected GDP growth.
On the supply side of the equation, over the period 2007, industry grew by 10.6%,
subsequently making it the single largest contributor to GDP growth. Over the same period
private industry expanded by 20% far outstripping the state-owned sector.
Looking at the industrial sector in detail, manufacturing, the largest subsector, grew by
12.8% and output of utilities, fuelled by growing domestic demand grew by around 12%. In
contrast mining output fell by 2% as the country’s largest oil field became depleted.
Services however grew by 8.7%, buoyed by strong performances in the trade and finance
sectors as well as a good performance by the tourism industry.

2. Vietnam Key Trade indicators
Table 1: Import of goods by SITC (m USD)
Source: General Office of Statistics Vietnam
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
1 2 3 4 5 6 7 8 9 10 11 12
TOTAL
Primary products
Food, foodstuff and live
animal
Beverages and tobacco
Crude materials, inedible,
except fuels
Mineral fuels, lubricants and
related materials
Animal and vegetable oils,
fats and wax
Manufactured products
Chemical and related
products, n.e.s
Manufactured goods
classified chiefly by materials
Machinery and transport
equipment
Miscellaneous manufactured
articles
Commodities not clasified
elsewhere in SITC

3. Table 2: Export of goods by SITC (m USD)
Source: General Office of Statistics Vietnam
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
TOTAL
Primary products (total) m
USD
Food, foodstuff and live
animals m USD
Beverages and tobacco m USD
Crude materials, inedible,
except fuels m USD
Mineral fuels, lubricants and
related materials m USD
Animal and vegetable oils, fats
and wax m USD
Manufactured products (total)
m USD
Chemical and related
products, n.e.s m USD
Manufactured goods classified
chiefly by materials m USD
Machinery, transport and
equipments m USD
Miscellaneous manufactured
articles m USD
Commodities not clasified
elsewhere in SITC m USD

4. Table 3: Volume of freight traffic by transport sector (million/ton/km)
Source: General Office of Statistics Vietnam
Table 4: Trade growth by sector (previous year=100) %
Source: General Office of Statistics Vietnam
0
20000
40000
60000
80000
100000
120000
International
Domestic
0
20
40
60
80
100
120
140
160
Total Trade Growth
Domestic Trade
Growth
International Trade
Growth

5. Table 5: Trade growth, total, import, export, balance (m USD)
Source: General Office of Statistics Vietnam
Table 6: Trade growth total, import, export (previous year=100) %
Source: General Office of Statistics Vietnam
-40000
-20000
0
20000
40000
60000
80000
100000
120000
1990
1992
1994
1996
1998
2000
2002
2004
2006
Total (m USD)
Exports (m USD)
Imports (m USD)
Balance(*) (m USD)
0
20
40
60
80
100
120
140
160
180
1991
1993
1995
1997
1999
2001
2003
2005
Prel.2007
Total % growth over
previous year
Imports growth over
previous year
Exports growth over
previous year

6. Table 7: Vietnam Exports, by destination as percentage of total 2000 (inner) and 2007 (Outer)
Source: ADB
Table 8: Growth rates of merchandise exports (% of previous year)
Source: ADB
Developing Asia
PRC
Japan
USA
EU
Others
-40
-30
-20
-10
0
10
20
30
40
2004
2005
2006
2007
2008
2009
2010
Growth rates of merchandise exports
(% of previous year)
Growth rates of
merchandise exports
(% of previous year)

7. Port Industry Dynamics
With many manufacturers looking for lower cost alternatives to China’s Pearl River
Delta, as costs rise in Southern China, Vietnam is attempting to cash in. This shift in
production base location has created a great deal of interest in the nation’s port
and harbour infrastructure that has, up till now, failed to keep pace with the
nation’s attractiveness as a destination for manufacturing FDI.
At present, across Vietnam’s 3,260km coastal line, the country's 49 major seaports
currently operate 166 terminals with 300 berths. Statistics in 2007 from the
Vietnam Maritime Administration show that more than 88,000 ships were called to
ports with a total cargo volume of 181mn tonnes. The administration estimates this
figure will increase to 230mn tonnes by 2010 and to 400mn tonnes by 2020. With
this in mind six new large scale container terminals are planned to come on line in
by 2010. But the government still feels its policies are not meeting the country’s
logistics needs.
As an example, taking the three largest ports of Vietnam – Saigon port in the south,
Hai Phong port in the north and Da Nang port in central Vietnam – and comparing
them to some major seaports of Thailand and Malaysia, the three main ports of
Vietnam seem significantly inferior in terms of maximum vessel size and storage
capacity despite roughly similar sizes of berth lengths. This lack of draft depth is
already having a significant impact on the manufacturing sector in the country by
forcing up shipping rates by requiring shippers to tranship cargo at deeper water
ports like Hong Kong, Singapore, or Ningbo-Zhoushan.
The lack of capacity faced and numerous hinterland infrastructure problems are in
many ways similar to the difficulties China faced a decade ago. At most of
Vietnam’s major ports significant levels of congestion impede the smooth flow of
traffic both into and out of the ports. This situation is particularly acute in the
surrounding area of the country’s largest port zone, Ho Chi Min.
A short distance from most of the major ports, container traffic sits nose to tail
blocking the roads. An increase in hinterland investment has made the situation
acute in recent years as cargo throughputs have increased as FDI has entered the
economy. The lack of alternate infrastructure forces trucks to pass through
congested city streets slowing the journey significantly. This crunch is further
compounded by private car purchases which have risen almost two hundred
percent over the past year. In addition, a traffic ban which prevents trucks
transiting through Ho Chi Min City between six and nine in the morning and
between four and nine in the evening severely restricts cargo flow to the port. With
seventy percent of Vietnam's inbound and outbound cargo processed at ports in
the Ho Chi Min region backlogs are becoming acute.

8. Whilst the government has plans to improve these conditions it faces a number of
obstacles. Impeding the government’s current port development strategy is
infighting between local and regional levels of government. This is common in
many areas of development in Vietnam, with local authorities fighting for State
funds and attention. Thus, State funds are dissected into increasingly smaller pieces
resulting in a disparate scattering of resources and ultimately undersized projects.
In order to attract the foreign investment necessary for developing its port sector
Vietnam has already introduced a swath of incentives and preferential policies.
However, some in the government privately admit that the new measures, such as
partially equitising port enterprises - allowing private sector development of
seaport infrastructure and operation of terminals - have yet to be effectively
applied and are impeding development. Some analysts believe that regional
bureaucracy and red tape is holding back full implementation of the strategy. This
said however, the sector is already attracting the attention of several international
players – such as Maersk, Hutchison and PSA.
Another element of legislation that may be holding back full implementation of the
strategy is legislation restricting foreign investment in domestic transport
networks. Whilst the country has pledged to roll back such restrictions under its
WTO commitments the current situation significantly impedes development in the
sector. Given that most of the country’s major port areas are located either on or
very near river delta regions the ability of international terminal operators to
extend barge traffic operations up the delta regions into the hinterland may offer
significant advantages in terms of reducing landside congestion. But so long as the
restrictions on foreign investment remain, this traffic will remain under the control
of small-scale local operators and government offices, making it extremely difficult
to integrate international container cargo operations into the inland waterways of
the delta.
In comparison to their counterparts in Thailand and Malaysia, Vietnamese port
storage capacity and maximum vessel size fall far short despite similar berth sizes.
As a result, transport of goods to major markets, such as the US or EU, often must
be transhipped at foreign ports, increasing the expensive of such transactions. For
example, shipments from Ho Chi Minh City to Los Angeles, USA are almost 30%
more expensive than identical shipments from Hong Kong and 15% more expensive
than those from three major Chinese ports. These higher costs erase advantages
Vietnam has with its cheap and abundant labour force.

9. Major Ports
The Ministry of Transport and Communications unveiled a plan in late 2006 to
improve facilities at Vietnam’s largest port cluster, Saigon Port, by relocating the
facility to Cai Lai and Hiep Phuoc. This is expected to address not just hinterland
congestion, but draft depth issues as well.
The new port complex is to be located among the region’s industrial parks and
export processing zones of Ho Chi Minh City, Binh Duong, Dong Nai, and Ba Ria –
Vung Tau. When finished, the new ports will resume Saigon Port’s role in
international and domestic trade. The new deep-sea port in Hiep Phuoc is designed
to cater to vessels of up to 50,000DWT. In 2005, Cat Lai port also went through an
expansion in which it was equipped with more modern equipment. Furthermore,
Saigon Port is seeking the government’s approval to develop Cai Mep port complex
and Thi Vai International General Port. If approved, these are slated to be
completed in 2010, and will be able to receive vessels of up to 80,000DWT. Some in
the industry have however expressed doubt that the project will be finished on
time.
The Vietnamese government is also working to encourage investment into port
infrastructure projects in the 114 ports along Vietnam’s 3,200km long coastline.
With nearly USD1.7bn invested nationally, into over 70 projects either already
underway or scheduled. In this respect Vietnam is taking strides to overcome a
significant hurdle for its growth.
The largest projects are in regions on the Mekong delta surrounding Ho Chi Minh
City. An estimated USD628m is being invested into the construction of the Cai Mep
Container Port and Thi Vai Multi-Purpose Port in Ba Ria-Vung Tau province, and
Hiep Phuoc Port in the outskirts of Ho Chi Minh City and is expected to greatly
increase the handling capacity in the region with its completion scheduled for 2010.
Haiphong port is in the completion stages of the second phase of its Dinh Vu
project and is moving into phase III with a further VND300bn investment adding
four more wharves and an additional 900m of quay 2010.
Also scheduled for completion in 2010 is the VND525bn Phase II of the project at
Cai Cui Port with the construction of 2 wharves, one with a length of 165m and
another with 355m; 2 buoy berths for 10,000DWT vessels and 20,000DWT vessels;
and the expansion of warehouse and open storage facilities.
Expected to see completion by the end of 2008 is the construction of a VND800bn,
100 tonne capacity bridge that should further facilitate the flow of goods to Doan
Xa Port.
Other projects range from VND1.2bn construction of a 2,500m2 warehouse at Ky
Ha Port to VND1.4 trillion invested into the upgrading of Chan Mai Port.